Marketing Monthly - February 2012

February 2012: Vol. 7, Issue 2

Marketing Monthly Photo credit: Brittany Hanagriff , Messina Hof

MS MKTG Students @ Messina Hof Winery in Bryan, TX

MS MKTG students with Paul Bonarrigo (yellow shirt), son Paul (green shirt) and Manjit Yadav at Messina Hof

Manjit Yadav’s MKTG Strategy students started the semester with a field trip to Messina Hof Winery. And no, they weren’t there to sample the product—it was all business!

MS Marketing students will be working on a semester-long project with Messina Hof as part of their Marketing Strategy course. The project will focus (in part) on developing and implementing a digital marketing strategy for Messina Hof’s expansion into the Fredericksburg area. The implementation of the digital strategy will be done using Google’s Adwords platform.

Paul Bonarrigo, who co-founded the winery with his wife, back in 1983, spoke to the students about the history of the company. His son, Paul, then talked about the current state of the company and where they are heading. Our students did a great job asking insightful questions after the presentation.

The students are excited to be working with a successful company and the people at Messina Hof are looking forward to seeing what the students come up with to help them move the company in new directions.

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Congratulations!

Texas A&M is ranked 8th in the top 10 universities worldwide in a recently-published paper, “Perspective: Ranking of the World’s Top Innovation Management Scholars and Universities.”

Mays faculty members included in the list were Michael Hitt, Venkatesh Shankar (also #8), Sanjay Jain and Xen Koufteros.

-------------------------------Sanjay Jain’s single-authored paper “Self Control and Incentives: An Analysis of Multi-Period Quota Plans” has been accepted for publication in Marketing Science.

Abstract: It is well known that individuals often fail to exert proper self-control. In organizational settings, this can lead to reduced productivity and profits. We use the literature on present biased preferences to model employees' self-control problems and examine how firms can design compensation plans to reduce the negative consequences of their employees' self control problems. Our results suggest that firms can mitigate self-control problems by delaying payment to the employees. This can be achieved by using multi-period quotas (such as annual quotas) to compensate employees on their cumulative performance. While such plans are prevalent in the market, there is little theoretical research which shows when multi-period quota plans can be optimal. The paper provides one potential explanation for the widespread use of such quota plans. Interestingly, we find that such plans may be optimal despite the fact that they encourage more procrastination! We also find that such plans lead to higher effort by the employees and can sometimes improve the welfare of not only the firm but also the employees.

-----------------------------------Shankar, Venkatesh and Jiaoyang Li (2012), “Leveraging Social Media in the Pharmaceutical Industry,” is forthcoming in Handbook of Pharmaceutical Marketing, Min Ding, Jehoshua Eliabshberg, and Stefan Stremersch, Eds., Springer.

The Aggie Advertising Club has nominated marketing student, Ariel Mueller (left), for the prestigious American Advertising Federation’s Stickell Internship program.

This national and highly selective program provides top US advertising students the opportunity to intern with leading national media organizations, advertising agencies, client, or supplier companies.

Aggie Advertising Club Advisor, Lisa Troy, says she is delighted that Texas A&M’s very first nominee for the Stickell program is a student of Ariel’s caliber. In addition to starting and running a successful business while maintaining excellent academic credentials, Ariel has also laid a strong foundation for a career in international advertising. She participated in a Study Abroad program and interned for an Italian agency, meeting with clients and preparing reports in a foreign language. Upon returning from Italy, Ariel became an active member in the Aggie Advertising Club and further advanced her advertising education by pursuing the Department of Marketing’s Certificate in Advertising, participating in AAF-Houston’s annual student advertising competition, and becoming an invaluable member of the Department’s 2012 National Student Advertising Competition Team. We wish Ariel good luck with the Stickell nomination process, but know already that she is poised to make an impact in the advertising world upon her graduation in December 2012.

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Len Berry’s Book Wins Prize in China

Len Berry and co-author Kent Seltman’s book, Management Lessons from Mayo Clinic (2008 McGraw-Hill), was translated into Chinese in 2009. This translation is now in its 17th printing with more than 40,000 copies sold. Some of the honors the book has received in China include:  2009--won the "Excellent Book of Social Science introduced to China in 2009“prize.  2010-- The China Healthcare Ministry specified it as a textbook for young healthcare administrators.  2010--The China Healthcare Ministry held a seminar on the book.

The book also has been translated and published in Portuguese, Russian, Japanese, Arabic, Korean, and Thai.

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Joe Stallard ‘91 --in the Classroom Joe Stallard '91, Senior VP of Human Resources at Sewell Automotive, spoke to both Lisa Troy's MKTG 321 class and Mary Zimmer's MKTG 325 class on February 2. Stallard discussed how the current recession is affecting the emotions of affluent consumers—they’re feeling less confident in the future. When it comes to cars, they are looking for quality, craftsmanship, and service from an auto dealer. They also want to be able to justify their

purchase to others. Stallard described the great (vs. good) service which is provided at Sewell Automotive such as free car washes and loans of new cars.

Joe has visited many classes in Mays Business School over the years. His detailed industry knowledge and keen sense of humor keep his audience engaged. We are always happy and grateful to have him share his experience with our students.

Congratulations A paper by Allan Chen et al. has been formally accepted for publication in the Journal of Marketing. Says Allan, “While I’m thrilled by every acceptance, I’m especially thrilled this time, because when this paper gets in print, I will have published in all four of the major marketing journals (JCR, JM, JMR, and Marketing Science)!” The accepted paper is, “When More is Less: The Impact of Base Value Neglect on Consumer Preferences for Bonus Packs over Price Discounts” by Haipeng (Allan) Chen, Howard Marmorstein, Michael Tsiros, and Akshay R. Rao. Abstract: The interpretation of a percentage change often hinges upon the base value to which it is attached. The authors identify a tendency among consumers to neglect base values when processing percentage change information and investigate the implications of such base value neglect for how consumers evaluate economically equivalent offers presented in percentage terms, such as bonus packs and price discounts. The authors first document a substantial advantage in sales volume for a bonus pack relative to an economically equivalent price discount in a field experiment conducted in a retail store. Further, in a mall-intercept survey and multiple lab studies, the authors provide additional evidence in support of the effect and identify managerially useful boundary conditions for when the effect is likely to be manifested. The article concludes with a

discussion of the theoretical and managerial implications of the findings. ________________________________ The following papers of Mays faculty and doctoral students have been accepted for presentation at the 2012 Marketing Science Conference to be held in Boston in June.

Li, Krista and Venkatesh Shankar, “Sales Force Targeting Strategy Incorporating Social Contagion among Decision-Makers.”

Dotzel, Thomas and Venkatesh Shankar. “Service Innovation vs. Goods Innovation: Effects on Firm Value and Firm Risk.”

Yun, Wonjoo, Lucy Liu, and Venkatesh Shankar.

“Sources and Consequences of Product-harm Crises: Evidence from the Automobile Industry.”

Liu, Lucy and Venkatesh Shankar. “The Dynamic Impact of Product-Harm Crises on Brand Equity and Advertising Effectiveness: An Empirical Analysis of the Automobile Industry.”

Shankar, Venkatesh, Nicole Hanson, and Gary Frazier. “The Effect of Ex-Ante Governance Mechanisms on Distribution Expansion: An Empirical Analysis in the Franchising Context.”

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MS MKTG Students Visit Blue Bell Creamery in Brenham, TX

Smell that country air! Group photo with CEO Paul Kruse and his executive team.

Mr. Kruse enjoys the fruits of his labor with (l to r) Ojus Narawane, Holly Herrera, Heather Robinson, Hung Pham, and Kendall Klinkhammer.

CEO Paul Kruse talks with the group about Blue Bell’s marketing strategies.

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CRS Retailing Career Fair

Former students, now working for Stage Stores, in Houston, recruit at recent Career Fair.

February 1, 2012 CRS sponsored another successful Career Fair.

Participating companies has this to say about the event:      

Overall great experience and will be back! - Walgreens Excellent career fair, professional and prepared students – Tommy Hilfiger Great career fair – HEB Our student host (Kathryn Gaines) was Awesome. – Ross Great student hosts (Kelly Nicholson & Lauren Duhagah)! Very impressive. – David Gardner’s Jewelers Good career event – Autonation

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Center for Retailing Studies The Dynamics of Online Retail: Vicki Spencer, VP of ECommerce, Zale Corp.

For almost a century, American consumers bought goods through the channels of stores, catalogs, and 1-800 numbers. Technology radically transformed this behavior in two short decades. Vicki Spencer helped trail-blaze this change when she assumed the role of VP of ECommerce at Zale Corp in 1999. Her background included a rich education in traditional merchandising principles as a buyer for Macy’s. However, when she was offered the challenge to develop the Zales.com website and online store, she had to read Internet for Dummies before understanding that retailing was evolving into a new era.

Today’s state of online retail is dramatically shaped by Google, Amazon, Apple and Facebook. Customers interact with these brands every day. They may use their iPhones to research products via Google, price shop at Amazon, and poll friends on Facebook before they visit Zales.com to purchase that special pair of blue topaz earrings. These competitors gather enormous amounts of data on almost a billion unique daily users. Retailers like Zale then use this data for Search Engine Marketing and Search Engine Optimization to grab customers combing the web for jewelry deals.

Spencer said online merchants act differently than traditional buyers. Store buyers at Zales manage 2,200 SKUs. They must bring laser precision to inventory because it turns only once a year. Online buyers utilize a “longtail strategy” wherein they sell less of more products; Zales.com offers 15,000 SKUs, including many niche items. Effective customer intelligence allows Zales to convert people looking for unique products into content buyers.

Webstore merchandising tactics differ from brick & mortar store because there is no “buy and wait.” Online merchants set-up their products,

Vicki Spencer and CRS Director Cheryl Bridges

merchandise the website to promote hot items, immediately analyze results, and then optimize merchandise in real time. Spencer believes they exert far more control over the end result of their buying selections. She advised students in Cheryl Bridges’ retail merchandising class to become experts in Microsoft excel. The company compiles endless data reports in excel that the merchants utilize. Spencer also said for students not to be afraid of technology. She joked she often must convince older corporate executives of the web’s value. However, the numbers support her. Because of the rapid adoption of mobile devices, holiday sales surged from 11% online in 2010 to 29% for Valentine’s Day 2012.

Vicki Spencer serves on the Center for Retailing Studies corporate advisory board. Her retailing career began when she took a part-time job at Lazarus Department Store, formerly a division of Federated Department Stores, while working on a PhD in linguistics at Ohio State University. She eventually joined their executive training program, realized a love of merchandising, and became a buyer--effectively ending her academic career!

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News & Updates “The Center for Retailing Studies proudly welcomes fifteen senior executives from H-E-B on Tuesday, February 28 as part of the company’s annual interdisciplinary education day at Texas A&M University. The team of executive leaders will speak to over 2,000 students in departments of marketing, INFO, animal science, agricultural leadership, industrial distribution, and poultry science.

Through this investment of time, energy, and knowledge, H-E-B positions itself as an innovator in all areas of the grocery business. Far from just stocking shelves, professional careers at H-E-B offer students roles in store operations, meat science, consumer behavior, sourcing and supply chain.

The H-E-B leaders who will attend on Tuesday: Scott McClelland, President Houston Division Melissa Mueller, Director of Human Resources for Gulf Coast Region Juan Alonso, Regional Vice President for Houston West Region & Mi Tienda Division Jim Alcock, Sr. Facility Leader for Transportation Jody Hall, Director of Global Sourcing Ron Ozment, Director of Supply Chain Tony Atkins, Unit Director in College Station Mike Newkham, Unit Director in College Station Rich White, Unit Director in Bryan Rob Hall, Gulf Coast Regional Vice President & General Manager Mike Warren, Director of Corporate Merchandising & Grocery for the Houston Division Mike Jarzombek, Vice President of Meat Operations John Sauter, Director of Meat Procurement Derek Kirchner, Director of Product Safety and Quality Assurance Joe Gonzales, Regional Merchant for Market for Houston Division

Aggieland Sales Competition

Advisors’ Corner

Arrangements for the March 2-3 event are coming along very well… we have 13 sponsor companies and 66 students signed up to compete. And the prize money has increased substantially this year. For more info go to: salescontest.tamu.edu

Leslie spent much of February helping students get ready for the career fairs. She also prepared materials for, and promoted the Marketing Department at Aggieland Saturday on February 18.

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Rocky LaRoche, Victoria Acuff, Skylar Collins and Lulu Chen present a memorial wreath on behalf of Texas A&M, in front of Dachau Concentration Camp Memorial in Munich, Germany.

Somber remembrance highlights study abroad

By Kelli Levey • Mays Business Online One stop during a four-week excursion through eight Western European countries turned into a spontaneous memorial ceremony at the Dachau Concentration Camp Memorial outside Munich, Germany. Eighty students participated in the Marketing Study Abroad Program, led by Steve McDaniel, professor of marketing, and Chuck Tomkovick, visiting professor of marketing at Texas A&M. The day before the visit a four student team (Victoria Acuff, Lulu Chen, Skylar Collins and Rocky LaRoche) gave a presentation on Dachau to the entire study-abroad group. For the presentation, the Dachau student team enlisted marketing student Lauren Machol to describe her grandfather’s experience there during World War II. Lt. Col. Fred B. Machol, was part of the U.S. Army forces that entered the camp on the second day of

its liberation. The students decided to take up donations for flowers to leave at the site, and raised over $100.

Lauren Machol’s visit to Dachau, the first German concentration camp and the model for others, was particularly memorable for her. The four student team spoke again about Dachau, and Skylar Collins delivered a moving tribute to the thousands who had died there. And again, Machol read some of the words her grandfather had written some 65 years earlier, “I saw more than I can forget,” Lt. Col. Machol wrote. Those young travelers understand. Lauren laid her own bouquet of flowers as a tribute to her grandfather, who died just a few months before the trip. She included a photograph of him taken during the time of his Army service.

The spontaneous ceremony ended with the students laying their wreath of flowers at the base of the Dachau International Monument as a memorial tribute from Texas A&M University to the thousands of people who died there.

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McDaniel says it was a very emotional time as the students laid the wreath and as Collins made her presentation. “I was so proud of our Marketing Study Abroad students for all chipping in money to buy the flowers,” he says. “I had to wipe tears from my eyes during the student team’s presentation to our group the day before and also at the site. I was touched by the reverence shown by our students. They truly wanted to honor all those who died at Dachau and in the Holocaust.”

Victoria Acuff holds a photo of Lt. Col Fred B. Machol, a member of the liberating force at Dachau whose granddaughter, Lauren Machol, was one of the Study Abroad students.

Collins, a graduate student in sports management who received a bachelor’s degree in marketing, calls the visit to Dachau “a surreal experience.” She describes the visit: To walk the grounds of the first concentration camp, the camp that served as a model for places where so many innocent people lost their lives, is indescribable.

As I walked through the camp, enclosed by the fences, I could feel a presence in the place. I could feel the heaviness of the tragedies and

atrocities that occurred in this place. Pictures of some of the prisoners hung in the main building, with descriptions of why they were there hanging below them. They were political opponents, Jews, Gypsies, homosexuals, etc. These were people that we are surrounded by daily. They were taken from their families, stripped of their possessions, and ruthlessly tortured and murdered because they were different.

The most chilling experience that day came when we walked over to Barrack X--the gas chamber. The original gas chamber was still standing, but as the number of prisoners grew, a second, bigger gas chamber had to be built.

When I first walked into this building, my heart and stomach dropped. I could feel a weight just land on my shoulders. I couldn’t help but think about the number of people who had lost their lives in this very place where I was standing at that moment. The crematorium was in the room right next to the gas chamber. The ovens were still in the room. Plaques on the wall described how multiple bodies were stuffed in this oven.

They burned nonstop day and night.

Prisoners at the camp were made to burn the bodies of their fellow prisoners and clean out their ashes. Some they knew, some they didn’t. Either way, I couldn’t imagine having to do that – wondering if the next day, would it be my body that is being crammed in this oven, never to return home and be buried by family? On the walls of the crematorium were pictures of bodies piled on top of each other in that very room I stood in. They hadn’t had time to burn all of them before the liberating troops took control of the camp. I can’t even begin to imagine what these people endured while at these camps. Visiting Dachau is an experience I will never forget, and one I’m glad I was able to experience.

We want to include your news items in the next issue. Please submit them to Laurie Marshall at lmarshall@mays.tamu.edu,

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