"Price discounting is one of my pet peeves," says Sharmila Chatterjee. No, the academic head for the Enterprise Management (EM) Track of MIT Sloan School of Management's MBA program doesn't have it out for customers looking for a deal. Rather, this is a stitch in a running thread of conversation about bigger-picture thinking honed from years of research.
Chatterjee is a business-to-business (B2B) marketing expert and an award-winning case writer who examines issues in the domains of channels of distribution, sales force management, and relationship marketing. "No one should be engaged in price gouging, of course," she says, "but get an equitable return on the value delivered through your offerings, such that you can sustain investments for the long-term success of your brand."
Citing Millward Brown's finding that brands account for more than 30 percent of the stock market value of companies in the S&P 500 index, The Economist acknowledged that for many companies, their brand is their most valuable asset. Consider United Airlines' 2017 branding crisis that resulted in their stock plummeting $1.4 billion in a matter of days after video footage emerged showing the forced removal of a passenger from an overbooked flight.
Brand, according to Chatterjee, is a function of customer experience. In a 2019 opinion piece for USA Today, Chatterjee outlined the importance of customer experience by examining the case of bricks-and-mortar (B&M) retailers. When e-commerce emerged in the early 1990s, traditional retailers tried to compete by slashing prices. As a result, they were forced to cut costs elsewhere: They whittled down sales teams, neglected investment in training, and ignored merchandising and product development - all to the detriment of the in-person customer experience.
Their misapprehension of the situation resulted in a self-fulfilling prophecy. Customers flocked online for discounts, leaving, among others, big brands like RadioShack, Toys R Us, and Sears to file for bankruptcy. In an unexpected twist, the rise of the digital age exposed the importance of the human interface. Today, savvy retailers recognize the benefits of combining e-commerce and B&M, integrating online and offline. "Technology is a great facilitator and enabler. Problems arise when we turn to technology as a panacea," warns Chatterjee. "Human capital is critical for successful outcomes in most cases - minimizing this comes at a great cost."
