Transformative Data Initiative

1. Transformative Data Initiative

2. Bryan Maach

3. Transformative Data Initiative: Objective Faculty Ideas Board Firms Data Novel, Useful Insights from In-Depth Research

4. What types of data? • Existing primary data • Existing syndicated data • Additions to existing projects • Access to existing panels • Creation or purchase of new data • Access to managers Confidentiality, publication issues discussed up front

5. Benefits to board firms • Engage with world-renowned faculty • Further leverage investments in data • Examine long-term issues and approaches that may not be examined otherwise

6. Benefits to faculty • Access data that will be impossible or inordinately expensive to access otherwise • Engage with top firms to develop, refine ideas • Conduct impactful, relevant research

7. What do the faculty do? An introduction…

8. Rohini Ahluwalia- Negative advertising - Decision making- Branding and advertising - Persuasion- Negative information effects in the marketplace - Political advertising • Branding • Brand extensions, e.g. cross-cultural issues • Brand loyalty and brand attachments • Extent to which these are driven by factors such as ethnicity, gender, nationality, attachment style • Possible hypothesis: Consumers with an interdependent self-construal may also be more loyal

9. Rohini Ahluwalia- Negative advertising - Decision making- Branding and advertising - Persuasion- Negative information effects in the marketplace - Political advertising • Negative publicity • Which brands, in what product categories, are most likely to be influenced by product recalls? • How long and to what extent are sales likely to be influenced? • What is the role of brand equity? Does strong equity help or hurt in this regard? • Recovery period: • Factors that influence it • Pre-recall advertising, company's response, brand positioning, media coverage, etc.

10. Mark Bergen- Pricing - Gray markets- Private labels and store brands - Channels of distribution- Cooperative marketing - Marketing strategy • Pricing capability • Measuring capabilities • Building capabilities • Assessing returns on investments in capability • Organizational barriers • Why it is so hard to get organizations to price effectively?

11. Mark Bergen- Pricing - Gray markets- Private labels and store brands - Channels of distribution- Cooperative marketing - Marketing strategy • Price rigidity • Costs of adjusting prices • Price flexibility

12. Mark Bergen- Pricing - Gray markets- Private labels and store brands - Channels of distribution- Cooperative marketing - Marketing strategy • Gray markets and counterfeit markets • Why and where • Measuring • Managing

13. Rajesh Chandy- Innovation - Technology management- Product development - Marketing strategy- International business • The new dynamics of multinational innovation • Why are some firms more successful at managing innovation across geographic subsidiaries? • What to do where? • Business model innovation • Why is it so hard to respond to business model innovations?

14. Rajesh Chandy- Innovation - Technology management- Product development - Marketing strategy- International business • Marketing to the Street • Are some firms and managers better at communicating with Wall Street than others? • Who should say what? How? • The stock market impact of product failure • Analogies: How analogies drive management thinking, actions, and performance

15. Tony Cui- Competitive strategy - Distribution channels- Pricing - Behavioral economics - Trade promotions • Pricing Strategy: How do consumers' concerns about price fairness affect firms' pricing strategies?

16. Jane Ebert- Decision making - Inter-temporal choice and temporal discounting - Affect prediction • Long Term Goals: When and how do people initiate long-term goals such as starting to eat more healthily, changing savings habits, and investing in money-saving devices for the home? • Objective: Explain systematic variation in goal initiation.

17. George John- Industrial marketing - High technology markets - Marketing of intellectual property - Technology markets - Marketing channelsProkriti Mukherji- Models of learning through marketing communication - High technology marketing - Technological innovation - Marketing strategy - Pharmaceutical industry innovation - Business to business marketingOm Narasimhan- Innovation and competitive advantage in high technology markets - Competition - Pharmaceuticals- Pricing - Channels of distribution

18. George John, Prokriti Mukherji, Om Narasimhan • Dynamics of private labels: • Why does a retail firm enter the private labels market and in which categories? • The relative emphasis of private versus national brands • The supply side- who makes these for the retailer? Is the reason over-capacity? Wouldn’t a national brand firm not be concerned about diluting its brand name with lower- priced private label brands? • Does the consumer know or care about the retailers’ brands? How do these brand perceptions enter into choice? • Carryover or spillover of brand perceptions from one private label in one category to another category

19. George John, Prokriti Mukherji, Om Narasimhan • How does a firm target or match customers with channels? • How does the pricing structure work with multiple channels? Does the customer generally pay more for service-intensive channels? • How does the retailer balance margins across two channels, particularly when one channel is a higher cost (higher service) channel? • How do we manage free riding by one channel on the other channel’s services? • Can we really segment customers by channels? Or is it more a case of segmentation by purchase occasion? • Are some product categories more amenable to online selling than others? Is there a trade off between categories online and off line and how does the retailer’s profit maximization work? • Some advisory board firms (e.g., Best Buy) have been redesigning stores based on their customer segmentation strategies- does that carry over to online and how does that affect profits?

20. George John, Prokriti Mukherji, Om Narasimhan • Buy back, Resale, and Service Programs, particularly in short lifecycle items • Do short life cycle durables (e.g., video games) represent different pricing and trade-in challenges relative to long life cycle durables (e.g., appliances)? • How should a retailer market the traded-in item? Resell in-store, resell to 3rd party outlets?

21. George John, Prokriti Mukherji, Om Narasimhan • Sales Compensation Plans: • Productivity of different sales compensation plans (salaries vs. commissions vs. mixed) across product categories and market situations • Productivity of group commissions versus individual commissions

22. Akshay Rao- Advertising - Pricing- Branding - Judgment and decision making - Gas prices - Cultural issues in marketing • Cross-Cultural Consumer Behavior:Understanding the influence of brand information on consumers' price sensitivity across cultures. • Low Introductory Prices as Signals of High Quality:Can a firm communicate that its product's unobservable quality is high by charging a sub-optimal price? Under what circumstances will such a strategy be credible and not misperceived as a desperate attempt to dispose of excess, low-quality inventory?

23. Akshay Rao- Advertising - Pricing- Branding - Judgment and decision making - Gas prices - Cultural issues in marketing • Bonus Packs versus Price Reductions: An enduring finding in the literature is that consumers are bad at math. They make mistakes when presented with multiple percentages (e.g. a 20% discount + another 20% discount is calculated as 40% off, when it is actually 36% off). • What happens when consumers are confronted with quantity increases or decreases (50% More!) versus price decreases or increases (33% less) which are economically equivalent? Do they choose the numerically larger value? • What implications does this have for pricing, the presentation of numerical information (whether it be to consumers or Congress), etc.?

24. Akshay Rao- Advertising - Pricing- Branding - Judgment and decision making - Gas prices - Cultural issues in marketing • Brain Imaging: Examining the cognitive neuro-science basis for biases in consumer judgment and decision making. • How do consumers process mixed outcomes (regret due to a foregone options and satisfaction due to the option chosen)? • How do different parts of the brain process different emotions (sadness versus anger) and resolve conflict between mixed emotions? • Political Choice: What is the role of brand information and message content in persuading uninformed and uninvolved voters in national elections? • Does the candidate's "brand" influence the party brand perception or vice versa? • What is the impact of local and state races on national races, and vice versa?

25. Joe Redden- Satiation with repeated experiences and the reduction of satiation- Influence of multiple categories on judgments- Effects of complex price formats on perceived cost and product choice • Recovery from satiation • How do consumers spontaneously recover from satiation? • Ad wearout • How does the “optimal frequency” of ads vary across consumers and contexts? • Perceptions of serving sizes • “Whole” vs. “individual” processing • e.g., how does variety of assortment affect perception of serving sizes?

26. Joe Redden- Satiation with repeated experiences and the reduction of satiation- Influence of multiple categories on judgments- Effects of complex price formats on perceived cost and product choice • Two-part pricing plans (e.g., flat fee + overage) • Consumer use of short-cuts • Systematic biases in consumers’ cost estimates

27. Carlos Torelli- Global branding - Cross-cultural consumer behavior - Self-regulation - Persuasion • Iconic Brands: Little is known about what it means to be an “iconic brand.” • Are American iconic brands those that American companies introduced a long time ago (e.g., Levi’s jeans)? • … brands that American companies make better than others (e.g., Nike shoes)? • … brands that remind us of our childhood and family roots (e.g., Cheerios)? • … or brands that remind us of our American heritage (e.g., Ford automobiles)? • Objectives: • Define “iconic brand.” • Learn what it takes for a brand to reach an iconic status

28. Carlos Torelli- Global branding - Cross-cultural consumer behavior - Self-regulation - Persuasion • Cross-cultural preferences for brand values (e.g. sincere vs. ambitious brands) • Objectives: • identify dimensions of brand values that hold across cultural boundaries • uncover cross-cultural preferences for brand value dimensions • help marketers in design communication efforts across cultural and ethnic boundaries

29. Kathleen Vohs- Self-regulation - Dieting and disordered eating - Problems with spending - Self-processes such as self-esteem - Heterosexual sexual relations as predicted by economic principles • Self control and consumer behavior

30. Transformative Data Initiative • Exciting opportunity • Great fit with Institute goals • We can help initiate the connections

31. Excerpts from minutes – additional information about research and opportunities • Transformative Data Initiative: • The Transformative Data Initiative (TDI) grew out of a conversation with Bryan Maach, our advisory board member from Cisco. During a periodic call with Maach, he mentioned that Cisco has been collecting a lot of very expensive data from marketing research studies, and they feel that they could be getting more out of that data. There’s some analysis done with the data, but then it’s just shelved. Cisco is only tapping the top layer of their data. This got Rajesh Chandy (Carlson School) and others thinking about the fact that academics are always seeking data, and companies are always spending a lot on getting data – perhaps we can pull those together. • In point of reference, Mark Bergen (Carlson School) shared an experience with his own research in price rigidity. In class he lamented the paucity of data on the cost of price adjustments, repeating the common wisdom (at the time) that “no one knows” the true cost of these adjustments. A student pointed out that his own company was selling electronic shelf price tags and had actually collected data on that very question – it was old data they no longer needed, but it turned out to be the very first data ever collected in this area. Those figures became formative for pricing research; literally sitting in a student’s company’s files were the answers to one of the most fundamental economic pricing questions. Chandy added that, while the research Bergen and his co-authors published became defining for their own careers, the story also added value to the company’s credibility and raised their profile.

32. Excerpts from minutes continued: • Types of data and help our faculty generally need, other than money, include: existing primary or syndicated data, additions to existing projects and panels (such as adding two or three questions our researchers are interested in to a current study underway at a company), creation or purchase of new data, or access to managers. Confidentiality can be ensured through NDN agreements, “disguising” of the data, etc. In this collaboration, companies will be able to further engage with the faculty, leverage investments they’ve already made in data, and examine long-term issues and take approaches that might not otherwise be examined. Our faculty, meanwhile, will get access to data that would be impossible or prohibitively expensive to access otherwise, engagement with top firms to develop and refine ideas, and the ability to conduct impactful, relevant research. Our Ph.D. students, also, would be expected to benefit from access to corporate managers. • Chandy then reminded the board that they had acknowledged previously that they might have data to share, but did not know what the faculty were currently working on (rather than what they’ve already finished and published). To that end, the faculty have provided small introductions to some of their current projects (Slides included in the TDI presentation). • Rohini Ahluwalia: “negative information.” Well known in the field for work on negative information, branding and cross-cultural issues, and brand attachments, Ahluwalia has two current projects. The first is on addressing consumers in “interdependent” societies (like China) and their brand loyalty. A second study focuses on brands which have weathered negative publicity (such as after a recall). How much and how long will negativity affect a brand? How is that affected by brand equity? In this case, data on a brand that a company was tracking both before and after negative publicity would be very helpful. • Mark Bergen: “pricing.” Bergen addressed the board to talk about his research team, including an economist and a sociologist, and their field work. They have published on pricing as a strategic capability and are considering why it is that it’s so hard to get organizations to price effectively. Finding a company that would allow a sociologist to observe their attempts to build pricing capabilities so that they can see both the rhetoric and the reality would be great; the researchers can provide scorecards for companies to measure their effectiveness in return. Jim Henney (Wells Fargo) pointed out that private companies are very interested in pricing questions, in part because surveys always show price as a major determining point for customers, but then that doesn’t play out in real-world scenarios. Ideally, sharing data would allow Bergen’s team to measure a qualitative study against real data to answer questions and help learn the role of pricing in consumer behavior. Other work Bergen is doing currently is on gray/unauthorized markets and how companies measure and address them. Bergen has written a white paper with an Institute Advisory Board member company already, seeking insights on the best approaches to gray markets to preserve your brand and your profits.

33. Rajesh Chandy: “innovation.” Chandy introduced five current streams of research: multinational innovation, business model innovation, “marketing to the Street,” stock market impacts of product failure, and analogies as drivers of change. “Marketing to the Street,” which addresses how companies approach their conference calls with stake holders, generated a lot of discussion, with Chandy discussing how psycholinguistics allows for an interesting analysis. In a recent paper, Chandy and his team were able to evaluate share holder letters from CEOs for future-oriented phrasing and accurately predicted innovation for up to 5 years from that measure alone. He’d like to extend this work. Sherman Black (Seagate) pointed out that there is a big trend toward looking at short-term predictions over long-term ones, with Pat Hughes (GfK) adding that a number of large retailers have decided to stop reporting this year’s earnings versus last year’s. Chandy said that the extent to which CEOs quantify information does seem to be an early indicator of companies who don’t do very well in future investments and innovation. Focusing on certainties takes away from the possibilities of uncertainty. One more research stream Chandy is pursuing involves the use of analogies in trying to drive change. • Tony Haitao Cui: “fairness.” Cui has published recently on the impact of fairness on markets and channels, but now he plans to study consumers and fairness. • Jane E. J. Ebert: “consumers and time.” Ebert’s research sets out to explain systematic variation in goal initiation, particularly in terms of long-term goals. Jane’s research was one of the projects funded last year by the board. • George John, Prokriti Mukherji, and Om Narasimhan: This team of professors is working together on a series of projects, including the dynamics of private labels (which Schroer, Hughes, and Bergen point out is an anachronism which would be better replaced by “store brands) vs. national brands. A second stream of their research is on how companies and consumers handle the complications that arise with multiple marketing channels. G. John says that the question can seem trivial, but it’s an enduring puzzle that companies pursue multiple competing channels, even when one is demonstrably “better” than another.

34. George John et all continued: • Bergen points out that there is very little data on this question – there’s some good theory out there, but almost no data to actually analyze, and G. John has been one of the few researchers to get into these complex issues and come up with real data on questions of marketing channels. Chandy further explains that marketing is an applied field, and that Bergen and G. John have had major impacts on the basic field of economics, G. John in applying real-world data against marketing channel questions. It’s a case in point—that marketing researchers long for the data the business world has, that the questions are common, but the sharing of the data connection just hasn’t been made. Bergen further states that some projects are better studied through an entire channel – if a faculty member could get a full series of companies on our board to study a product in a shared way from manufacturer through to retailer (say, Cargill to General Mills to Supervalu to Target), it would be a dream project and form a defining data set for coming decades. Jim Henney (Wells Fargo) asks about the optimizing the marketing mix. G. John says that there is a lot of active research in that area, but he doesn’t know of any current ones within our faculty group. Mukherji is, however, working on the direct-to-consumer advertising in the pharmaceuticals industry. Chandy also says that there will be non-Carlson School academics speaking at our May conference, so that’s an important resource for the board. Bergen elaborates that we have a lot of people in our department teaching marketing communications and in the psychology field, so that’s a good portion of addressing the “mix,” and that we have some defining researchers here on integrated marketing communications work. Depending on the cross (some people are promotion and price, some are product and price, etc.), you could put together a great consortium with even just a few of our faculty members.Another stream of research G. John, Mukherji, and Narasimhan are pursuing is on buy-back and resale programs, and G. John says that they are “desperately” looking for data on it – there simple isn’t much syndicated data in this area. G. John is also an expert on compensation plans and wants to address how you get people to do things that are uncertain and where it’s tough to measure the uncertainty. • Akshay R. Rao: “cross-cultural issues.” Rao is working on price-sensitivity cross-culturally; if you prime people with an American icon (e.g. Statue of Liberty) vs. an Eastern icon (e.g. Taj Mahal), their behavior around pricing seems to change. Show them the western icon, and they’re more likely to pay for expedited shipping. How does that work? Rao has also done seminal work on putting data to signaling theory – the role of signals, such as high price, in signaling quality. His work seems to show that low introductory prices actually suggest high quality; how can marketers exploit that? More of his current work is on consumers’ failure to do calculations correctly, fMRI and decision making issues, and emotional vs. rational decisions by consumers.

35. Joe Redden: “satiation.” One of our two newest hires, Redden works primarily on questions of satiety. A brand can be reliable, but also boring; how do we get consumers to recover from satiation and find a brand new and exciting? He also works on ad wearout – if three is the optimal number of exposure for TV ads, how does that work with internet ads? Other streams of research for Redden are on perceptions of serving sizes and two-part pricing plans. • Carlos Torelli: “iconic brands.” Torelli says that we think of brands as symbols, but symbols of what? He is studying iconic brands, their cultural symbolism, and how that works in a global market. Does iconicity create brand affinity? Torelli wants to see worldwide data for one company against its marketing position. Schroer suggests a book called The $100 Billion Allowance: How to Get Your Share of the Global Teen Market (Elissa Moses, 2000), which addresses some similar questions, and offers to hook up Torelli with the author. In a second area of study, Torelli seeks to find out what measures we can use to study people’s brand values cross-culturally (i.e., “Rugged Individualism” means something in the U.S., but is a useless measure in India; researchers need to find apples-to-apples comparisons). Torelli would be willing to work with companies to create these measures for them. Hughes discussed the brand potential index (BPI) that GfK and argil use, and says that she thinks that they have some BPI research data that they could easily let Torelli use. They’ve found that brands with higher BPIs have higher share values over time than those with lower BPIs. Proprietary indices, Torelli mentions, often aren’t accessible to researchers, so this information would be very helpful. Hield added that Cargill is looking to extend their BPIs to Europe. • Kathleen D. Vohs: “self-control.” Vohs is one of the Carlson School’s most prolific researchers and works broadly on the topic of self-control.