Eric T. Anderson - Faculty - Kellogg School of Management

Eric T. Anderson

MARKETING
Hartmarx Research Professor of Marketing

Overview
Vita
Research
Teaching

Eric T. Anderson is the Professor of Marketing at Kellogg School of Management, Northwestern University. Prior to joining Kellogg, he was an Assistant Professor of Marketing at the University of Chicago Graduate School of Business. Professor Anderson's research interests include pricing strategy, promotion strategy, and channel management. Recently, he has worked with several direct mail firms conducting field experiments to test economic theories of pricing and promotion. His publications have appeared in leading academic journals such as Journal of Marketing Research, Marketing Science, Management Science, Quantitative Marketing and Economics and Journal of Economic Theory. Professor Anderson has made much of this research accessible to managers via publications in Harvard Business Review and Sloan Management Review.

Areas of Expertise

Distribution Channels
New Product Development

Recent Media Coverage

Advertising Age: Package-Goods Brands Lose Loyalists in Recession - 6/22/2009

NPR/American Public Media: Will brand loyalty return in good times? - 6/22/2009

Financial Times: Brands left to ponder price of loyalty - 6/21/2009

Medill Reports: Magnificent Mile hosts first Chicago Target 'pop-up' store - 5/6/2009

See all Kellogg in the Media

Recent Kellogg News

Retailers try not to lose cheer — or shirts — during holiday downturn - 12/2/2008

See all Kellogg News

Education

PhD, 1995, Marketing, Massachusetts Institute of Technology

MS, 1989, Engineering-Economic Systems, Stanford University

BS, 1988, Electrical Engineering, Northwestern University, Highest Honors

Academic Positions

Professor, Marketing, Kellogg School of Management, Northwestern University, 2009-present

Hartmarx Research Professorship, Kellogg School of Management, Northwestern University, 2007-present

PhD Program Coordinator, Marketing, Kellogg Graduate School of Business, Northwestern University, 2007-present

Associate Professor, Marketing, Kellogg School of Management, Northwestern University, 2004-2009

Visiting Assistant Professor, Marketing, Kellogg School of Management, Northwestern University, 2003-2004

Assistant Professor of Marketing, Graduate School of Business, University of Chicago, 1997-2003

Assistant Professor, Marketing, William E. Simon Graduate School of Business, University of Rochester, 1995-1997

Editorial Positions

Editorial Review Board, Journal of Marketing, 2007-Present

Area Editor forMarketing, Management Science, 2008-Present

Editorial Review Board, Marketing Science, 2003-Present

Area Editor forMarketing, Operations Research, 2007-Present

Editorial Review Board, Quantitative Marketing and Economics, 2007-Present

Research Interests

Pricing strategies, channel management, effects of price promotions, sale signs, nine endings and installment billing using large-scale field tests

Articles

Nijs, Vincent, Kanishka Misra, Eric T. Anderson, Karsten Hansen and Lakshman Krishnamurthi. Forthcoming. Channel Pass-Through of Trade Promotions. Marketing Science.

In non-vertically integrated channels manufacturers rely on incentives to influence the prices offered by channel partners such as wholesalers and retailers. One of the most common channel incentives is a trade promotion. Packaged goods manufacturers spend in excess of $75 billion annually on trade promotions with the goal of offering temporary discounts to end-consumers (Cannondale 2001). A common metric used by practitioners and academics to evaluate trade promotion effectiveness is pass-through. Although the effectiveness of trade promotions has been debated for decades, empirical research on the topic is scarce. Extant research has relied on data from one or two supermarket chains in a single market and managerial surveys. For this study we assemble a unique dataset containing information on prices, quantities, and promotions throughout the entire channel in a category. The data enable us to extend the empirical literature on pass-through in two important ways. First, we investigate how it varies across more than 1000 retailers in over 30 states. Second, we study pass-through at multiple levels of the distribution channel, allowing us to assess how channel intermediaries -- such as wholesalers and brokers -- influence pass-through. We find that the median pass-through elasticities are 0.75, 0.58, and 0.39, for the wholesaler, retailer, and total channel respectively. Thus, a 10% reduction in manufacturer price results in a 3.9% reduction in consumer price. At each of the levels in the channel large variances in the estimates of pass-through elasticities are observed. We therefore argue that average pass-through elasticities are only of limited tactical value to manufacturers. For example, the pass-through for a specific chain in California may be 0.98 while it is equal to 0.42 for the same chain in Nevada. The average of these values holds little meaning for a firm trying to evaluate and improve trade-promotion effectiveness. We investigate the sources of pass-through variation using various measures of cost and competition.

Anderson, Eric T. and Nanda Kumar. 2007. Price Competition with Repeat, Loyal Buyers. Quantitative Marketing and Economics. 5(4): 333-359.

Anderson, Eric T., Gavan Fitzsimons and Duncan Simester. 2006. Measuring and Mitigating the Costs of Stockouts. Management Science. 52(11): 1751-1763.

Narasimhan, Chakravarthi, Chuan He, Eric T. Anderson, Lyle Brenner, Preyas Desai, Dimitri Kuksov, Paul Messinger, Sridhar Moorthy, Joseph Nunes, Yuval Rottenstreich, Richard Staelin, George Wu and Z. John Zhang. 2005. Incorporating Behavioral Anomalies in Strategic Models. Marketing Letters. 16(3): 361-373.

Anderson, Eric T., Nanda Kumar and Surendra Rajiv. 2004. A Comment On: "Revisiting Dynamic Duopoly with Consumer Switching Costs". Journal of Economic Theory. 116(1): 177-186.

Anderson, Eric T. and Inseong Song. 2004. Coordinating Price Reductions and Coupon Events. Journal of Marketing Research. 41(4): 411-422.

Anderson, Eric T. and Duncan Simester. 2004. Long-Run Effects of Promotion Depth on New Versus Established Customers: Three Field Studies. Marketing Science. 23(1): 4-20.

Anderson, Eric T. and Inseong Song. 2004. Marketing Mix Synergies: Coupons and Price Promotions. Journal of Marketing Research. 41

Anderson, Eric T. and Duncan Simester. 2003. Effects of $9 Price Endings on Retail Sales: Evidence from Field Experiments. Quantitative Marketing and Economics. 1(1): 93-110.

Anderson, Eric T. and Duncan Simester. 2003. Mind Your Pricing Cues. Harvard Business Review. 81(9): 96-103.

Anderson, Eric T.. 2002. A Guadagni Little Likelihood Can Have Multiple Maxima. Marketing Letters. 13(2): 135-150.

Anderson, Eric T.. 2002. Sharing the Wealth: When Should Firms Treat Customers as Partners?. Management Science. 48(8): 955-971.

Anderson, Eric T. and Duncan Simester. 2001. Are Sale Signs Less Effective When More Products Have Them?. Marketing Science. 20(2): 121-140.

Anderson, Eric T. and Duncan Simester. 2001. Price Discrimination as an Adverse Signal: Why an Offer to Spread Payments May Hurt Demand. Marketing Science. 20(3): 315-327.

Anderson, Eric T., Florian Zettelmeyer, Jim Brickley, Erik Brynjolfsson and Hauser Eugene Kandell. 2000. Expanding to the Internet: Pricing and Communications Strategies When Firms Compete on Multiple Channels. Journal of Marketing Research. 37(3): 292-308.

Anderson, Eric T. and Duncan Simester. 1998. On The Role Of Sale Signs. Marketing Science. 17(2): 139-156.

Working Papers

Anderson, Eric T. and Duncan Simester. Forthcoming. Adverse Effects of Price Discrimination: Premium Pricing for Large Sizes. Marketing Science.

Anderson, Eric T., Karsten Hansen and Duncan Simester. Forthcoming. The Option Value of Returns: Theory and Empirical Evidence. Marketing Science.

Anderson, Eric T. and Duncan Simester. Forthcoming. Does Demand Fall When Customers Perceive That Prices Are Unfair: The Case Of Premium Pricing for Large Sizes. Marketing Science.

Anderson, Eric T. and Duncan Simester. 2008. Customer Antagonism and Price Stickiness.

Anderson, Eric T., Nathan Fong, Duncan Simester and Catherine Tucker. 2008. Do Internet Tax Policies Place Local Retailers at a Competitive Disadvantage.

Anderson, Eric T., Karsten Hansen and Manish Tripathi. 2008. Measuring the Mere Measurement Effect.

Anderson, Eric T., Edward Cho, Bari Harlam and Duncan Simester. 2008. Using Price Cues.

Anderson, Eric T. and James Dana. 2007. Integrating Models of Price Discrimination.

Huang, Qingyi, Vincent Nijs, Karsten Hansen and Eric T. Anderson. Wal-Mart's Impact on Supplier Profits.

Book Chapters

Anderson, Eric T. and Duncan Simester. Forthcoming. "Price Cues and Customer Price Knowledge." In Handbook of Research on Pricing, Edward Elgar Publishing.

Cases

Anderson, Eric T.. 2005. Keurig At Home. Case 5-105-005 (KEL021).

Teaching Interests

Introduction of new products and services, marketing channel management, pricing strategy

Full-Time / Part-Time MBA

Marketing Channel Strategies (MKTG-451-0)

This course counts toward the following majors: Marketing, Marketing Management

Marketing channels are analyzed as systems of interrelated and interdependent organizations engaged in making goods and services available for consumption by industrial, institutional and household consumers. This course emphasizes the means by which effective and efficient distribution networks (comprising manufacturers, wholesalers, retailers, transportation firms and other actors in the distribution process) can be constructed. Particular attention is given to examining the behavioral dimensions of channel relations, the roles of channel members, their use of power, the conflicts that arise among them and their communication procedures. Government and other constraints on channel activities are also examined. Cases are used for illustrative and analytical purposes. Prerequisite: MKTG-430.

Sales Promotion and Retailer Behavior (MKTG-462-0)

This course counts toward the following majors: Marketing, Marketing Management

Why is a dress priced at $39 rather than $40? How does a "Sale" sign change customer behavior? Does it matter what other customers pay for an item? Can price changes antagonize customers and reduce demand? How has the Internet changed customer price sensitivity? Are retail loyalty programs effective? How has expansion of retail stores, factory stores and the Internet changed customer behavior? This course seeks to answer these types of questions. Approximately two-thirds of the course covers topics in sales promotion and pricing; the remainder focuses on emerging issues in retailing, such as retail loyalty programs, category management and multi-channel consumer behavior. This empirical, data-driven course provides an integrated framework for studying consumer behavior, which we then take to data. Most of the data is from real-world managerial problems, and students will often study data from field experiments to gain a deeper understanding of consumer and firm behavior. Students will learn how to make informed pricing and retailing decisions using data. Prerequisite: MKTG-430.

Doctoral

General Seminar For Phd Candidates (MKTG-520-6)
This seminar confronts students with significant problems, issues and theories at the leading edge of the marketing field. Presentations and discussions are designed to stimulate thinking on important areas of research and the development of new theoretical viewpoints.

Executive MBA

Managing Price & Value Perceptions (MKTGX-460-0)
Why is a dress priced at $39 rather than $40? How does a “Sale” sign change customer behavior? Does it matter what other customers pay for an item? Does price fairness really matter? In this course, we seek to answer these types of questions. We begin the course by developing a theoretical, normative framework of customer value. We then illustrate how to apply this framework to both business and consumer markets.

CONTACT INFO:
PHONE: 847-467-6482
FAX: 847-491-2498

EMAIL:
eric-anderson
@kellogg.northwestern.edu

OFFICE:
Jacobs Center Room 463