Saturday, November 12, 2011
Russell Winer,William H. Joyce Professor of Marketing and the Chair of the Marketing Department at Leonard N. Stern School of Business, New York
An Interview with Russell Winer
William H. Joyce Professor of Marketing and the Chair of the Marketing Department at Leonard N. Stern School of Business, New York
In this month’s Vartalaap we have with us Mr.Russell Winer . Russell Winer is the William H. Joyce Professor of Marketing and the Chair of the Marketing Department at Leonard N. Stern School of Business, New York. Professor Winer has served two terms as the editor of the Journal of Marketing research; he is the past co-editor of Journal of Interactive Marketing and is currently an Associate Editor of the International Journal of Research in Marketing. In this interview, he talks about the psychology of pricing, in-store decision making and consumer choice models.
Q1: From Economics to Industrial Administration to Marketing- how has the journey been? Any learning/ insights you would like to share with our readers?
Economics is a great background for business as you learn how markets work and how consumers “should” behave. Of course, they don’t behave exactly the way economists predict, but it is good to have a baseline model from which we can see differences in behavior. In addition, economics helps us to understand finance and accounting which are important disciplines for marketing managers to understand. Industrial administration was Carnegie Mellon’s term for business. I was originally interested in finance but found marketing to be much more interesting, and an opportunity to combine my economics background with my interest in consumers.
Q2: In the Indian context, what are the key noteworthy points in psychology of pricing? How is the Indian market different from the US in this aspect?
At one level, people are people in that they look at a retail price and internalize it by mentally assessing whether it is a good or bad deal for them. I feel that many of the basic psychological aspects of price hold. However, given the very wide disparity of incomes in India, a person’s reaction to a price will depend greatly upon their income or necessities vs. luxuries, situation and their budgets.
Q3: You have been studying in-store-decision making for years. Could you share with us your learning in consumer behavior from the same?
Well, what amazes me is how many purchase decisions are made in the store, right at point of purchase. In the U.S., we have developed a term for how marketers are focusing more on in-store marketing, “shopper marketing.” While it is actually somewhat broader, the main focus is how we as brand marketers can draw more attention to our offerings than to a competitor’s right there on the shelf. Thus, money spent on advertising can be offset by special attractive displays in the store.
Q4: With large brands and companies, product management is a key concern. Are you in support of umbrella branding? Does it help product management or dilute the brand equity?
In most cases, yes I support umbrella branding. Companies spend millions building brands and it is natural that they would try to amortize that spending over a number of sub-brands. However, there have been many cases where brands have been “stretched” too far resulting in sub-brands that have no real relationship to the parent. Marketing managers should exercise caution when developing brand extensions and make sure that they study consumer reaction to any new “stretching” that may be beyond the bounds of the original brand concept.
Q5: What interests you the most in the consumer choice models?
I am interested in incorporating psychological aspects of price and advertising into brand choice models. For example, I have published a paper showing that consumers process prices with “9” endings from left-to-right basically ignoring the last digit. I also study how individual family advertising exposure affects brand choice. I like working with what is called electronic scanner panel data, data collected at point-of-purchase on individual household purchasing.
Q6: As management students, we know how important it is to understand the customer. However, do companies really take the effort to really understand the consumer?
Good question. In my experience, more companies give lip service to understanding the customer than really do it. It is important for managers to talk to customers and actually go into stores and observe how choices are being made. You cannot make intelligent decisions only sitting in an office tower poring over computer printouts.
Q7: You are known for your expertise in the use of information technology in marketing. A lot of engineers with IT background venture into marketing. Could you help them in understanding the applications of IT in marketing, so that they can make an informed career decision?
The most exciting nexus of technology and marketing is what’s going on in new modes of communications, particularly social marketing such as Facebook. No one forecasted how much people wanted to connect with each other online and through smart phones or how this could be successfully monetized. However, all the other areas of marketing such as pricing, channels, new product development, etc. are also being affected by technology, mainly by figuring out to reach customers on a 1-to-1 basis and integrating them more into the operations of the company.
Q8: What would be your word of advice to MBA students?
Get a broad education in business school. Do not overly focus in any one area because general managers need to have a sound education in all of the functional areas of business. In addition, always think of what the customer wants. The smart managers and companies make products and services that resonate with customers, not with themselves.