Research Spotlight: Marketing insights from the Trulaske College of Business

While faculty members of the Marketing Department at the Robert J. Trulaske, Sr. College of Business are focused on preparing their students for careers in marketing, retail, promotion, sales, marketing research and analytics, they are also sharpening their expertise through research that examines the most relevant issues in marketing today. 

Brand survival in the dynamic world of online shopping

Assistant Professor Julien Bei

Today, online brand-aggregator platforms, such as Amazon and Alibaba’s Tmall, have emerged as powerful intermediaries for many brands. These ever-expanding platforms provide consumers with unprecedented access to their favorite brands, making it easier than ever to compare prices and take advantage of resales and discounts. 

But what about the brand experience -- and ultimately, the brand performance? 

New research from Julien Bei, assistant professor of marketing, found that the answer depends on who controls the prices and promotions – the platform or the brand. Bei found that brands that set their own prices and promotions and use online platforms to sell directly to their customers (third-party marketplace) experience an increase in market shares over time, especially if they have prior direct-to-consumer experience. However, brands that use online platforms as resellers or wholesalers (one-party marketplace) and those who relinquish their power to set prices and promotions lose market shares over time. 

intermediary is a broader concept, which includes wholesalers (buy from Kellogg's and sell to Walmart), retailers (Walmart, Target), etc.

“That’s because an intermediary – a company that acts as a middleman and purchases from a large producer such as Kellogg and sells to Walmart or Target -- will sometimes price a product really low,” Bei said. “And what that does is change the consumer’s perception of the brand – they begin to think that the lower price is really what the brand is worth. So, when they go to another seller, they will not be willing to buy the brand at a higher price. And that creates a long-term problem for the brand.”

For this study, Bei examined the performance of nearly 2,000 brands over a 10-year period on two online platforms in China: JD.com, which serves as an intermediary for brands, and Alibaba’s Tmall, which allows brands to retain control of pricing and promotions. He also learned that as online brand-aggregator platforms rapidly increase in size, the online retail landscape is consolidating globally. By 2025, four of the five biggest retailers worldwide will be online platforms and ecosystems -- Alibaba Group, Amazon, Pinduoduo and JD.com -- implying that these platform giants will emerge as ever more powerful channel members and powerful brands in their own right. In the United States, Amazon has seized 50% of online retail sales and has access to the information of 142 million Amazon Prime members, which represents 43% of the U.S. population. 

According to the study: “Millions of brands, big or small, are eager to be present on these brand-aggregator platforms. However, for most brands, selling through such platforms is beyond simply finding another gateway to their consumers, as these platforms increasingly control access to their consumers. The rewarding and disruptive power of these brand-aggregator platforms easily becomes a sweet blessing or a bitter curse for a brand, not only lingering in the online space but also spilling over into offline.”

Sometimes this offline impact comes from “rogue” sellers who buy up leftover brand-name products from wholesalers and resell them on third-party sites at drastically reduced prices; thus, calling into question the brand’s reputation over time. 

“The issue with rogue seller is tough because collecting data on these sellers is difficult, which makes it a very gray area in retail,” Bei said. “What we’ve found is the impact of a rogue seller on a site can reach far beyond the site and into other platforms.”

The issue of what type of platform online brand-aggregator platform becomes even more complicated for luxury brands whose reputation and sales depend on their exclusivity. Bei’s study found that the impact of losing control of pricing and promotions on the one-party marketplace platform was far more severe for luxury brands. He recommends luxury brands use third-party marketplaces to retain their exclusivity. 

Bei said he makes it a priority to develop his research questions based on current issues in the business world. “I want my research to be well-connected to the industry,” he said.

Bei’s paper, “The One-Party Versus Three-Party Platform Conundrum: How Can Brands Thrive?” was published in the Journal of Marketing. 

The linguistic properties of effective slogans

Assistant Professor Brady Hodges

Slogan, together with a brand’s name and logo, constitute the three key elements of brand identity. In general, brand names tend to be one or two words, and both brand names and logos rarely change. 

Slogans are different. They are typically multiple words and can be updated as firms adapt or reinvent themselves. This makes slogans the most dynamic of the three elements of a brand’s identity, and an invaluable tool for building brand. But what goes into creating an effective slogan?

Answering that question is at the heart of Assistant Professor Brady Hodges' research, which lies at the intersection of cognitive psychology and marketing and contributes primarily to the domains of pricing and branding. Hodges especially focuses on numerical cognition, psycholinguistics, semiotics and cross-cultural consumer behavior.

Hodges' recent research on the linguistic properties of effective slogans found that businesses can improve their brand recognition through specific changes to their slogans. The research also provides guidelines for business owners and managers about the best practices for slogan creation. The findings show that slogans that are longer, include the brand name and use uncommon words are likely to be more memorable among potential consumers. The findings also show that slogans that are shorter, omit the brand name and use simpler language are more likely to make the brand more likable in potential consumers’ eyes. 

Hodges pointed out that it is important for businesses to first determine what stage of brand building they are in. For example, the research found that having a memorable slogan – one that is longer and uses uncommon words – might turn some potential consumers off but could help a newer brand make a name for itself. 

Hodges’ interest in slogans was intensified when he discovered there had been little scientific research into effective slogan creation. What he found was only surface level and abstract, such as slogans should be creative and skillfully worded or “capture the soul of the brand.” 

But why do some words in slogans resonate more than others? With this latest research, Hodges has completed five different studies that help businesses understand why people like or remember certain slogans better than others. His studies have consisted of slogan testing and surprise memorability tests of real current slogans, fake YouTube bumper advertisements and eye-tracking technology to track people’s attention on individual words as they read slogans.

Through these steps, Hodges has determined best practices for brands based on specific qualities of the slogan, which is novel information for businesses. That way, business owners can use these findings to create slogans that they know are maximizing either their likability or memorability and to understand why a slogan works or why it does not. 

His paper, “Intel Inside: The Linguistic Properties of Effective Slogans,” was published in the Journal of Consumer Research. 

Marketing capabilities can help distressed firms turn around

Assistant Professor Niket Jindal

No matter the industry, even well-managed firms can experience financial distress. However, why do some firms recover and others don’t? 

According to new research from a team of researchers including Niket Jindal, an assistant professor of marketing whose research uses quantitative marketing techniques to study marketing’s effect on firm value and risk, the key to recovery for struggling firms is to first identify the source of the distress – is it firm specific or industry wide? 

Using empirical data, Jindal and his coauthors discovered that when the source of distress is firm-specific, it is marketing capabilities – how effectively and efficiently marketing dollars are used – that enable a firm to turn around. However, when the distress is industry driven, it’s a firm’s research and development capabilities – how effectively and efficiently research and development dollars are used – that aid most in the firm’s recovery. The study looked at 1,488 distressed manufacturing firms over a 27-year period (1995-2021) of which 88% survived. 

“Although operations capability and cost-reduction actions do help distressed firms survive, they do not help firms regain financial well-being,” Jindal said. “Overall, these results highlight the importance of capabilities in the context of distressed firms and have implications for both firm managers and shareholders.”

In general, there are three outcomes for financially distressed firms: bankruptcy, continued distress or recovery. Previous research has shown that distressed firms use three turnaround strategies to recover: cost-cutting, increasing revenues through additional spending and risk-shifting. 

Jindal and his coauthors’ study found that cost-cutting alone might not bring a firm out of distress, even though the stock market often rewards such measures. The problem is cost-cutting measures often include reducing marketing expenses such as advertising. For example, Wonder Bread America first tried to salvage its business by cost-cutting. It curtailed advertising and product development -- even as customers’ tastes shifted to multigrain bread, the owners refused to expend the advertising dollars needed to introduce Wonder Bread’s multigrain product offerings. The result, the company eventually filed for bankruptcy.

The second go-to strategy for turning businesses around is to increase spending. However, the bankruptcies of companies like Toys “R” Us, despite substantial spending on advertising, seem to dispute the use of this strategy, Jindal’s study found.

Finally, the third strategy that distress firms often employ to recover is risk-shifting. That is when a firm takes on additional debt to increase cash flows while not necessarily making internal improvements. Managers often take on additional debt to delay an expected bankruptcy declaration or because they believe that additional cash flow obtained from borrowing will enable them to recover. That strategy didn’t work for Hertz, which filed for bankruptcy in 2020 despite taking on more debt to remain profitable.

But Jindal and his coauthors’ research found that a more nuanced look at the recovery of distressed firms showed a connection to the efficient and effective used of assets such as advertising. So, it wasn’t just spending more on advertising or on research and development but using those dollars for efficiently and effectively.

“It’s getting more bang for your buck,” Jindal explained, adding there has been little research into how well marketing costs are managed compared to the revenue-generating aspect of marketing. “Though research suggests that cost-cutting, spending or risk-shifting measures may help a firm survive, such actions may not foster recovery from distress. Instead, our findings imply that investing in and maintaining firm capabilities, especially marketing capabilities, is critical.”

A secondary implication involves debtholders including capabilities in their credit risk models to help determine which of their high-risk business customers is the least likely to go bankrupt. Suppliers might also consider a firm’s capabilities when deciding on whether to dial back exposure to distressed firms. 

This paper follows previous research Jindal has done on bankruptcy involving the effects of advertising and research and development on the spillover from a rival’s bankruptcy. 

Jindal’s latest paper, “Marketing capability and the turnaround of financially distressed firms,” was published in the Journal of the Academy of Marketing Science. 

The influence of lobbying on product recalls in the auto industry

Assistant Professor Khimendra Singh

Product recalls are inevitable in many industries. There was the Johnson & Johnson Tylenol recall, Pfizer’s Bextra recall and hundreds of toy recalls. But for the automobile industry, recalls are especially pervasive. 

While there have been many studies on the topic of product recalls, most of them focus on events after a recall has been issued, such as the impact on sales or the stock market. However, a new study from Khimendra Singh, assistant professor of marketing, focuses on what events impact the decision to issue a recall in the first place – specifically, the impact of lobbying. 

Based on nine years of multi-source data from the automotive industry, Singh discovered that more money in lobbying expenditures is associated with fewer voluntary or mandatory recall decisions. In fact, about $417,014 more in lobbying expenditures is associated with one less voluntary recall.

“Conventionally, objective product quality should be the only factor influencing recall decisions, Singh said. “However, the evidence suggests otherwise. Product defects can cause severe societal impacts, such as loss of lives and economic loss. Therefore, any element that may bias corrective actions to address product defects should be examined.”

Additionally, Singh found that political influence through lobbying might also affect mandatory recall decisions by the industry’s regulatory agency -- the National Highway Traffic Safety Administration (NHTSA). Results suggest that firms with higher lobbying expenditures are likely to face fewer mandatory recalls -- approximately $1.55 million more in lobbying expenditures is associated with one less mandatory recall.

Singh became interested in researching what impacts the decision to issue a recall after learning about a 2010 U.S. Congressional report that examined Toyota’s slow response to accidents involving its vehicles in 2009-10, which were linked to sudden acceleration flaws. The congressional report discussed an internal document in which company officials highlighted several wins, such as delaying final safety rules and persuading the regulatory officials to impose smaller sanctions. 

Before entering academia, Singh worked as a consultant focused on clean energy and sustainability issues. He often represented clients in front of government agencies and interacted with policymakers. 

“I had the experience with the regulatory and political system,” he said. “So, when I began my doctorate, I wondered about a possible political angle that plays an important role in marketing decisions in the auto industry.”

The study was the result of work Singh completed towards his doctorate in marketing from the University of North Carolina-Chapel Hill in 2021. 

While the study found that lobbying may impact the number of recalls in the auto industry, Singh said banning lobbying isn’t the solution. “One could argue that there is a good reason why lobbying started in the first place – it can help you raise your voice in the political system which is a good thing,” he said. “We live in a society where our voices should be heard. However, we do need to take actions to ensure things are happening in the right manner.”

During his research, Singh discovered that as the number of media articles concerning a particular defect increased, the influence of lobbying may decrease. In other words, the active presence of different actors, such as consumer watchdog groups, in the media space can help reduce the influence of lobbying.

Singh’s research into issues involving product recalls in the auto industry continues, but this time, he is studying the impact on auto dealers. Another stream of research for Singh is digital products and the impact of digital content piracy.

Singh’s paper, “Lobbying and Product Recalls: A Study of the U.S. Automobile Industry,” was published in the Journal of Marketing Research.