Incentive planning system wins Marketing Science prize
The 2006 INFORMS Society for Marketing Science Practice Prize competition judges declared a winner at the 28th Marketing Science Conference in June, hosted by the Katz Graduate School of Business at the University of Pittsburgh, USA.
The prize is supported by grants from the Marketing Science Institute, the Brand Science Institute, the Institute for the Study of Business Markets, the European Marketing Academy, and the Australian Marketing Institute, in conjunction with the Australian and New Zealand Academy of Marketing.
The winning entry was ‘Incentive Planning System: A DSS for Planning Pricing and Promotions in the Automobile Industry’, by a joint team of Professor Jorge Silva-Risso from the University of California, Riverside, and J. D. Power’s Irina Ionova.
Their work reports on a promotion analysis tool that enabled car manufacturers to improve the timing, frequency, and components of their promotional activity to maintain sales but reduce margin loss.
The authors presented evidence of savings in the order of $2 billion, with Daimler Chrysler executives alone claiming annual benefits of $500 million. The researchers used the sales data available to J. D. Power to help them work with individual car manufacturers to calculate the dynamic impact of sales promotions. The work was implemented in a phased approach, allowing an evolutionary increase in sophistication among its users.
The Practice Prize is awarded for an outstanding implementation of marketing science concepts and methods. The methodology used must be sound and appropriate to the problem and organisation, and the work should have had significant, verifiable and, preferably, a quantitative impact on the performance of the client organisation.
The 2006 Practice Prize Committee comprised Nils Andres (representing the Brand Science Institute), Pete Fader, Delaine Hampton from Procter & Gamble, Dominique Hanssens (representing the Marketing Science Institute), Gary Lilien (representing the Institute for the Study of Business Markets), John Roberts (Prize Committee chair), Steve Shugan (as Marketing Science editor), Jan-Benedict Steenkamp (representing the European Marketing Academy), and Tulin Erdem (as ISMS president).
ABOVE: Prize Committee chair Professor John Roberts (left) presents the winners' plaque to Professor Jorge Silva-Risso, from the University of California, Riverside.
The other finalists in the competition
‘The Power of CLV’, by V. Kumar, Denise Beckman, Tim Bohling, Rajkumar Venkatesan
This research described a carefully planned and implemented program within IBM to optimise the number of times the organisation ‘touches’ its customers, incorporating innovations with respect to alignment with corporate objectives, forecasting cost to serve, imputing unobserved contribution margins, and allowing for interdependence of purchase incidence and quantity.
‘BRAN*EQT: A Model and Simulator for Estimating, Tracking, and Managing Multi-category Brand Equity’, by Venkatesh Shankar, Pablo Azar, and Matthew Fuller
In the BRAN*EQT study, the researchers examined the drivers of the Allstate brand name. By understanding how advertising investments directly influenced the brand equity of Allstate, the researchers were able to make brand-building activities within the firm accountable.
This led to advertising changing from being viewed as a discretionary cost to a strategic investment. One of the useful aspects of the research was to ‘untease’ the benefits of corporate branding into the advantages that were captured by each of the divisions within Allstate.
‘Planning New Tariffs at Tele.Ring – An Integrated STP Tool Designed for Managerial Applicability’, by Martin Natter, Andreas Mild, Alfred Taudes, and Udo Wagner
Tele.Ring is a leading cellular phone supplier within Austria. A new entrant threatened its position and past experience suggested its share could become marginal as it was squeezed by different players within the market. By undertaking a detailed segmentation study, Tele.Ring was able to identify a new market opportunity of no upfront subscription charges, which would be difficult for other competitors to mimic.
A sophisticated perceptual mapping study not only made the resulting service innovation credible to senior management, overcoming internal barriers to its launch, it also provided ideas as to how the product could be introduced with a compelling and relevant advertising campaign.
Presentations available for study
As with previous competitions, the presentations were professionally videotaped and have been edited especially for classroom use. These DVD versions of the presentations are in chapter format, enabling rapid and easy selection of the aspects of the presentations that instructors wish to highlight.
DVD users also have access to the papers and the related competition PowerPoint presentations for use in the classroom. This material, along with the material from previous competitions (available now), will be available by 15 October at http://www.informs.org/Edu/MarketingScience
In addition, papers and reports on these outstanding implementations of marketing science will appear in a forthcoming issue of Marketing Science. Short 3-4 minute video summaries of each of the presentations are now available at http://www2.informs.org/Edu/MarketingScience/
Entries in 2007
Entries are being sought for the 2007 Practice Prize Competition. For further information, contact John Roberts at JHRoberts@london.edu |
