The marketing group at Chicago Booth is one of the prominent marketing departments in the world. Its role in Chicago Booth research and teaching is growing, as a result of hiring the best marketing scholars. In each of the past three years we have added new faculty members.
This growth has been possible due to the increasing support of the James M. Kilts Center for Marketing. The center, with Arthur Middlebrooks as its director, supports faculty and students in multiple ways: funding of research, course development, and scholarships for students, allowing Chicago Booth to attract top MBA students with marketing interests.
The demand for Chicago Booth marketing courses is strong, since marketing strategy is critical to the success of firms in today's increasingly competitive environment. At Chicago Booth, students learn marketing frameworks for sustainable strategy. In the Chicago tradition, these frameworks borrow from such basic disciplines as economics and psychology. The Chicago empirical tradition is a powerful culture to inspire research conducted by the marketing faculty. Our faculty develops and uses the full range of methods of data collection and analysis, including experimental design, statistics, and econometrics. Some of the most influential marketing research of today has been produced at Chicago, which has been reflected in numerous national awards, in citations, and in download counts. Based on these criteria, the following works have been recognized in just the past two years: the work of Jean-Pierre Dubé and Sanjay Dhar on national brand performance across regions, the work of Günter Hitsch on new product dynamics, and my research on channel coordination. Several articles published by Chicago Booth marketing faculty truly have been "Capital Ideas" in that they have influenced and continue to influence the way marketing is defined and practiced today.
The papers in this issue continue to reflect the diverse strengths of our faculty in behavioral science and quantitative methods. Three papers are in the domain of the behavioral sciences dealing respectively with 1) how people respond to reward programs, 2) how consumers may attribute human characteristics to some products and 3) how the use of visual identifiers can play a role in product preference. The two papers on quantitative methods investigate store location strategies and market share dominance.
Oleg Urminsky's paper on the psychology of rewards reports how consumers accelerate their purchasing or persist in a rewarded activity as they get closer to earning the reward. A marketer can influence the perception of progress toward the goal, inducing progress that leads to acceleration of purchasing.
Ann McGill's paper describes studies suggesting that the ability of consumers to see human characteristics in a product (anthropomorphizing of the product) and their evaluation of it depend on the extent to which the product is endowed with characteristics congruent with the selected human representation of the product. Marketers' understanding and fashioning of brand and product identity will be enhanced by this work.
Aparna Labroo's paper studies the positive effect on product preference of priming consumers with a word describing a visual identifier on a product (semantic priming). Her work sheds important light on the way product identifiers such as logos, packaging and mnemonics may affect consumers.
The paper coauthored by Jean-Pierre Dubé, Günter Hitsch and Pradeep Chintagunta analyzes market share dominance. This is the phenomenon of a market tipping toward one industry standard. Both supply and demand issues are involved. A recent example of this phenomenon is the format war won by Sony's Blu-ray over Toshiba's HD-DVD. In the hardware/software markets such as Blu-ray/HD-DVD, consumers adopt hardware (the player) based on current availability and beliefs about future availability of software (the movies). The positive feedback of a larger installed base may lead to more concentrated markets. Their model demonstrates this tipping (increased concentration) in the 32/64 bit video game console market. Important implications for firm's behavior, such as dynamic pricing, result.
The second quantitative paper featured in this issue is Ting Zhu's study of store locations. The paper takes into account the important differences between competitors, for example Wal-Mart versus Target, in the market studied. One key insight from this work examines the nature of competition in an industry. For example, Wal-Mart supercenters operate as monopolists in many markets, an outcome driven not only by the higher efficiency of Wal-Mart compared to its competitors, but also its strong negative effect on other firms. Wal-Mart also uses local market conditions differently than its competitors, selecting lower income and less populated areas, thus avoiding direct competition.
These five research projects in their great diversity exemplify the commitment of marketing at Chicago Booth to rigorous scientific standards that are critical to significant long-term contributions.