Haas School of Business

Leading Through Innovation

The Haas School's Strategic, Quantitative Approach to Marketing

The Haas School's Strategic, Quantitative Approach to Marketing

(Aug. 2011) Berkeley-Haas marketing curriculum emphasizes strategy and data. This approach has its roots in the pioneering research of such faculty members as Professor Emeritus David Aaker, at Haas from 1968 to 2000, and Professor Rashi Glazer (pictured above), who retired in Spring 2011. Read on to learn about their pioneering research and about the innovative teaching and research of current marketing faculty.

Are you willing to transform your business from a bus into a taxi? That's the first question Haas Professor Rashi Glazer might ask when evaluating your firm's marketing plan. Glazer has nothing against the bus. It's a perfectly respectable business model, as long as you have customers willing to ride on your schedule, to destinations along your route. But when customers' needs change, the bus doesn't respond. It plods along the same streets, making all the scheduled stops, even when no one's there.

A taxi, however, is only in business when a customer hops in and tells the cabbie where to go. As Glazer describes it, a taxi service is "smart" because it's a partnership with the customer. For him, "smart markets" break down the traditional roles of producers and consumers by creating true partnerships between firm and customer. "Increasingly, the customer is the most important asset of any business," says Glazer. In this data-rich age, he adds, "firms are going to look deeper into information about customers as the way to win in the marketplace."

Glazer's trailblazing theory about smart markets – introduced in 1991, years before the Internet boom – is one example marketing thought leadership at Berkeley-Haas. Exposure to this kind of path-breaking research, along with rigorous coursework has led as many as 20 percent of full-time Berkeley MBA students to take jobs in marketing each year – a higher percentage than Northwestern's Kellogg School of Management.

"Historically, marketing has been done at the gut level," says Teck-Hua Ho, chair of the Haas School's Marketing Faculty Group, explaining what sets Haas apart. "But we are interested in how the firm's strategy links to the marketing strategy, and how the marketing strategy helps the firm to grow and become more profitable."

Strategic

This strategic view permeates the school's marketing course offerings, from Glazer's core course to Ho's pricing class, which are both among the school's most popular classes. If there is a mantra to Glazer's course, it would be "every strategic decision a company makes is a marketing decision."

Pullquote"I still rely on the insights I learned from Professor Glazer's Marketing class," says Patrick O'Neill, MBA 05, brand manager and recruiter at Del Monte Foods in San Francisco. "Marketers can get caught up in the latest technology; he kept coming back to the need to develop products and services that meet unmet consumer needs."

Ho helps develop this mindset in his Strategic Pricing course. "My vision is to have students leave my class with the ability to think strategically about pricing and with the practical tools they need for their future careers," says Ho.

Students frequently see marketing in practice through assignments with real companies. LaLoo's Goat Milk Ice Cream Co., for example, asked students in Ho's class if it should lower its prices to generate more sales. After conducting surveys and testing prices at different stores, the students found limited brand awareness – not price – was to blame for slow sales. "The students learned that when things are not selling, the first reaction shouldn't be cut price," says Ho.

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Quantitative

Haas also is a leader in teaching a data-driven approach to solving marketing problems, reflecting the evolution of marketing from a qualitative, creative field to a quantitative science. Glazer, for example, has been a pioneer in studying the impact of information on marketing: His influential 1999 article "Winning in Smart Markets" defined a smart market as a turbulent, information-intensive field with constantly changing products, customers, and competitors. Such markets, he argued, require a shift in performance goals from profitability per product to profitability per customer.

"You learn a very thorough, analytical methodology at Haas," says Intel CEO Paul Otellini, MBA 74, who started in the marketing and sales side of Intel to become the first non-engineer to head the semiconductor giant. At Haas, "we relied heavily on a strategic data-driven approach to problem-solving. That has worked extremely well for me in the high-tech industry."

Indeed, Otellini was executive vice president of Intel's sales and marketing group when Financial World named Intel the world's third-most valuable brand, thanks in part to its innovative "Intel Inside" campaign. The campaign is considered among the most successful ever in marketing.

Pioneering Scholars

Glazer is one of several Haas faculty members who have influenced the field of marketing with pioneering research. "The research culture of the faculty is focused singularly on making path-breaking contributions to marketing strategy and behavior rather than incremental contributions," says Professor Ganesh Iyer, also co-chair of the Haas Marketing Group.

"We not only value the understanding of marketing problems through the development of theory, but also empirical analysis that validates the theory or uncovers phenomena," Iyer adds.

Glazer, who joined the Haas School in 1989, and Professor Emeritus David Aaker, who was at Haas from 1968 to 2000, are among the forward-thinking faculty members who have helped turn Haas into one of the top-ranked marketing schools in the world. Aaker is one of the world's leading branding experts and award-winning author of more than 100 articles and 14 books. He returns to Haas every spring to give a special marketing lecture, and will return in 2011 to talk about his new book Brand Relevance: Making Competitors Irrelevant.

While Glazer and Aaker have taught a generation of students about marketing, a new cadre of influential scholars has picked up the torch. They include Professor J. Miguel Villas-Boas, who this year won the INFORMS Society for Marketing Science's inaugural Long-Term Impact Award for a groundbreaking paper that launched a significant change in marketing methodology. The paper, which Villas-Boas co-wrote a decade ago, led marketers to incorporate a range of "marketing-mix variables" into strategic marketing plans.

Villas-Boas and Assistant Professor Zsolt Katona teach Marketing Strategy courses at Haas, using the MarkStrat simulation pioneered at the school to allow students to make key decisions over the life of a firm. The core message to students, Katona says: "You can't be successful if you don't think of the big picture."

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Steering the Sports Car Market

Indeed, alumni in marketing repeatedly credit their success to their high-level, strategic thinking combined with strong analytical skills – both developed at Haas. Take Chas Murphy, EWMBA 07, who last year made AutoWeek's list of "10 Secret People" that the magazine said are distinguished by their "smarts, talents, wit, charm, capabilities, and single-minded drive."

As a manager overseeing the sports car line for Audi of America, Murphy helped steer the company's decision to enter the exotic sports cars market. Murphy used logistic regression analysis (a statistical tool to forecast event probabilities) that he learned at Haas to predict how many new sales Audi would gain from launching a sports car with a V10 engine and how many sales would cannibalize customers from its V8 line.

"It was a new segment for us. We were going to compete in a place we never had before with Ferrari and Lamborghini, and we needed data to make the right decision," says Murphy. "I was able to present to the board what I thought the loss or gain in sales would be."

"When the car launched, I was correct with my prediction," adds Murphy, who was promoted in September to head the company's strategy planning department. The CEO of Audi of America cited Murphy's strong analytical reputation in the company in giving him the new job.

The Future

Glazer believes marketing still has a long way to go in terms of taking advantage of ever-increasing abundance of data. "We're moving into a phase where the customer co-creates the product," he says. Custom-styled Levis and Nikes, customized computers from Dell, and highly personalized news from Google are just the beginning of these types of marketing-driven partnerships between firms and consumers that will power Glazer's "smart markets" future.

In this future, a successful firm is the one that pulls up close to its customers, invites them inside, and takes them where they want to go. With the marketing skills that students develop at Haas, there's no doubt that the school's alumni will be driving that success.

Photo: Gabriela Hasbun
Story: Cyril Manning

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