Sergio Meza. Photo by Susan Bubak

You’d have a hard time finding a grocery store that doesn’t carry store-brand products these days. Usually, they are lower-quality than the national brands, but they are also less expensive, so many shoppers will choose them over the pricier competitors.

But the store brands and national brands may not really be on a level playing field, says marketing professor Sergio Meza. “The retailer is in charge of pricing for both the national brands and the store brands owned by the retailer. There’s really a conflict of interest here.”

National brands compete against each other, and would like to see the retailers as their partners in the marketplace. “That balance of fairness can be shifted when the competitor is a store brand, though,” says Meza. “I wanted to see if retailers set prices in a fair way, as if the store brand was just another brand of similar quality coming to the store, or if they set the prices in a way to benefit the store brands.”

He found that stores varied in how much they favoured their own brands through pricing, but that some definitely did. Is that a bad thing or a good thing? “If it helps to increase competition among national brands, it could be good,” says Meza. “If the store brands become predominant, though, it’s not a good thing. I believe strong national brands are beneficial to the consumer.”

Canada, he adds, has a special situation: the President’s Choice brand foods, which are traditionally of higher quality. Most store brands are lower quality items. “This puts more pressure on the national brands,” he says. While the President’s Choice products are generally less expensive, Meza says this may be due to the retailers’ pricing strategy. He suggests that fairer pricing might benefit consumers by having lower costs for the national brands.

Meza grew up in Venezuela and attended the Universidad Simon Bolivar in Caracas, Venezuela, where he majored in electronic engineering. He soon found work in that field, but after a few years had the opportunity to become a manager, so he completed his MBA at IESA (also in Caracas). With that degree in his hand, he became marketing director at Venezuela’s second largest TV network.

“At that point, I started to think about the future,” says Meza. “I was making money for the companies I was working for, but I wondered if I’d look back in 20 or 30 years and feel proud of what I’d accomplished. And I realized that this was just not fulfilling for me, and decided to go into academia.”

Meza enrolled at the Stern School of Business at New York University and completed his PhD in marketing there. After graduation, he was offered a position at the University of Toronto where he taught and researched; in addition, he was a visiting professor at the University of California Davis.

He moved to the University of Guelph this summer and is excited about his new academic home. “The campus is beautiful here, we have top quality faculty and it is great to be away from the stress of Toronto,” he says.

Meza says his research takes an economics-based approach to understanding marketing, rather than the psychological approach some others follow. Besides his work on store brands, he’s been looking at other aspects of marketing – one inspired by his experience with a gymnastics-loving daughter.

He explains: “My daughter competes in gymnastics and trains for about 20 hours a week. My son does recreational gymnastics for two hours a week. Yet I don’t pay anything close to 10 times as much for my daughter’s classes as I do for my son’s.”

Why are his daughter’s classes cheaper per class? Meza explains that there’s a symbiotic relationship. The gym has a large number of children who do recreational gymnastics; the parents see the competitive gymnastics stars who also train there as a sign that the gym is good quality and they are more likely to enroll their children. Using the fees paid by these children to subsidize the costs for the small number of top-level athletes means those elite gymnasts are more likely to stick with the gym. Meza is interested in studying pricing and competition in this type of sports programs.

“In countries like Canada and the U.S., sports are largely supported by parents, so the competitive structure of the market plays an important role in the development of the sport,” he points out.

Meza is also interested in the marketing of electronics products – not surprising, given his background. He comments that companies have used innovation as a main driver to sales, and have treated price as a secondary factor. In fact, research hasn’t found a strong correlation between price and the rate of people adopting the new item.

However, Meza points out that these assumptions apply only to the “early adopters” – the first group of people who buy new products. “The next ‘wave’ of purchasers may be more price-sensitive, for example,” he suggests. Considering the demographics and other factors of the people who are not early adopters will be an important part of a product’s ultimate success. “You can’t expect all your potential purchasers to behave in the same way,” he says. He’s studying the demographic and psychographic differences between the early and later adopters to help companies see how they need to make changes.

And yes, his academic career is meeting his need for more fulfilling work. “I am helping to generate information that will benefit other people and I am teaching students who will go out and make their contribution. That’s satisfying,” Meza says.