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Spring 2012

Letter from the Director

Wayne Mueller

Recently, incoming University of Minnesota President Eric Kaler selected the Carlson School of Management's Marketing Department, which includes the Institute, as one of only a few departments he wished to review. The department's review presentation highlighted our faculty research in various areas of marketing, the history and mission of the Institute, and our engagement with the Institute's corporate members. President Kaler's vision for the University includes outreach and engagement of faculty research with the corporate business community and he sees the Institute and the Marketing Department as models of that vision.

Changes in the leadership of the Carlson School have impacted the Marketing Department, and we are proud to announce that our former Marketing Department Chair George John was selected to become our new Associate Dean of Faculty and Research. George will report to newly elected Dean, Sri Zaheer. The Institute is proud that George was selected as he was an outstanding Marketing Department Chair who led, hired, and retained the excellent research faculty team with whom many of our Institute members support and interact with in their business environments. He also provided excellent support and guidance to me in my role as Director of the Institute.

We are also proud to announce that Professor Barbara Loken was selected as the new Chair for the Marketing Department. Barbara has been at the Carlson School for over 30 years and is widely noted for her research in the areas of brand management and consumer psychology. She has led our Marketing PhD program and has the leadership skills to continue our path of excellence in research engagement and involvement with our Institute members.

We are pleased to welcome Ashley Dziuk to the Institute as the new program coordinator. Her experience in non-profit marketing and event planning, along with her degree in journalism, will re-energize our efforts in community outreach and promotion. We look forward to incorporating her fresh perspective into the Institute's daily routines.

In the articles in this issue we hope to revitalize you with new research in brand extendibility, stereotype threat, brand matching, mortality cues on consumerism, and fairness in distribution channels. We hope you enjoy what you read and that you will continue to visit our website for more.

Best wishes,

Wayne G. Mueller
Director, Institute for Research in Marketing



Q & A with new Marketing Department Chair Barbara Loken

Barbara Loken

Barbara Loken, recently appointed Chair of the Marketing Department, brings over three decades of professional academic practice to her new post. She is both a professor in the Marketing Department and an adjunct professor in the Psychology Department. Loken is a recognized expert in the fields of branding, consumer psychology, and social and health marketing. She received her PhD in social psychology at the University of Illinois, her MA in psychology at New York University, and her BA in psychology at the University of Minnesota.

Barbara Loken

1. What excites you most about the Marketing Department?

I am very enthusiastic about the exceptional quality of research accomplishments in the Marketing Department. Our department was selected as one of those on campus that was visited by University of Minnesota President Eric Kaler in order for him to learn more about our research and outreach programs. In preparation for our presentations, we collected a great deal of information about our research accomplishments, and based on our findings, added these to our department website as well. For example, year after year, the Marketing Department ranks in the top five public universities in the nation in terms of our productivity in the major academic marketing journals. We have exceptional junior faculty and our more senior faculty also are impressively productive. The rankings are trending upward, which is also a great sign, so we are very proud of our productivity. Research is, of course, important in that even theoretical findings can eventually work their way into the day-to-day marketing of products and services.

2. What is your vision for the department?

My vision for the department is for faculty to continue their record of accomplishment but with sufficient resources to continue to conduct high-quality research in a number of different venues. We are excited that some of our doctoral students and faculty have mutually beneficial relationships with companies in terms of research projects and we appreciate the assistance in funding by companies for those efforts. We look forward to more of these mutually beneficial relationships with our Institute Board members. Even when joint research projects are not undertaken or feasible, however, we gain tremendously by listening to our Board members' interests and experiences in their companies. For example, hearing about the Wells Fargo brand changes from Susan DeFranco at the last Advisory Board meeting was fascinating!



Advisory Board

Jim Hield retirement

A special thank you from the Institute for Research in Marketing to Jim Hield, vice president of Marketing Services, who recently retired from Cargill after 33 years in marketing. Jim was an inaugural member of the Institute Board and we thank him for his many contributions to our mission here at the Carlson School.

ADVISORY BOARD

David Kristal Augeo Affinity Marketing
Drew Panayiotou Best Buy Co., Inc.
Paul Hillen Cargill, Inc.
Julie Moore Ecolab
Dave Euson G&K Services
Jeanine Bassett General Mills
Michael Jonikas Polaris Industries
Brent Sherwin The Schwan
Food
Company
To be appointed Target
David Mucha UnitedHealthcare
James S. Henney Wells Fargo
ACADEMIC REPRESENTATIVES
David Hopkins
George John
Akshay Rao
Robert Ruekert
INSTITUTE STAFF
Wayne G. Mueller Director
Ashley F. Dziuk Program Coordinator

New Advisory Board Member: Paul Hillen

Paul Hillen

Paul Hillen was appointed to the position of vice president of corporate brand and marketing for Cargill globally in December of 2011. He has responsibility for managing and building Cargill's brand globally, and for building the marketing capability and services of Cargill. This appointment is in addition to his other role of global growth leader for Cargill's Food Ingredients and Systems businesses. In this role, he is responsible for the global growth portfolio, innovation system deployment and execution, and marketing capability for Cargill's $35 billion food ingredient and systems businesses, including consumer packaged goods and foodservice.

Hillen currently chairs Cargill's corporate Marketing Council; and is a faculty member of the Cargill Marketing Academy and the Cargill High Performance Leadership Academy. He also sits on the University of Chicago Booth Business School's Advisory Board for the Kilt's Center for Marketing. He is a regular guest lecturer at the University of Chicago (Booth), Georgia Tech, and University of Minnesota (Carlson) schools of business/management.

Hillen previously held the position of president of the Cargill Food Systems Business Unit and the position of vice president of marketing for Cargill's Food Ingredient and Systems Businesses. He joined Cargill in 2001 as the vice president of marketing and sales for the Food System Design businesses. Prior to joining Cargill, Hillen spent 15 years at Procter and Gamble. At P&G, he held positions in sales, sales management, brand management, and general management, leading the beverage business just prior to joining Cargill. He worked on the Folgers, Millstone, Crisco, Hawaiian Punch, Sunny Delight, and Pringles brands among others while at P&G; and ran P&G's soft drink bottling business.

Hillen recently served on the board of directors of Integrated Bakery Resources, Inc., and has served on other non-profit and for-profit boards in the past.



Research Highlights

Mortality Cues and Consumerism
Looking through the lens of a life history approach

Vlad Griskevicius

People make decisions each day that have both immediate and long-term effects. Going out to lunch every day this week might bring you pleasure now, but you'll have less money to put into savings for later. Exercising at the gym might feel time consuming in the moment, but a healthy lifestyle could help extend your life by years and ward off significant future ailments.

Why do some people live in the present while others build a future? What makes some people risk takers, and others more conservative? And, why will two people react in completely different ways in response to the same event? Assistant Professor Vladas Griskevicius suggests in his article, "The Influence of Mortality and Socioeconomic Status on Risk and Delayed Rewards: A Life History Approach," published in the Journal of Personality and Social Psychology, that our diverse reactions to threatening circumstances might all be based upon our upbringing.

Griskevicius and other researchers conducted a study that presented participants with an article to elicit a feeling of threat, depicting trends toward death and violence. Then participants were given an assessment to measure their willingness to take risks. For example students were asked questions like, "Would you like $550 for sure, or a 20% chance to get $1,000?" Participants were also asked about their socioeconomic background as children and their current socioeconomic situation. The results showed that participants with a perceived lower socioeconomic status during childhood exhibited significant affinity for risk after the mortality cue. Interestingly, this was a much stronger predictor of risk taking than their current socioeconomic status.

People inevitably face tradeoffs in pursuit of certain goals. If a person grows up in a relatively safe and predictable environment where resources are plentiful, that person will adopt a slower life strategy to maximize benefit of those resources. Meanwhile, if a person grows up in an unstable, resource-scarce environment, his or her investment in an unknown future seems riskier; the investment could be wiped out by unforeseen circumstances. Thus, it makes more sense to them to adopt a faster life strategy.

"For individuals who grew up relatively poor, mortality cues such as a natural disaster or terrorist attack lead them to value the present and gamble for big immediate rewards," Griskevicius said. "Conversely, for individuals who grew up relatively wealthy, mortality cues lead them to value the future and avoid risky gambles."

In application, this research could help guide the strategies of marketers who might promote continuing education or saving for retirement. Consumers who grew up poor will be less likely to invest in their health, education, and their savings accounts if the message paints a picture of uncertainty, whereas the opposite will happen for consumers from a privileged upbringing.


Brand Matching
Consumers enjoy coordinated products more

Redden

Imagine a typical trip to the grocery store. You move from aisle to aisle, selecting the brands you prefer the most. You might choose Tropicana orange juice over Minute Maid, and Sunbeam over Wonder bread. Marketing research suggests that brands help a consumer maximize utility, and the more you like a brand, the more you will enjoy that brand's products.

But, something strange happens when you arrive at chips and salsa. Independently, your favorite chips are Tostitos, and your favorite salsa is Pace. You pick out your Tostitos chips first. When you select your salsa, you find yourself grabbing for the Tostitos brand salsa this time to complement your chips selection. What might motivate consumers like you to choose a product they might prefer less? And, will they actually enjoy it less? Assistant Professor Joseph Redden has the answer.

"Branded products are not always consumed in isolation," Redden said. "Some products are experienced in concert with other products such as ice cream and hot fudge, televisions and surround-sound speakers, razors and shaving creams, designer shirts and slacks, shampoo and conditioner, even makeup. Consumers enjoy matching brands because they infer these items were specifically designed to go together."

This means that the selection of a certain product is often dependent on the other product or products with which it is meant to be enjoyed.

In an initial study, participants were asked to rate how well they thought different laundry detergents would work with different fabric softeners. Participants rated matching brand combinations such as Gain detergent and Gain fabric softener higher than mismatched combinations such as All detergent with Gain fabric softener. Researchers achieved the same results across several product categories including toothbrushes and toothpastes, chips and dip, and mp3 players and headphones.

"It's not just that consumers prefer coordinated products over mismatched products," Redden said. "They actually enjoy the experience of consuming the matching products more."

This research has significant implications for marketers. It puts the consumption of a product in context of the combinations in which it is consumed. Preference for a specific branded product becomes harder to define. For example, a customer might only prefer Hãagen-Dazs chocolate syrup topping if he or she has already selected Häagen-Dazs ice cream first. Additionally, it helps marketers to easily increase the satisfaction of their products by promoting the combined consumption. A customer will enjoy the experience of new Sony speakers if he or she pairs them with a new Sony television. Lastly, brands take on a new signaling role as product coordinators, ensuring that branded goods go well together.


Playing Fair
The effects of fairness between manufacturer and retailer in a channel

Cui

While existing research suggested that concerns for fairness could significantly affect the healthiness of a channel relationship, Assistant Professor Tony Haitao Cui and PhD candidate Paola Mallucci knew the literature didn't go deep enough. Their paper, "Fairness Ideals in Distribution Channels," studies whether and how concerns of fairness may affect the interactions between manufacturer and retailer in a channel. This information has valuable applications for building and managing healthy and strong channels of distribution which affect not only the companies in the channel, but the consumer as well.

As there is more and more social pressure to "play fair" in society, companies are paying more attention to fairness concerns within and across channels. The global effort of Fair Trade is a successful example that urges dominant retailers to treat their suppliers of raw materials, such as coffee farmers, in a fair way. It has also been shown that playing fair can bring economic benefits to the firms in a channell.

"So playing fair will satisfy both the social needs of being a fair player in the society and economic needs firms have of making more profits," Cui explained.

In their new research, Cui and Mallucci focused on how equitable payoffs are determined in the fair channel, and they proposed a new principle of fairness based on their empirical studies. They provided an estimation of fairness parameters in a channel context. The results suggest that there are significant fairness concerns in distribution channels. In particular, players are adverse to both advantageous and disadvantageous inequities, but they display a greater aversion for disadvantageous inequity than for advantageous inequity. Their research is trying to offer some insights into those important issues through both theoretical and empirical studies.

It is suggested that both inclinations for social preferences and bounded rationality (the idea that decisions are affected by the cognitive limitations of decision makers) affect firms' pricing decisions. This implies that deviations in players' pricing decisions from predictions of the standard economic model are not entirely due to errors in their decision making. Concerns for fairness do significantly affect firms' decisions, even after bounded rationality is considered.

"The understanding of channel members' understanding of equitable payoff, i.e., what is a fair deal for channel members, is of importance to maintaining a harmonious channel relation," Cui explained. "However, it is still not very clear in the literature about how such a social norm is formed and what factors may influence fairness concerns and firms' equitable payoff, i.e., the fair proportion of the total pie a firm deserves to have."

The newly proposed principle of fairness — the sequence-aligned ideal — is studied for the first time in the literature. This newly established ideal reflects the concept that the equitable payoff for the retailer is in agreement with the ratio of players' profits reflected by the power structure of the channel. Based on their results, the power structure does affect the impact of fairness concerns on the dynamics between firms in a channel. It is perceived as "fair" for the more powerful firm (the manufacturer as a Stackelberg leader in their model) to obtain a higher payoff than the less powerful firm (the retailer as a follower.) The average consumer is affected significantly by this.

"The way firms deal with each other in a channel can well affect how the retail price is determined, which will certainly affect both consumer surplus and social welfare," Cui said. "In addition, the brand image a firm has due to the adoption of fairness-related strategies can also affect consumer behaviors in their purchase decisions."


Extending Culturally Symbolic Brands
Testing culturally congruent products vs. incongruent products

Torelli Ahluwalia

Think of these brands for a second: Corona, Sony, and Armani. Each brand evokes the very DNA of its country of origin. Corona is recognized as a Mexican brand while Sony is associated very closely with Japanese culture and identity. Many well-known brands become symbols or icons of the cultures or countries with which they are associated. Marketing professionals that tap into that cultural identity can build iconic brands with the expectation of being rewarded with stronger market-leadership positions and higher levels of brand equity.

But, how does a brand's status as a cultural symbol influence its ability to leverage its brand equity through product extensions? Carlson School researchers Carlos Torelli and Rohini Ahluwalia investigate this very question in an article published in the February issue of the Journal of Consumer Research: "Extending Culturally Symbolic Brands: A Blessing or a Curse?"

"Cultural symbolism is a critical issue for brand managers. Brand extensions are an important avenue for growth in today's highly competitive marketplace, but extension failure rates are known to be as high as 84 percent," Professor Ahluwalia said. "Any strategy for leveraging a brand's equity to launch a new product could make a difference in the success or failure of the extension."

The experiences that people have with a particular culture - whether direct or indirect - serve as building blocks for an understanding of that culture. Those building blocks are made up of the culture's perceived values and beliefs. For example, images of Superman and the Statue of Liberty evoke an American cultural schema. Well-known brands and products can become part of this schema, adding nuance to the perception others hold of a culture.

"Consequently, the presence of one culturally symbolic brand can affect how we feel about another culturally relevant product," Assistant Professor Torelli explained. "If the extension product category matches the cultural knowledge we have in mind, by also being associated with the same cultural schema, we feel more at ease with the product and are more likely to buy it. In contrast, when the extension product category symbolizes a different cultural schema, the simultaneous activation of incongruent cultural schemas by a brand extension is likely to generate a feeling of unease, resulting in a lowered extension evaluation."

To test this theory, researchers asked participants to react to and evaluate potential product extensions for the culturally symbolic brand, Sony. In this particular study, participants reacted more favorably toward the idea of a Sony electric car (both Sony and electric cars are associated with Japanese culture) than a Sony cappuccino maker (Sony brings to mind Japanese culture, whereas cappuccino makers bring to mind Italian culture) or toaster oven (a culturally neutral product), for example. In another study, participants were asked to evaluate product extensions for the culturally symbolic (British) brand, Burberry. Participants reacted more favorably to the idea of a Burberry brand tea brewer (culturally congruent product) than a Burberry cappuccino maker (culturally incongruent product). Consistent with prior research, the study revealed that people are unlikely to articulate their cultural knowledge or feelings when describing their judgments. Nonetheless, researchers found that cultural congruity has an impact on extension evaluations over perceptions of fit and/or a country's manufacturing expertise.

There are several implications for brand managers - especially ones that oversee iconic brands. A deep understanding and appreciation for the cultural attributes that the brand elicits is essential to a brand's extendibility. A brand's cultural symbolism can be a liability or an asset, and to harness it profitably, a manager needs to understand the cultural symbolism of the potential extension categories under consideration. These brands may successfully extend into culturally congruent products regardless of fit. In contrast, extensions into culturally incongruent products may backfire despite their perceived fit. Cultural associations, however, are not likely to be of concern for managers of brands that are neutral or low in cultural symbolism, as these associations are unlikely to drive people's judgments.


Stereotype Threat
How negative stereotypes may affect consumer behavior

Vohs

The fear of being stereotyped and taken advantage of in the marketplace can affect from whom consumers purchase products and services. Associate Professor Kathleen Vohs, along with co-authors Kyoungmi Lee and Hakkyun Kim (a PhD marketing graduate from the Carlson School), predicted and found that if consumers are aware of a negative stereotype about a group of which they are a member (in this case, someone of their gender), they were more conscious of whether service providers were from the same group (which is called the "in-group") or from another group (the "out-group"). This awareness also lowered consumers' probability of purchasing a product or service when the provider was from an out-group.

The effect of this perceived stereotyping is known as stereotype threat, which is the experience caused by the momentary recognition that one might be treated differently because of an unfavorable stereotype about one's group. The researchers found that consumers may be extra wary for signs that they are being taken advantage of if a negative in-group stereotype is applicable to their transaction. In fact, consumers may try to avoid these transactions completely. The research showed consumers often chose to avoid the transaction when it would be with an out-group member, but not when it would be with an in-group member. In this case, it was found that after being reminded about negative stereotypes concerning women in science, technology, engineering, and math (STEM) domains, female consumers were less likely to use financial services from a firm whose advertising used male, instead of female, advisors. The same effect was found when making decisions about automobile repair and automobile purchases.

Consumers' preference to purchase from in-group members instead of out-group members was caused by heightened anxiety when transacting with an out-group service provider. This heightened anxiety may be due to the negative stereotype which consumers fear will encourage mistreatment.

"Firms should be aware that they might be putting some consumers into a mindset marked by anxiety over whether they will be taken advantage of," Vohs said. "Efforts to reduce that anxiety or place people of a diverse background into their stores or marketing pieces would be moves that could offset the potentially negative effects of stereotype threat."

If consumer anxiety is at the core of stereotype threat, then one way to alleviate the effects is to reduce that anxiety. The researchers predicted and found that the scent of vanilla would reduce anxiety enough to moderate the stereotype threat effect. The use of vanilla soothed threatened consumers' anxiety, which rendered the group status of a transaction partner not relevant to the decision to purchase a product or service.

"The average consumer should take notice if she or he is reacting with a sense of suspicion or tension about interacting with a firm," Vohs said. "This suggests that the firm could be cuing up non-conscious associations with being stereotyped."

This research highlights that if there is a perceived threat of stereotype, a consumer's group identity is very important in the marketplace. Consumer welfare in the marketplace can be undermined by prolonged stereotype threat, but they can use tension-reducing techniques to mitigate stereotype threat, including listening to soft music or deep breathing.

"If consumers avoid shops due to fear of being taken advantage of, that might just exaggerate those fears – without any evidence for the fear being justified," Vohs said. "It is far better for consumers to get out into those shops and interact with those firms, in order to put their fears to the test. My guess is that they will find themselves pleasantly surprised."

While Vohs currently has no plans to expand this research, the paper does suggest more research could generalize the findings to other areas, such as age, sexuality, ethnicity, or economic status.

"Stereotype Threat in the Marketplace: Consumer Anxiety and Purchase Intentions," was published in the Journal of Consumer Research, Vol. 38, August 2011.


Marketing Moment

AkshayWhich of the following offers is better: 33% off or 50% more? It's a trick question, since both are economically equivalent, but, in their recent paper entitled "When More is Less: The Impact of Base Value Neglect on Consumer Preferences for Bonus Packs over Price Discounts," Professor Akshay Rao and his co-authors propose a novel explanation for why consumers prefer bonus packs over price discounts when both are expressed as percentages. Consumers are not very proficient when working with percentages, and neglect the base associated with percentage information. Consequently, 50% more looks better than a 33% lower price. They show that the provision of bonus packs rather than price discounts can have a substantial positive impact on a firm's sales. This article is forthcoming in the July 2012 issue of the Journal of Marketing.



The Carlson Brand Enterprise Program

About the Carlson Brand Enterprise

The Carlson Brand Enterprise (CBE) is a unique marketing consultancy and experiential learning platform that unites top MBA candidates with faculty, professionals, and industry-defining research. The Brand Enterprise objectively assists companies with strategic and analytic components of marketing challenges. The Brand Enterprise philosophy is simple: powerful brands influence customer preference, strengthen the bottom line, and boost market valuation. The CBE prides itself on project management, efficiency, and effectiveness. Carlson Brand Enterprise consultants design an integrated and aligned strategy supported by innovative marketing tactics. Methods and tools used by the CBE deliver high value and measurable return on investment for its clients.

Brand Enterprise Client Benefits

With a broad client base, including Fortune 500 companies, recently formed entrepreneurial businesses, and nonprofit organizations, the Brand Enterprise is equipped to provide all the services of a professional marketing consultancy. The CBE is rpud of having more than 150 client engagements with 100 percent client satisfaction. Each project in the Brand Enterprise is structured to meet the client's needs in the given timeframe. CBE partners with companies on a semester basis with new projects beginning in September and January of each year. Brand Enterprise clients receive:

  • 4-6 consultants dedicated to a 14-week project
  • Cutting-edge research and intellectual capital
  • Recruiting access to high-caliber talent
  • Professional advisors with a wealth of experience in multiple industries
  • Support from experts and researchers on the Carlson School staff

Brand Enterprise Student Opportunities

Student consultants apply their theoretical knowledge through the insights of a team of academics and practitioners with significant experience in the marketing industry. The Brand Enterprise offers students access to the latest theories and practices from marketing and the chance to enhance their career with real-world knowledge and experience. Student consultants work on high-level marketing and business challenges, taking on tasks that are typically reserved for senior management. With their objective viewpoints and their willingness to take risks, student consultants are a strong asset to their clients. The Brand Enterprise's services are in high demand. Clients get an excellent value from the program's services while accessing promising talent and the latest industry know-how. Student consultants are asked to broaden the scope of their marketing expertise throughout the program. Brand Enterprise graduates get an MBA while gaining the experience of working in a professional services firm environment. And many student consultants use the Brand Enterprise to make the career transition into the marketing field from another discipline. The Enterprise also offers networking opportunities throughout the program. In addition to the advantages of working with senior corporate management on marketing and business challenges, the Brand Enterprise's Executive Advisory Board of top executives serves as mentors and advocates for student consultants. In most cases, student consultants are connected with internships and jobs directly through the resources of the Brand Enterprise.

More Information

To find out more about the Carlson Brand Enterprise, contact David Hopkins at dhopkins@umn.edu or 612-626-0630.




About Ashley F. Dziuk

Dziuk

Ashley Dziuk started as the program coordinator for the Institute for Research in Marketing in February. In this position, she draws on her nonprofit marketing and event planning background to work with academics, executives, and the national and international media to support and promote cutting-edge research. Prior to the Carlson School, she was the community programs coordinator at the Chippewa Valley Museum in Eau Claire. As a key team member for the Institute of Museum and Library Services grant project, "The Good Life: A Cultural Plan for Eau Claire County," she worked with community partners to develop a community cultural vision for Eau Claire County. Previously, Dziuk had been the marketing and special events coordinator at the Eau Claire Regional Arts Center and she enjoyed an internship at Ms. magazine in Los Angeles after graduation. She has a bachelor's degree in journalism and women's studies from the University of Wisconsin-Eau Claire. Welcome to the Institute Ashley!




Advisory Board Members

Thank you for your continued support of the Institute for Research in Marketing.


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Dave Euson
David Kristal
Jeanine Bassett
Brent Sherwin
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Julie Moore
David Mucha
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Michael Jonikas
Drew Panayiotou
Paul Hillen
James S. Henney

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