The New Marketing, According to Tuck Faculty

Tuck marketing faculty weigh in on the evolution of marketing—and the marketing strategies that shouldn’t change.

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How to Get Multichannel Distribution Right

Kusum L. Ailawadi

Charles Jordan 1911, TU’12 Professor of Marketing

When it comes to multichannel distribution, the biggest opportunities turn out to be the biggest challenges.

“Today we have the opportunity of reaching consumers in multiple ways, but if you are a supplier of a product or service, that’s also your biggest challenge because the decision of what distribution channels to use, and how, is a really, really hard one,” says Kusum Ailawadi, the Charles Jordan 1911 TU’12 Professor of Marketing. “Not only are you trying to figure out whether you need a certain channel and a certain channel partner or not, but adding one invariably makes your existing channel members unhappy because you’re bringing in more competition to their business. When a company starts to compete with its retail partners itself by going direct to consumer, that is an especially sore point, and yet it’s what many companies find logical to do these days.”

Conundrums like these became especially apparent during the pandemic when e-commerce spiked—causing many companies to up their game on digital distribution—then plateaued as consumers returned to shopping in person with a vengeance. This shift caused manufacturers to shuffle around their operations and negotiate with distribution partners while trying to find the right balance.  

“The challenge for manufacturers and retailers alike has been getting up to speed on digital, then focusing on physical, then figuring out what the balance between the two is going to be like in the future,” Ailawadi says. “This is true whether you are a digital native realizing you must also master brick-and-mortar or a traditional marketer integrating digital and direct channels into your mix.”

Ailawadi has spent more than two decades researching the interaction between suppliers and their channel partners. She has published award-winning articles in top marketing journals and is the author of Getting Multi-Channel Distribution Right, a definitive resource for managers and MBA students that provides metrics, tools, and frameworks to successfully manage distribution in physical and digital channels.

She references Nike as an example. Despite its brand equity, the company has continuously been evolving its distribution to match changes in the market: expanding then contracting its distribution coverage in the stores of independent retailers, being off Amazon, then on, and then off again, and leaning into direct-to-consumer distribution—a channel that Nike has been able to grow significantly, in large part because of its large product portfolio, strong brand equity, and its investment in consumer pull and customer analytics.

“Nike is a strong brand with a large portfolio of products and substantial consumer search loyalty, and without that, they would not have been able to make their direct-to-consumer channel as strong as it is,” Ailawadi says. “Paring down the number of their independent retailers to buttress the business of the ones they retained was also important. Still, the company will need to continue to balance and adjust because its reliance on independent retailers is not going away any time soon.”

When it comes to devising a multi-channel distribution strategy, there’s no one-size-fits-all model to follow. Ailawadi acknowledges that it’s complicated and advises thoroughness. As explored in detail in her book, she says it’s important to fine tune your strategy and arrangements with your different distribution channel partners and then track the right metrics. A few questions to consider are: What services do different channel members provide or not provide to consumers? What products should be sold on which distribution channels? Should you harmonize or differentiate across different channels? Who owns customer data? Who sets and monitors prices and retailer effort? 

Says Ailawadi, “We have so many more ways of reaching consumers, in digital and in physical stores, in company-owned and in third-party channels, and if you are a manufacturer or a supplier of a product or a service, the devil is in the details when it comes to managing multichannel distribution.”

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How to Build a Brand That’s Timely and Timeless

Kevin Lane Keller

E.B. Osborn Professor of Marketing

Professor Kevin Lane Keller remembers how different marketing was in the fall of 1978 when he took his first MBA marketing course. The “Mad Men” era of the ’60s had this idea of, “If you build a great ad, they will come,” Keller says, because there were only four or five channels of television, print media, and radio to use to communicate about your brand. Integrated marketing communications with a wider variety of tools and platforms was only just beginning to emerge.

Fast forward to today. Consumers live online. They have higher expectations. They demand transparency from companies, from hiring practices to environmental policies. As such, marketing is more personalized, more customized, much more interactive and no one-size-fits-all way of going about it.

“There’s a million ways to do it,” Keller says. “And that’s the really fun part.” That said, product innovation is crucial to building an indelible brand. Take Nike, for example, a retailer that started with running shoes focused largely on the young male market in the U.S. Now, Nike sells shoes, clothing, and equipment in all kinds of sports to people of all ages all over the world.

“They’re phenomenal,” says Keller, who has served as a brand confidant to the company at different times during his career. “They’re a lot like Apple in that they have really strong intrinsics in terms of the actual performance of the product. They innovate in quality, style, and design, but they match that with really strong extrinsics that satisfy people’s needs, rationally and emotionally, with the whole ‘Just Do It’ idea of empowerment.”

Keller’s texts are mandatory reading for anyone in the industry. He is the coauthor of Strategic Brand Management (nicknamed “the Bible of branding”) and the coauthor of Marketing Management, the biggest-selling marketing textbook in the world. He’s had lengthy engagements with some of the world’s top brands, including Accenture, American Express, Disney, Ford, Levi-Strauss, Procter & Gamble, and Samsung, and published more than 130 papers on marketing topics.

Throughout his career, Keller has noticed that companies who are successful are always looking to the future. “The key is to balance continuity and change, to be timely and timeless,” he says. A good rule of thumb for any marketer is to step back at the end of the day, month, or quarter and ask yourself: What have you done to keep your brand innovative, relevant, and moving forward in the right direction and at the right pace?

“I don’t care what category you’re in—the product that you’re selling now is not going to be the same product in 10, 15, or 25 years,” he says. That goes for even Uber and Warby Parker. Both may be standout brands now, but how will they evolve and grow over time?

“At the heart of a great brand is a great product, and I think some people in branding can get a little too carried away with imagery and other things,” says Keller. “But if you really look at the most successful brands, they have really great products at their core, and they’re always trying to find ways to improve those products and the customer experiences.”

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Marketing Your Perks and Purpose to Your People

Punam Anand Keller

Charles Henry Jones Third Century Professor of Management; Faculty director, Center for Business, Government & Society

It’s a tough time to be in HR. Competition for talent is stiff. Gen Z can be impatient. Employees are retiring early. Job applicants accept offers, but don’t always follow through.

“All of this is very hard on organizational culture,” says Punam Anand Keller. “These problems have only become more salient post-pandemic. How do you keep employees connected and engaged when they’re not even in the office for half the week?”

Keller is a widely acknowledged expert at applying social marketing principles and behavioral theory to improving consumer and employee wellness and maximizing the value they derive from corporate benefit programs. Keller adapts conventional marketing principles and processes to find ways to create added value for employees, e.g., boosting yield in benefit programs by leveraging employee research to create targeted decision points and tailored communications for different employee segments. You can find an example of this approach in her paper, “Effectiveness of Corporate Well-Being Programs: A Meta-Analysis” published in The Journal of Macromarketing.

Annual benefits enrollment events often fail to motivate employees, so Keller uses decision points such as unexpected crises, promotion reviews, and employee relocations to drive employee engagement. Such strategies are crucial to reach employees relying on their companies to provide more than standard retirement advice, e.g., tips on financial planning or how much to put aside in a health savings account.

Keller notes that these perks are not solely for attracting and retaining talent. Employee satisfaction puts a cap on customer satisfaction, especially in service businesses.

Keller, who served as president of the Association of Consumer Research, has spent her career helping companies, foundations, and government agencies design and implement programs to help consumers, employees and the general public adopt smart health and saving behaviors. Her research has received much recognition and awards for how skillfully it tests theories of consumer psychology in real-world field settings. At Tuck, she has taught courses in social marketing and cause marketing.

Keller notes that in addition to perks, many employees want to work at organizations that have good governance practices and do right by the environment and humankind; they are looking for companies that share their values. “Employees want a 360° experience,” she says. “They want to know how to live a balanced life, and how to give back to their communities.”

Most companies nowadays state their values in their mission statements and on their websites, but supporting this internally to employees is of equal importance. In fact, some companies have enlisted employee ambassadors to encourage other employees to engage in a value-consistent manner. At some companies, these functions are owned by HR, but Keller says that in general, employees don’t know who to turn to for help with these functions at their companies. In the future, Keller is interested in looking at whether HR needs its own rebranding.

“HR may not be trained to think about value propositions and get data from employees in ways that can help them design new benefits or help them customize their benefits, just like how marketing is customizing externally,” she says. “It’s a big challenge, and I hope to share more research on this.”

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New Data Sources Measure the Incrementality of Marketing Campaigns

Scott Neslin

Albert Wesley Frey Professor of Marketing

Until about a decade ago, marketers relied on customer purchase histories to predict whether shoppers would respond to marketing campaigns. Would they purchase? Would they re-subscribe? Would they engage?

This worked fairly well, but the elephants in the room were two untapped data sources: the text of the campaign and its pictorial images. Today, using sophisticated methods for compiling and analyzing these data, marketers have an even better chance of predicting customer response.

“The surest way to peer into the customer’s future is to stand on the everbroadening shoulder of better data,” says Scott Neslin, Tuck’s Albert Wesley Frey Professor of Marketing. Neslin has been a professor at Tuck since 1978 and is a prolific author with deep expertise in statistical modeling.

An example of leveraging text and image data is his ongoing work on predicting customer charitable donation rates in response to advertising. Customers are shown an ad, then told to click through to the website, where they will hopefully donate. Neslin and his team find that if customers are shown an ad that contains text and images related to nature, then directed to a website that is even more nature-themed than they expected, the chances they will donate increase.

Machine learning, as well as the “old-fashioned” wisdom of human judges, made it possible to sift through a database of 5,000 ads to classify them into categories.

“We find that certain pictures set up expectations for the website, and if you go in the right direction on those pictures, a customer is more likely to buy,” he says. “We demonstrate in our research that pictorial images can predict how a customer will react.”

That said, even if you have the smartest algorithm, the key is to measure “incrementality” of your marketing—getting customers to do something they otherwise would not have done. Incrementality used to be easy to measure. It’s much more difficult today.

“In the 1940s and 50s, when LL Bean sent out their fall catalog, every sale they got from that fall catalog was incremental because the only way you could buy from LL Bean was from the catalog,” he says. “Today, there are multiple ways you can buy—you can click on a paid search ad, an email, a social media video, or go to a physical store.”

Neslin says that randomized testing is the best way to measure incrementality. If you’re sending an email, for example, randomly select some customers to get your message, then look at the differences between the customers who got the email and those who didn’t. Neslin is concluding a study where he used a randomized test to measure the incrementality of an emailed promo code coupon. Results show that using a promo code does not generate a “mere” response; it generates an incremental response.

“Due to the veritable clutter of marketing being leveled at consumers, incrementality should be more on managers’ minds, but companies are not paying enough attention to it,” he says. “To be successful, you need to know that your marketing is getting people to do something that otherwise they would not have done.”

The ultimate secret is to combine better data—currently text and images—with methods that evaluate the incrementality of marketing campaigns.