When you think of camp, you think of sunny summer days, arts and crafts, and – at Mays – marketing analysis.

For several faculty members and staff researchers, the 2011 Mays Marketing Research Camp opened the door for collaboration on recent studies and publications. Venkatesh Shankar, the marketing Ph.D. program director and Brandon C. Coleman, Jr. Chair in Marketing, organized the camp to assemble prominent figures in the marketing research field and give them an opportunity to share their work.

Mays marketing PhD program director Venkatesh Shankar (left) recognizes University of Rochester professor Sanjog Misra during the sixth annual Mays Marketing Research Camp. Misra was one of four scholars to present at the event.
Mays marketing PhD program director Venkatesh Shankar (left) recognizes University of Rochester professor Sanjog Misra during the sixth annual Mays Marketing Research Camp. Misra was one of four scholars to present at the event.

Speakers Gary Frazier (Editor in Chief, Journal of Marketing) of the University of Southern California, Sanjog Misra of the University of Rochester, Rishika Ramkumar of Texas A&M and Cait Poynor Lamberton of the University of Pittsburg discussed their research with Mays marketing faculty and doctoral students and received helpful feedback and collaboration. This active participation on behalf of the audience led to a dynamic ask-and-answer approach to the presentations, which enriched the overall structure of the camp itself.

Shankar said the opportunity for researchers and practitioners to communicate about innovation in organizations is rare.

“It is so important in our field, because we have to make our own reputations,” he said. “This way, the people in charge of selecting the projects to publish are talking with our faculty and grad students. It is an ongoing conversation.”

Mays marketing faculty and doctoral students were encouraged to contribute to the presentations with questions, discussions and feedback to help produce innovative ideas in the research field. Assembling these marketing scholars in an open-communication forum is a unique concept that both contributes to the overall findings and generates interest in Mays Business School.

Shankar said his biggest challenge is accommodating the editors who want to participate. “It is delicate,” he said. “I always tell them I would love to have them here, but we are booked up, then I set them up for the following year.”

The sixth annual camp featured presentations on research in the fields of sales force compensation structures, the strength of online social communities, franchise channel relationships and allocation with compulsory payments.

2011 Mays Marketing Research Camp presentations

Contracts, Extra-Contractual Incentives, and Ex Post Behavior in Franchise Channel Relationships

Gary Frazier, Richard and Jarda Hurd Chair in Distribution Management and Professor of Marketing, Editor-in-Chief, Journal of Marketing, Marshall School of Business, University of Southern California

Inherently, franchise and franchisee relationships are fraught with challenges. There may be a franchise control problem, where franchisees may have an incentive to maximize their own profit at the expense of the franchise. As a result, franchisors attempt to prevent these problems through contract formulation. However, some problems relating to these contracts are the following: (1) no contract is complete; (2) monitoring can be counterproductive; and (3) there may be selective enforcement issues. However, to help overcome these constraints, there are a number of governance behaviors that can be undertaken to manage franchisee relationships after the start of the relationship; specifically, these are (1) behavior monitoring, (2) output monitoring, and (3) enforcement. The authors look at the combinations of these governance mechanisms and the resulting effects on franchisee opportunism and compliance in the context of the US auto industry. They conclude that none of the governance mechanisms used in isolation helped to reduce opportunism or to elicit compliance. In fact, when behavior monitoring is performed alone, it actually reduces franchisee compliance levels. Their empirical results show that the best outcome is a combination of these mechanisms. Specifically, behavior and output monitoring increased compliance as did enforcement and output monitoring. With regards, to increasing opportunism, enforcement combined with behavior monitoring provided the best result.

• • • • •

A Structural Model of Sales Force Compensation Dynamics: Estimation and Field Implementation

Sanjog Misra, Associate Professor of Marketing and Applied Statistics, Simon Associate Professor of Marketing and Applied Statistics, Simon Graduate School of Business, University of Rochester

Personal selling is an important component of the economy- accounting for over 40% of total sales. Furthermore, in many cases, the salesforce becomes the interface between the firm and the consumer. The authors posit that one should be able to see patterns in the selling behavior; specifically, that salespeople can manipulate the timing of their sales in order to meet specific quotas. There is some evidence of this manipulation when looking at the quarterly sales pattern. Looking at the data from a manufacturer of contact lens in the US, the authors clearly show that salespeople would significantly increase their levels of effort as their quota targets approached. To quantify this behavior, the authors develop an empirical model to understand the dynamics of salesforce compensation which will then be used to help inform the firm about the best compensation route to take in order to maximize firm profits. Interestingly, one of the key findings is that salespeople are extremely capable of exerting just enough effort in order to achieve their target sales quota, thus suggesting that there is the ability to control the level of exerted effort. Using these behavior findings, the authors begin to design the optimal compensation plan. However, given real world constraints, they developed a set of feasible compensation plans. Ultimately, the firm selected one of these profit enhancing compensation frameworks and has seen a substantial and sustained increase in profits.

• • • • •

The Effect of Asymmetric Social Ties on Online Contribution: The Role of Tie Strength and Homophily

Rishika Ramkumar, Assistant Professor of Marketing, Mays Business School, Texas A&M University

While participation in online social communities continues to increase at a rapid rate, the number of those contributing content, such as user reviews, remains at a very low level. Increasing online contribution can result in improved user experiences, and from a firm’s perspective, can improve their revenue stream by driving an increase in their web traffic. In order to improve the online experience, we need to understand what drives online contribution in online communities and how a user’s network impacts her motivation to contribute content. A key component of these online communities is that users can create their own social networks thus forming unique social ties. Understanding how influential these social ties are may depend of the strength of the relationship and also on shared characteristics. Using data from an online music blog aggregator that aggregates over 1500 music blog post, the authors model the effect of tie strength on contribution. A key conclusion is that stronger network ties were more influential in decision making than weaker network ties.

• • • • •

A Spoonful of Choice: Using Allocation to Increase Consumer Satisfaction with Compulsory Payments

Cait Poynor Lamberton, Fryrear Faculty Fellow and Assistant Professor of Business Administration, Katz School of Business, University of Pittsburgh

All spending is not considered equal in the minds of consumers. Some payments, such as taxes or home owner association fees, are inherently more painful to make. These compulsory payments offer collective benefits with low levels of upfront choice; this combination prompts low levels of satisfaction with the expenditure experience. What if you give consumers a little bit more choice in how they allocate their spending? Would this make payments less painful in the cases of collective benefits? The authors study how the allocation of a small portion of the payment across different expenditure categories influences consumers’ satisfaction levels. They find that this allocation can increase satisfaction with compulsory payments, and this increased level of satisfaction can be done with relatively small proportions of allocation amount. Thus, giving consumers “partial choice” led to a decrease in their level of reactance and an increase in their perceived level of benefit.

Categories: Departments

“Women make IT Sparkle” was the theme of this year’s Women in Information Technology conference hosted by faculty and staff in the Center for Management of Information Systems (CMIS) at Mays Business School.  Featured speakers included Amanda Adkisson, clinical professor of finance, on Financial Planning after College; Merna Jacobsen, director of the Women’s Resource Center and coordinator, organizational and staff development director for the Texas A&M Division of Student Affairs on Essential Skills for your Conflict Resolution Toolkit; and John Humphrey, co-founder and chairman of Pariveda Solutions on Networking for Life as the luncheon keynote. Jerry Strawser, dean of Mays Business School, welcomed attendees to the conference.

The Center for Management of Information Systems hosted its annual Women in Information Technology conference on March 4, 2011.
The Center for Management of Information Systems hosted its annual Women in Information Technology conference on March 4, 2011.

David and Julia Gardner, co-owners of David Gardner’s Jewelry, provided insight on current jewelry designs and a featured door prize.  In addition, door prizes were donated from HP and ExxonMobil. Five $100 scholarships were provided by CMIS. Industry attendees and conference sponsors included members from AMD, Chevron, Conoco Phillips, Dell, ExxonMobil and HP.  Additional attendees included members from Anadarko, PWC, Deloitte, Pariveda Solutions, SAS, Shell, Sungard, TAMU (faculty and staff), and USAA.

Attendees assisted with round table discussions with students regarding Preparing for Your Career and Beginning Your Career.  Industry sponsors also hosted a panel discussion on Work-Life Balance Experiences.

The Women in Technology conference is hosted yearly by CMIS and includes students from Texas A&M University, Prairie View A&M, Texas A&M-San Antonio, and Texas A&M-International.

Categories: Centers

The Center for Retailing Studies in Mays Business School at Texas A&M University will host its annual Retailing Summit in Dallas, Texas, October 7-8. Early bird registration for this event is going on now through July 15 and offers a $50 savings.

The event will be held at the Westin Galleria Hotel and is expected to draw retailing executives from across the nation. Presenters will touch on pertinent topics including sales techniques, youth marketing, understanding the changed luxury customer, and effective merchandising and branding. The theme for the event is “The Evolving Customer: emerging issues and future outlooks.”

Summit speakers include top-level executives such as Ken Hicks, chairman and CEO of Foot Locker, Inc.; Larry Magee, chairman, CEO and president of Bridgestone Retail Operations LLC; Garrett Boone, chairman emeritus of The Container Store; Sona Chawla, executive vice president of e-commerce at Walgreens; Tony Rogers, senior vice president of brand marketing at Walmart and more. (Click here for a full list of presenters.)

Hicks’ keynote presentation, “Creating Power Merchandising,” will focus on how to identify, develop, and present big merchandise ideas to maximize sales and expand the customer reach. (See more about this presenter below.)

“The Retailing Summit offers executives from all retailing sectors the chance to discover best practices from an impressive line-up of industry speakers. Innovative ideas, applicable for small businesses to the world’s largest big box retailers, are featured,” said Cheryl Holland Bridges, director of the center. “Attendees enjoy the direct interaction with top level executives and the learning environment that we, an academic host, uniquely provide.”

Last year was the first time that the event was held at the Westin Galleria. Attendees responded enthusiastically to this change in venue, due to its anchor in a retail mall and many opportunities for dining and shopping. The summit returns there this year.

Sponsor partners for the 2010 Retailing Summit include BDO Seidman LLP, SAP, and the Center for Retailing Studies. Proceeds from the event fund scholarships and programs for students pursuing retailing studies at A&M.

Register today at retailingsummit.org. In addition to the early bird savings, discounts are available for groups, sponsor companies, and former students of A&M.

About the Center for Retailing Studies

Founded in 1983, the Center for Retailing Studies bridges the academic and business communities by educating the next generation of retail leadership, and serving the industry through research and executive education.

About Ken C. Hicks

Ken C. Hicks has had a long career in retail, leading many well-known brands in a variety of capacities. He has served as president and CEO of Foot Locker, Inc. since August 2009 and became chairman of the board a few months later in January 2010. Prior to joining Foot Locker, Inc., he served as president and chief merchandising officer of J.C. Penney Company, Inc. and was a member of its board of directors. From 2002 to 2005 he was president and COO of Penney’s stores and merchandise operations.

Before joining JCPenney, Hicks was president of Payless ShoeSource from 1999 to 2002, where he had responsibility for all elements of merchandising, marketing, product distribution, and direct product development and sourcing for 4,900 stores in seven countries. Prior to joining Payless ShoeSource, Hicks was executive vice president and general merchandise manager of all merchandising and programming for the Home Shopping Network.

From 1987 to 1998, he held senior management and merchandising positions for May Department Stores, including senior vice president of strategic planning and general merchandise manager for several divisions. From 1982 to 1987, he was a senior engagement manager for McKinsey and Company Consultants.

Hicks graduated from the United States Military Academy at West Point, New York, and served in the U. S. Army, attaining the rank of captain. After leaving the Army, he earned an MBA with highest honors from Harvard University.

He serves on the board of Avery Dennison Corporation.

Categories: Centers

While the IT industry has long been populated predominately by men, the fairer sex is quickly making inroads in the industry. Each year a new generation adds to the number of women in IT leadership positions, further shifting the balance of power and the environment of the industry.

On March 26, the Center for the Management of Information Systems held its 10th annual Women in Information Technology (WIT) conference at A&M. The conference, designed for future female IT professionals, gave students the opportunity to interact with women from all levels within the field. Students from sister schools Texas A&M International University and Prairie View A&M University also attended.

The theme of the 2010 WIT conference was “Finding the Right Fit,” and presenters focused their lectures on how women can make a place for themselves in IT management. The WIT roundtable discussions allowed for students to ask questions related to their fields of interest, and for IT professionals to share some of their personal experiences, including the challenges they face in a male dominated industry.

Networking with professionals and presenters was another valuable component of the event for students. Corporate sponsors AMD, Chevron, ConocoPhillips, Dell, ExxonMobil, and HP also provided a number of door prizes and scholarships for participating students.

Categories: Centers

Seventy percent of the U.S. economy is tied to retail, says Mark Dotzour, chief economist with the Texas Real Estate Center. Since the global economy depends on the U.S. economy, the whole world is depending on retailers having the right assortment and prices, Dotzour told a group of retailers on campus recently for the annual Center for Retailing Studies Sponsors Forum. Dotzour addressed the future of the U.S. economy as it pertains to retail to provide participants with a glimpse of what the recovery might look like. He was one of several presenters from Mays to address the group, which included top retail executives from the center’s sponsor companies.

Dotzour, economic weatherman

Dotzour prefaced his comments by saying that he’s probably not any more accurate than the weatherman. However, retailers should not dismiss his conclusions: “What you’re hearing in the media is pretty much all wrong,” he tells retailers. Consumer perception is so vital to the economic recovery, that the media doesn’t dare tell the whole truth. The U.S. economy is on the road to recovery, he says, but it’s a long road, and full of landmines. Dotzour compares the recovery process to driving a heavily armored bomb detonation vehicle: it will take care of the explosions, but it moves very slowly.

Mark Dotzour

Personal consumption expenditures in the U.S. had been on the rise for years until 2007, when people stopped buying so aggressively and began to pay down debt and save. Dotzour believes that businesses and individuals have now right-sized their budgets, but governments have not. He sees major hurdles ahead for local, state, and federal government agencies, which are now or will soon be scrambling to pay their bills due to bloated budgets.

Dotzour warned retailers not to expect the same levels of personal consumption that Americans practiced a few years ago, when net home equity extraction boosted retail sales. Today, Americans have less equity in their homes, and less flexibility for borrowing.

Dotzour compares the recovery process to driving a heavily armored bomb detonation vehicle: it will take care of the explosions, but it moves very slowly.

One promising trend he is seeing is an increase in temporary hiring. Many businesses that are rebounding need extra employees as they grow, but are uncertain about adding permanent employees lest the growth doesn’t continue. He predicts that in one year, many businesses frustrated with the limitations of temporary staff hires will begin hiring permanent replacements as the economy improves. “We’re not out of the woods yet, but we’re getting close,” he says.

Yet there are landmines ahead. Higher income and capital gains taxes, health care costs and regulation changes, changes in banking regulation, constricting budgets of governments at all levels, and cap and trade policy impact on the cost of energy, will all play a major role in the recovery process. The uncertainty in the marketplace prevents consumers from spending as much and prevents businesses from pursuing opportunities for growth as aggressively as they might otherwise. The good news for retailers is that “Americans are tired of being scared,” says Dotzour, who believes that consumers are ready to begin spending again, despite uncertainty.

Retailers: A little bit green is good enough

As sustainability issues continue to be a major factor in retail, assistant professors of marketing Karen Winterich and Kelly Haws have conducted several studies that analyze green consumer mindsets and practices. They presented some of their own research as well as summed up others’ recent findings pertinent to their retail audience.

Kelly Haws

Ninety percent of Americans report that if the price was the same, they would purchase sustainable products, say Winterich and Haws. So, should retailers invest more in green products and sustainable processes? Yes, and no. Prior research ((Trudel and Cotte 2008)) shows while there is a huge impact on consumer opinion if a product or company isn’t considered green, a little bit green is good enough for most consumers. When it comes to pleasing the customer, retailers don’t have to remodel their stores or assortments completely—smaller actions may be as effective in capturing the green consumer, and far less costly.

Green consumers are hard to profile, says Haws. The stereotype is young, fairly affluent, well educated, and more liberal in their political views; however, green consumers cut across all demographics. They can’t be attributed to any gender, age, income, or political affiliation. The only defining characteristic is that they tend to be people that are more self-controlled in they way they use resources. These are the folks that reuse the Cool Whip container to store leftovers.

Ninety percent of Americans report that if the price was the same, they would purchase sustainable products.

Despite the stereotype of green consumers being wealthier, Haws says they are more price and value conscious. This leads to a conflict of values, as many green products are more expensive than their less-sustainable counterparts. Haws advised the retailers to consider: how can we make it easier for consumers to be green?

Karen Winterich

One way says Winterich would be adopting a uniform rating system for all products, similar to the proposed Walmart sustainability index. If consumers could more easily compare the greenness of two similar products, they might be more likely to purchase the one that is quantifiably better for the environment, even at a premium, researchers suggest.

An important takeaway from Winterich and Haws’ research is that the more green a consumer is, the less interested they are in green products that tout personal benefits instead of environmental benefits. For example, green dish soap with a label that reads “No harsh chemicals, better for the environment!” will be more attractive to green consumers than the same product with a label reading “No harsh chemicals, better for your skin!”

Hire smart

All hiring managers are looking for potential employees that will perform well in the company, but frequently they test for the wrong thing, said Wendy Boswell, associate professor of management at Mays and director of the Center for Human Resource Management. Here’s the one thing you should know when hiring: If you are concerned with performance, look for the smartest candidate. Research indicates that intelligence is the strongest predictor of performance.

Here’s the one thing you should know when hiring: If you are concerned with performance, look for the smartest candidate.

Boswell says that frequently interviewers screen more for team culture fit than other important characteristics. This may be a mistake, as fit is a predictor of retention, but not directly linked to performance.

Wendy Boswell

There are complications when it comes to screening for intelligence, however, Boswell notes, as African-Americans and Hispanics tend to score lower on cognitive ability tests than Asians and Caucasians for a variety of hard-to-define reasons. Due to this fact, employers are often concerned about the threat of being discriminatory when hiring based on intelligence test scores alone.

Other important traits to screen for are conscientiousness and integrity, which are both predictors of performance and related outcomes.

Less important characteristics are: applicant interests; years of job experience beyond five years (a candidate with 20-years job experience is no more likely to be successful as a candidate with five); years of education; and age.

Good hiring is vital to the success of an organization, as employee satisfaction is related to customer satisfaction, which is related to the bottom line. Boswell suggests that interviewers stick to the same questions with each candidate for a job, in a structured, pre-planned interview format, rather than a more free-flowing and conversational interview, to have the most effective hiring.

In addition to the theory presented to the retailers through the Sponsor Forum, participants were also exposed to a practical lesson from Robert Loeffler, former president of H-E-B. Loeffler was the recipient of the 2010 M.B. Zale Visionary Retailer award, and presented an address that explored his long career in business and retail.

Categories: Centers, Featured Stories

Imagine walking into a store with a shopping list on a digital device. As you pick up an item, information about the product, including user reviews, best prices at other retailers, and which of your friends is buying the same product, is displayed directly on the packaging, beamed there from your device. This sort of information stream that integrates technology and social interaction to fully engage the consumer at every moment of the shopping experience may be the future—the near future—of retail. (For an example of this kind of technology, watch this video clip from the recent TED conference.)

Retailing is dynamic, shifting as quickly as new technology creates new platforms, supply chains, and business models for selling everything from toilet paper to cars. Exploring such innovation in retail was the goal of the Thought Leadership Conference, held January 28 and 29 at Mays Business School. The event, which brought together 31 academic experts and senior retailing executives from the U.S. and other countries, was hosted by Mays’ Department of Marketing and Center for Retailing Studies.

The event was sponsored in part by the Center for International Business Studies at Mays, the Marketing Science Institute, and the American Marketing Association. Mays Professors of Marketing Manjit Yadav and Venky Shankar were conference co-chairs.

Social media: The game changer

Social media is revolutionizing retail, says Gary Kusin, a senior advisor at TPG and former CEO of FedEx/ Kinko’s. Kusin presented the keynote address at the start of the conference, presenting on an apt topic, as nearly every other presentation at the event had a social media component.

Our increasingly digitally connected society impacts retailing more than it does any other industry, says Kusin, as people’s consumption patterns and expectations are changing. No longer are television commercials the gold standard for advertising. In fact, consumers indicate that they are much more likely to trust product recommendations from friends or other consumers—even those they haven’t met—than they are traditional advertising. This necessitates a shift in the way retailers engage their audiences.

TPG senior advisor and former CEO of Fedex/Kinkos Gary Kusin told attendees that social media was too valuable and widely used by consumers for retailers to ignore.
TPG senior advisor and former CEO of Fedex/Kinko’s Gary Kusin told attendees that social media was too valuable and widely used by consumers for retailers to ignore.

According to Kusin, social media presents an awesome opportunity for the kind of involvement consumers are looking for. Your brand IS being talked about, whether you’re a part of the conversation or not, he says. Thanks to innovations like Google Sidewiki, where any user can contribute information to any website, more and more it will be the consumers that control a brand image, not the corporation. Consumers want to be heard, not shouted at, says Kusin. They will patronize the company that listens.

Retailers that choose not to enter the social media conversation are missing the opportunity to engage their consumers where they are most interested. This platform gives a retailer a channel for providing customer service in a way that’s instant and public; building rapport and enthusiasm among customers; correcting misinformation; and gathering new ideas and feedback from those who know your products and are using them. It’s too valuable and ubiquitous a tool not to use it, says Kusin. Even the Pope is making use of social media, with his own iPhone app, Facebook and Twitter accounts, and Youtube channel. Of the top 10 most visited sites in 2009, four were social—five, if you count Craigslist.

This shift in expectations has changed retail from an environment of create > advertise > sell, to one where retailers listen > interact > react > then sell, says Kusin.

One challenge social media presents is metrics. No one has yet determined the formula for how much one follower, fan, or comment thread is worth, so when examining social media through a budgetary lens, its impact is difficult to quantify. Whatever the dollars and cents ROI turns out to be, Kusin says it’s easy to see that the retailers that are on the forefront of social media, such as Best Buy, are the ones that are succeeding in the marketplace.

Further Research

The purpose of the Though Leadership Conference was to identify new areas for research based on recent innovations in retail. Attendees were broken into six groups and assigned a specific area of retailing to explore, including global retailing, supply chain, and assortment.

The 2010 Thought Leadership Conference brought together 31 academic experts and senior retailing executives from the U.S. and around the world.
The 2010 Thought Leadership Conference brought together 31 academic experts and senior retailing executives from the U.S. and around the world.

At the conclusion of the conference, each group of scholars and retail practitioners presented their thoughts on the future of retail and identified areas for future research in retailing innovation. Will facial recognition software and digital messages such as “shelf-talkers” and monitors within a store (think Wal-Mart) stream more highly targeted ads to shoppers? How could retailers best manage how customers share promotional codes via websites like Myretailcodes.com? How can retailers create a more seamless customer experience through multiple channels? Which new platforms or business models have the potential to radically alter the way retail is done?

Over the next few months, conference groups will continue to explore these questions while drafting papers to be published in a special issue of Journal of Retailing, to be published in 2011.

Categories: Centers, Featured Stories

What are the emerging business models in retailing? What’s new in how retailers approach promotions? What’s the next big idea in store assortment?

These will be among the questions discussed at the second annual Thought Leadership Conference, hosted by the Center for Retailing Studies, the Department of Marketing, and Mays Business School at Texas A&M University.

This exclusive, invitation-only event will welcome 31 academic experts and senior retailing executives from the U.S. and other countries, January 27-29. Attendees will work in teams to explore a variety of topics in retailing and marketing strategy, then will present their ideas and recommendations at the conclusion of the conference.

To maximize the conference’s impact, papers and findings based on the conference deliberations will be disseminated in a variety of formats, including a special issue of the Journal of Retailing.

Building on the theme “Innovations in Retail: Emerging Issues and Future Outlook,” topics to be covered include innovation in the following areas: retail business models, retail channels and supply chain management, retail assortment and store brands, retail shopper marketing, retail price promotions, and global retailing.

Gary Kusin, former president and CEO of Kinkos/FedEx, will present a keynote address to kick off the conference.

The first Thought Leadership Conference on the theme “Marketing in a Multichannel, Multimedia Retailing Environment,” held last year, was a huge success, says Venky Shankar, professor of marketing at Mays, as it attracted top minds in retail and resulted in a special issue of the Journal of Interactive Marketing. Cheryl Bridges, director of the Center for Retailing Studies, echoed that sentiment saying, “This conference uniquely brings together industry and university experts, positioning the center and Mays as leading contributors in retailing research.”

The 2010 event is also sponsored in part by the Center for International Business Studies at Mays, the Marketing Science Institute, and the American Marketing Association. Shankar and fellow Mays Professor of Marketing Manjit Yadav will serve as conference co-chairs.

For more information, contact the Center for Retailing Studies at (979) 845-0325, or visit http://www.crstamu.org/conference.php.

Categories: Centers

The debate over health care is a current news staple as U.S. senators and congressmen trumpet the merits of plans to expand coverage and lower costs for all Americans. No matter what the resulting legislation will be, it will have a deep impact on businesses, both large and small. That was the topic of a panel discussion called “The business of health: expert insights and perspectives,” presented by Mays Business School in November.

Hosted by the Full-Time and Executive MBA Programs, the panel brought together expert opinions from industry insiders, as well as an audience of more than 200 professionals from various industries. Presenters included a physician, the VP of benefits at large multinational company, and a member of the Mays management faculty. Moderated by Loren Steffy, business columnist at the Houston Chronicle, opinions varied, but all agreed on one thing: health care reform is imminent and vitally necessary.

A costly necessity

J. James Rohack, MD, was the first panelist to jump into the discussion. As a physician, the president of the American Medical Association, and the director of the Center for Health Care Policy at Scott and White Clinic, Rohack had a lot to say about the topic of reform. “The AMA decided two years ago to get involved in health system reform as frankly we noted…that for those that didn’t have health insurance, they lived sicker, they died younger, and the federal government said your access point is the emergency room,” he said. With the uninsured gaining primary care through ERs, we’re already paying for universal health care, as the cost of treating these people comes from everyone else paying a higher premium, Rohack contends.

A distinguished panel of industry leaders, policy experts, and Texas A&M faculty members met on November 12, 2009 at the Federal Reserve Bank of Dallas, Houston Branch to discuss how pending historic changes to the health care system will impact the business community.
A distinguished panel of industry leaders, policy experts, and Texas A&M faculty members met on November 12, 2009 at the Federal Reserve Bank of Dallas, Houston Branch to discuss how pending historic changes to the health care system will impact the business community. (view more photos)

Congress is concerned that reforming the system will add to the national deficit. Inaction will do the same, says Rohack. “The reality is these bandaid approaches…have grown the problem.” The AMA has been working with Congress to devise a solution since 2001. If serious action had occurred three years ago, the cost would have been less than $50 billion. Instead, stopgap measures were utilized, so that now, to “fix” the system the price is $210 billion—and will increase to $310 billion by 2012, when four million Baby Boomers will start to draw Medicare benefits.

Rohack is critical of proposed changes to Medicare that would reduce the amount paid to physicians. Fifty percent of health care in the U.S. is provided by solo practitioners or offices of less than three physicians. They are small business owners, Rohack says. The proposed Medicare cuts would reduce the profitability of these practitioners by 21 percent and the current business model will not be viable. This creates a new dilemma. If physicians have to close their practices, it will exacerbate access problems. That is especially true in rural areas where there are a disproportionate number of Medicare patients, he says.

John Kajander, senior vice president of the Texas Medical Center, echoed Rohack, noting that hospitals receive a large portion of their revenues from Medicare patients. That kind of subsidy already provided by the government means that all non-Medicare patients are paying 25 percent more to pay for others’ care. The money is already being spent, he says. When it comes to reform, it’s just a reallocation of where the money comes from.

To those that are concerned about “death panels” and government involvement in health decisions, Kajander was unsympathetic. “We should never kid ourselves. We’ve got health care rationing today,” he says. If you’re at a public hospital and you’ve got cancer, you may have to wait several months to see an oncologist and start chemo—and that wait may be too long.

Americans tend to have a negative perception of anything that sounds like socialized medicine, however, there are lessons to be learned from the Canadian health care system, says David Kasper. His company, Waste Management Inc., operates in most states and several other countries. As the vice president of benefits, he is familiar with the health care options for his employees in the U.S. and Canada.

Kasper says Americans demand more amenities from hospitals (such as private rooms, cable, etc.). Canadian hospitals are very basic by comparison. But nobody in Canada goes broke when they get sick.

Kajander commented on this as well, noting that the American system is inefficient, but that Americans might not be willing to make certain trade offs (such as choosing your own doctor) in order to reduce costs.

The public option still being debated will provide everyone with a bare minimum of coverage, Kasper says. To those that are worried that all business will cease to provide insurance and will pay only for the public option, Kasper says we must remember that many employers see benefits packages as recruitment tools; they want to offer what’s going to net the best employees. Small businesses are the ones that will save the most through a public option, if it’s offered. However, some larger companies will stick with private insurance or their own self-insurance programs, predicts Kasper.

Wellness programs key to savings and health

Waste Management Inc. is self-insured, providing tailored coverage for their 45,000 employees. Kasper says they look at health care expenditures as an investment. “It’s a very labor intensive business. People are our most important asset…We cannot operate unless we have people on the job doing what they need to be doing…Their health and productivity is…directly linked to the success of our organization,” he says.

A large part of Waste Management’s focus is on wellness programs, where healthy behaviors, such as not smoking and proper weight maintenance, are incentivized. Kasper says that legislation should incent employees to do the right thing for their own health, placing a monetary emphasis on prevention and healthy behaviors.

Rohack agrees. “Half of health care costs are because of choices people make…We can fix the system, but people are going to have to be engaged in healthier choices,” he says.

Michael Wesson, associate professor of management at Mays, mentioned corporate examples of wellness programs that are working, such as the incentive program implemented by grocery chain Safeway (see Wall Street Journal article: “How Safeway Is Cutting Health-Care Costs” ). They’ve reduced healthcare costs enormously, he says. As has IBM, who have dropped employee co-pays to encourage better preventative care from employees. New legislation should provide concrete funding for wellness programs, says Wesson.

What should reform look like?

Where in the country is health care being done well? In non-profit community health centers, says Rohack. The costs are lower and the outcomes are high. He also held up Lasik eye surgery as an example: the cost has decreased over the years, even as the procedure has improved. Why? Because it isn’t covered by insurance, so customers shop around to find where it can be done most affordably, forcing doctors to provide quality and economy. It’s rare to have that level of price comparison with other medical procedures.

That’s part of the problem, says Wesson: the price of medical procedures is too mysterious. Most patients have no idea how much it costs to receive healthcare, and most doctors have no idea what the real cost of a procedure or drug will be for their patients. He doesn’t believe that the current legislation pending before Congress does anything to alleviate this issue or to bring consumers into the picture.

A distinguished panel of industry leaders, policy experts, and Texas A&M faculty members met on November 12, 2009 at the Federal Reserve Bank of Dallas, Houston Branch to discuss how pending historic changes to the health care system will impact the business community.
Following comments from each of the speakers, the panel answered questions from the audience.

Wesson says everyone should have health coverage, but he is concerned about the price tag associated with the reforms before legislative bodies currently. The challenge before Congress is to expand coverage and lower costs. He says many versions of the bills before the House and Senate expand coverage, but are lacking in the cost reduction guarantees.

Robert Ohsfeldt, professor of health policy and management at the School of Rural Public Health at Texas A&M System Health Science Center, commented that there are about 48 million uninsured in the U.S. One of the main challenges in passing a reform that would expand coverage is convincing the other 256 million people in the U.S. that it is needed. “Those that have insurance for the most part don’t see this as a crisis that needs to be addressed right now,” he says, noting that whatever changes are made, people will complain.

Bruce Broussard, chairman and CEO at U.S. Oncology says that in markets that are highly competitive, there is a lower cost-delivery system. For that reason, the introduction of a government option will reduce cost by increasing competition. He also mentioned that potential litigation drives up the cost of health care significantly. If that problem could be solved through tort reform, the cost savings would be dramatic. (Rohack was quoted on this topic in the article “Trial lawyers plan tort reform fight” in Politico. ).

Reform is essential the panelists agreed. As Broussard and Ohsfeldt asserted, the cost of health care must come down. It’s unsustainable at its current level.

Complete video from the event is available at mays.tamu.edu/health.

Categories: Featured Stories, Programs, Texas A&M

Last May, calamity struck the well-loved Texas retailer Jim McIngvale (“Mattress Mack”) of Gallery Furniture: arson damaged his showroom and destroyed his main warehouse. A hundred thousand square feet burned, causing more than $20M in damages.

While not ravaged by literal fire, the U.S. economy faced its own overwhelming challenges last year as millions of jobs were lost, banks collapsed, and the credit market froze. Retailers were hard hit when their customers padlocked their wallets and hunkered down to wait out the economic storm. Many stores closed their doors, permanently.

“Not everyone has a literal fire occur,” said Gallery Furniture’s Jim McIngvale (center), “but we all have met with some overwhelming challenges.”

Mattress Mack refused to shutter his doors, opening a renovated and restored warehouse and showroom just 44 days after the catastrophe. Like Gallery Furniture, U.S. retailers are starting to see advances after a long, hard year. Rising from the ashes as the holiday season approaches, store owners are realizing that the retail landscape has changed dramatically. New tactics are needed to woo customers who don’t shop the same way as they did before the recession.

Those new tactics were the topic of the 2009 Retailing Summit, hosted by Mays Business School’s Center for Retailing Studies, held October 1 and 2 in Dallas. More than 200 people from 62 organizations involved with retailing congregated at the Westin Galleria to network and hear speakers present on the timely theme “Moving forward: innovation and discovery to survive, evolve, and thrive.”

Presenters included presidents and CEOs of major brands such as Home Depot, Nieman Marcus, Olive Garden, and Office Max, as well as authors, analysts, and researchers. Attendees took home valuable lessons about how to improve their business during the recession—and encouragement that there are sunny days ahead in the economic forecast.

“This past year in retail has been like the Mountain Ride at Disney: exhilarating, unpredictable with many twists and turns.”
— Gayle Tremblay, Vice President of Neiman Marcus’ Last Call Stores

Green is good, family is great

Each presenter confirmed that the retailing industry is undergoing a fundamental change. From her position as vice president of Neiman Marcus’ Last Call Stores, summit presenter Gayle Tremblay observes that consumers, even luxury consumers, have a new relationship with money: they are more mindful of their spending in an uncertain future. Retailers will have to stay laser-focused on customer needs and be flexible, she said. What are her customers looking for? She says that family values and eco-friendly initiatives are generating sales currently.

Michael Exstein, a senior retail analyst at Credit Suisse, warned retailers during his address that the business model of shopping malls is no longer viable.
Michael Exstein, a senior retail analyst at Credit Suisse, warned retailers during his address that the business model of shopping malls is no longer viable.

What’s not working in retail? Shopping malls. That’s the conclusion of presenter Michael Exstein, a senior retail analyst at Credit Suisse. With his Wall Street analyst no-holds barred delivery, Exstein said that the business model of malls is no longer viable. There are too many of them and they are too dependent on the productivity of anchor stores. He foresees further consolidation in the retail sector as more and more shopping is done on-line rather than on-site.

But Exstein isn’t down on retail. “Retail is a wonderful business. Fast changing. Exciting. Cyclical,” he says. As for the financial outlook, Exstein sees modest recovery in the fourth quarter of this year. His recommendations to retailers included store regeneration instead of building new stores; looking for opportunities in middle markets (between low end and luxury); and trumpeting sustainability efforts. There is an overwhelming desire on the part of consumers to hear companies talk about sustainability, so retailers must communicate about their green initiatives, he says.

The Home Depot CEO Frank Blake echoed the sentiment that growth will come from existing stores, and he plans to invest in his stores by investing in his people and merchandise. In a casual interview, Blake said his leadership vision places the CEO at the bottom of an inverted pyramid. It’s the people who work in the stores who have the greatest impact on their brand, profit, and business success, he says. To rebuild customer trust, Blake is redirecting the chain’s strategy to emphasize speed, simplicity and customer service that enables “more saving, more doing.” For his female customers, who make up a surprising 49% of shoppers, new lines like Martha Stewart will offer stylishly designed products that make the warehouse environment more welcoming, while expanding the DIY chain into new business categories.

Brand = promise to serve

After all of the shake up of the recession, companies need to reinforce their brands, especially if the brand has been repositioned due to the economy. Stan Richards, founder and leader of the Dallas-based Richards Group advertising agency, advised the audience about his Sphericalâ„¢ branding technique. With spherical branding, the brand is implemented at every contact point. Relationship marketing, public relations, even the company’s internal communications—their messages must all be integrated with the brand, he says.

The first step to making that happen is to clearly define the business, as well as the brand’s positioning, personality, and imagery or logos. Those branding strategies guide the development of communication plans for each point of customer contact, with the result being a brand that lasts longer than the average company CEO (three years) or marketing officer (less than two years). Clearly identifying the brand vision for internal audiences is as important as external communication, says Richards.

He should know: his company is responsible for highly memorable brand campaigns such as Chick-fil-A’s “Eat mor chikin,” Motel 6’s “We’ll leave the light on for you,” and Fruit of the Loom’s Fruit Guys.

“If a brand promise has easy substitutes among competitors, then the brand is a commodity. Great brands must have a compelling, unique promise, emotional connection, and align and direct the organization’s every decision.”
— Dave Pickens, President, Olive Garden Restaurants

Dave Pickins, president of Olive Garden Restaurants also spoke about brand management, and the unique promise an organization makes through a brand.

“If a brand promise has easy substitutes among competitors, then the brand is a commodity,” that is, a good that anybody can produce without differentiation across the market. “Great brands must have a compelling, unique promise, emotional connection, and align and direct the organization’s every decision,” says Pickins. A brand should differentiate a company from its competitors so that consumers understand the product or service is something you can’t get anywhere else. When you achieve that level of brand loyalty, your customers become apostles for the brand.

Where does a brand come from? Your brand and its promise must be based on inspired consumer insight, says Pickins. For Olive Garden, the brand is all about an idealized Italian family meal. The American public laments the loss of family time he says, so Olive Garden taps into that longing with an emotional connection: shared salad and breadsticks around the table and a boisterous environment make it more like a meal with extended family at home. Employees’ warm and caring demeanor feeds this brand as well. Across all customer touch points, their brand message “When you’re here, you’re family” is repeated.

“The real from the genuine, not the fake from some phony”

Today’s consumers are interested in real experiences and lasting products, says James Gilmore, author of Authenticity: What consumers really want. In an ever more commercialized, intentionally staged, and technologically mediated world—an increasingly unreal world—people want the real from the genuine, not the fake from some phony, says Gilmore. His advice to retailers is to think about experiential ways to improve business by focusing on how you do things rather than what you do. Retailers must engage the consumer’s five senses and create a unique, memorable, real experience.

On a related note, Leonard Berry, Distinguished Professor of Marketing at A&M, suggested that retailers take a lesson from the Mayo Clinic, which is known for it’s high level of customer service and satisfaction. Berry says retailers must manage the three types of clues sensed by consumers which determine the experience: functional clues (technical quality—the product does what it’s meant to do); mechanic clues (tangible and sensory elements, such as cleanliness or store layout); and humanic clues (personal interactions).

At the Mayo Clinic, respect for the patient is one of the highest priorities. That is something vital that is missing from retail today, Berry says. Retailers must value a customer’s presence, time, privacy, self-esteem, and voice if they want to provide truly great service.

“Advertising is the tax you pay for being unremarkable.”
— Robert Stephens, Chief Geek and founder of The Geek Squad

One other thing sets the Mayo Clinic apart: they don’t advertise. Their brand reputation of quality is so strong, they don’t need to. Retailers often have fantastic advertising and horrible customer service, says Berry, and that disconnect is what’s wrong with retail in America today. Retailers must define what great service looks like in their organization, then “major in the minors” by paying attention to all of the details that effect the customer experience.

Sam Duncan, CEO of OfficeMax, argues that something else is wrong in corporate America today, and that is a lack of integrity. His path to the corner office began bagging groceries at Albertson’s. As he moved up through the ranks, he infused the companies he led with his personal values including integrity, accountability, teamwork and trust. He says employees must think about the company and customers first, while applying focus, energy and discipline to all they do. To the students in the audience, Duncan provided a model of servant leadership, where success is defined not by multi-million dollar compensation packages but by “being honest, even when it hurts.”

In addition to the keynote presenters, summit participants shared ideas during break-out sessions and round table discussions on topics such as customer experience; going green and brand image; lessons from the last recession; new retail business models; and best practices in multi-channel marketing, among others.

Rising from the ashes

More than 200 people from 62 organizations involved with retailing congregated at the Westin Galleria to network and hear speakers present on the timely theme “Moving forward: innovation and discovery to survive, evolve, and thrive.”

Jim McIngvale’s story of triumph after tragedy at Gallery Furniture was the high point of the summit for many attendees. One participant said she found his presentation “inspirational and motivating,” as he shared details about how his company has flourished thanks to a corporate culture built on a “never give up” work ethic, and a local community that supported his business in crisis. “Not everyone has a literal fire occur, but we all have met with some overwhelming challenges,” said the participant.

The theme of the summit was that the same principals of perseverance and determination McIngvale shared must be implemented by all retailers in this changing and challenging economy if they are to emerge more vibrant and profitable than ever when the recession is over.

Plans for the fall 2010 Retailing Summit are underway.

Categories: Centers, Featured Stories

As Congress debates historic changes to the health care system, the business community prepares to react. How will the pending legislation affect businesses?

This is the topic of the panel discussion “The business of health: expert insights and perspectives,” to be presented Thursday, November 12, in Houston. Hosted by the Full-Time and Executive MBA Programs from Texas A&M University’s Mays Business School, the event is free and open to the public, though seating is limited. Registration is required by November 6: Click here to register online now.

The panel will feature A&M faculty members as well as industry and policy experts. Presenters will include J. James Rohack, MD, president of the American Medical Association and director of the Center for Health Care Policy at Scott and White Clinic; Bruce Broussard, chairman and CEO at U.S. Oncology; John Kajander, senior vice president of the Texas Medical Center; and David Kasper, vice president of benefits at Waste Management, Inc. Michael Wesson, associate professor of management at Mays, and Robert Ohsfeldt, professor of health policy and management at the School of Rural Public Health at Texas A&M Health Science Center, will round out the panel. Loren Steffy, business columnist at the Houston Chronicle will moderate.

The event will be held at the Federal Reserve Bank of Dallas—Houston Branch. Registration, networking, and refreshments will begin at 5:30 and the panel discussion will continue from 6:30-8:00 p.m. See mays.tamu.edu/health for more information and to register.

For more information about this event or the Texas A&M University Executive MBA Program at Mays Business School, contact Kristin Cooper at (979) 458-4571 or kristincooper@tamu.edu. News agencies interested in covering this event are asked to register by contacting Cooper. Confirmation will be provided.

About Mays Business School and the Texas A&M Full-Time MBA Program

Mays Business School currently enrolls more than 4,000 undergraduate students and 875 graduate students. The Full-Time MBA program is highly selective, with an acceptance rate of 23 percent. Currently there are 172 MBA students in their intensive 16-month program.

About the Texas A&M Executive MBA Program

The Executive MBA Program equips today’s working leaders with the skills and knowledge they need to excel in a rapidly changing organizational environment. The unique program is built around an ongoing study of how value is created in all aspects of an organization’s operations. Peer discussion and real-world case studies replace the typical lecture-driven classroom format. The result is a highly interactive learning environment that provides each participant with knowledge they can put to work immediately. The 18-month program begins a new class each August. For more information, please contact the Executive MBA office at emba@tamu.edu.

Categories: Programs