Dacko S.G. The Advanced Dictionary of Marketing Putting Theory to Use
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commodification 100
commercialization see new product development
commodification
DESCRIPTION
The transformation of non-commodity offerings into ones that are generally
regarded as commodities (also called commoditization).
KEY INSIGHTS
While commodities are goods that are almost solely bought and sold
on the basis of price and not on the basis of quality or features, many
other products are marketed in a way that differentiates them from
competing offerings, as when a brand is used in conjunction with product
features or qualities that are in some way different than competing
offerings. Yet, over time, many non-commodity products (e.g. personal
computers) are sought and bought by consumers increasingly on the
basis of price, thereby making them quite commodity like. While such
products may not be pure commodities, they nevertheless have lost some
of their distinctiveness as perceived by consumers, making it increasingly
challenging for the products to compete on characteristics other than
price.
KEY WORDS Commodities, price competition
IMPLICATIONS
The challenge to marketers of offerings that are, or have become, com-
modity like (e.g. orange juice) is to either accept the commodity-like
perception among consumers and compete accordingly or find ways
to differentiate the offering from competing offerings in an effort to
increase the perceived value of the offering. Orange juice, for example,
can be differentiated in terms of source of the oranges, freshness, and
even additives such as calcium.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Holbrook, M. B. (1995). ‘The Four Faces of Commodification,’ Journal of Marketing
Management, 11(3), 641–654.
Applbaum, Kalman (2000). ‘Marketing and Commodification,’ Social Analysis, 44,
106–28.
Marketing Management
Pasternack, Barry Alan (1985). ‘Optimal Pricing and Return Policies for Perishable
Commodities,’ Marketing Science, 4(2), Spring, 166–176.
Marketing Education
Brownlie, D., and Saren, M. (1995). ‘On the Commodification of Marketing
Knowledge: Opening Theme,’ Journal of Marketing Management, 11(7), 619–
627.
BIBLIOGRAPHY
Manno, Jack (2000). Privileged Goods: Commoditization and its Impact on Environment and
Society. Boca Raton, Fla.: Lewis Publishers.
101 common ratio effect
commoditization see commodification
common method bias
(also called common methods bias)
DESCRIPTION
A problem of research methodology leading to the outcome where data are
related simply because they come from the same source, thereby making
them subject to distortion.
KEY INSIGHTS
Common method bias, where the methodology employed by a researcher
affects the measures being gathered, is essentially a methodological arte-
fact. A solution to such a problem is to use multiple methods of data
collection. For example, in the study of marketing strategy phenomena,
methods including interviews, observation, and archival data could be
used in combination, with the results triangulated to increase the robust-
ness of the findings.
KEY WORDS Research method bias
IMPLICATIONS
Marketing researchers must be wary of developing and implementing
research methodologies that ultimately suffer from common method
bias, thereby leading to skewed, biased, questionable, or even useless
findings. Experienced marketing researchers are much more likely to
recognize the value and benefit of adopting multiple methods in studying
any given marketing phenomenon, even though the approach clearly
increases the complexity and scope of the research.
APPLICATION AREAS AND FURTHER READINGS
Marketing Research
Jap, S. D., and Anderson, E. (2004). ‘Challenges and Advances in Marketing Strategy
Field Research,’ in C. Moorman and D. Lehmann (eds.) Cool Tools for Assessing
Marketing Strategy Performance. Marketing Science Institute.
Doty, D. H., and Glick, W. H. (1998). ‘Common Methods Bias: Does Common
Methods Variance Really Bias Results?’ Organizational Research Methods, 1(4), 374–
406.
BIBLIOGRAPHY
Podsakoff, P. M., MacKenzie, S. B., Lee, J. Y., and Podsakoff, N. P. (2003). ‘Common
Method Biases in Behavioral Research: A Critical Review of the Literature and
Recommended Remedies,’ Journal of Applied Psychology, 88(5), 879–903.
common ratio effect
DESCRIPTION
The effect where an individual’s choices change when the probabilities of a
pair of gambles are scaled by a common factor.
communication-information processing theory 102
KEY INSIGHTS
Pioneering research by Allais (1953) identified the effect as clearly indicat-
ing a systematic violation of expected utility theory since actual observed
choices under the above conditions are inconsistent with expected utility
theory’s predictions. Such a difficulty gives rise to alternatives to the
theory including Kahneman and Tversky’s (1979) prospect theory. Also
relevant in explaining the effect is the role of framing where identical
items will result in different choices if presented differently (e.g. 80%
chance of living vs. 20% chance of dying).
KEY WORDS Decision making, choice, probabilities
IMPLICATIONS
Marketers must recognize that a consumer’s choice behavior will not
always be governed by expected utilities. Anticipating how consumers
will make choices may therefore not only consider the possible benefits
of applying theoretical knowledge to identify systematic behavioral ten-
dencies but also the results of earlier empirical research as well as applied
marketing research.
APPLICATION AREAS AND FURTHER READINGS
Decision Making
Currim, Imran S., and Sarin, Rakesh K. (1989). ‘Prospect versus Utility,’ Management
Science, 35(1), January, 22–41.
Barron, Greg, and Erev, Ido (2003). ‘Small Feedback-Based Decisions and their Lim-
ited Correspondence to Description-Based Decisions,’ Journal of Behavioral Decision
Making, 16(3), May, 215–233.
BIBLIOGRAPHY
Camerer, Colin, and Weber, Martin (1992). ‘Recent Developments in Modeling Pref-
erences: Uncertainty and Ambiguity,’ Journal of Risk and Uncertainty, 5(4), October,
325–370.
Allais, M. (1953). ‘Le Comportement de l’homme rationnel devant le risque: cri-
tique des postulats et axiomes de l’école américaine,’ Econometrica, 21, 503–546.
Kahneman, Daniel, and Tversky, Amos (1979). ‘Prospect Theory: An Analysis of
Decision under Risk,’ Econometrica, 47, 263–292.
communication-information processing theory
(also called communication theory, information processing theory, or
communication and information processing theory)
DESCRIPTION
Theory or theories related to how communication is transmitted and received
relative to a sender and a receiver, respectively, and how characteristics of
each as well as other factors can facilitate or hinder effective communication
and information processing.
KEY INSIGHTS
Pioneers in communication-information processing theory include Shan-
non and Weaver (1948) who developed the theory and related concepts
including transmitters, receivers, and noise. One of the most important
principles of effective communications based on the theory is to try
103 comparative advantage, law of
to eliminate or control for noise in the communication system since
background noise can reduce the quality of communication through
information distortion.
KEY WORDS Communication, information
IMPLICATIONS
Marketers are constantly seeking ways to communicate with current
and potential customers more effectively. From a competitive standpoint,
marketers are also interested in extracting information from the exter-
nal environment (e.g. information on competitive developments) and
to be in a position to respond to such information quickly and effec-
tively. Principles of communication-information processing theory can
be applied in both situations as the theory contributes elements of the
communication process that can be examined individually or collectively
to identify potentially weak information links in the process. For exam-
ple, understanding why a firm may be slow to respond to competitive
actions may be due to the stage of the communication process related
to communicating external information up through the organization to
key decision makers rather than sensing information from the market to
begin with. As another example, ineffective marketing communications
may be due to the firm’s message not being received or understood by
the firm’s target market to a significant extent if there is considerable
competing information being transmitted (e.g. advertising clutter) in the
marketplace at the same time.
APPLICATION AREAS AND FURTHER READINGS
Market Entry Timing
Dacko, Scott G. (2002). ‘Understanding Market Entry Timing Decisions: The
Practitioner–Academic gap,’ Marketing Intelligence & Planning, 20(2), April, 70–81.
Dacko, Scott G. (2000). ‘Benchmarking Competitive Responses to Pioneering New
Product Introductions,’ Benchmarking: An International Journal, 7(5), December,
324–342.
Marketing Communications
O’Cass, Aron, and Grace, Debra (2004). ‘Service Brands and Communication
Effects,’ Journal of Marketing Communications, 10(4), December, 241–254.
BIBLIOGRAPHY
Smith, Ken G., and Grimm, Curtis M. (1991). ‘A Communication-Information Model
of Competitive Response Timing,’ Journal of Management, 17(1), 5–23.
Shannon, C., and Weaver, W. (1948). A Mathematical Theory of Communcation. Urbana,
Ill.: University of Illinois Press.
comparative advantage, law of
(also called the theory of comparative advantage)
DESCRIPTION
An economic principle stating that people and countries should specialize in
whatever leads them to give up the least, thereby providing their comparative
advantage.
comparative influence 104
KEY INSIGHTS
Developed and advocated by economist David Ricardo, the law of compar-
ative advantage is consistent with the observation that many countries
tend to export those economic goods in the production of which they
have a comparative advantage (e.g. ability to produce inexpensively) and
import those economic goods in the production of which they have a
comparative disadvantage (e.g. ability to produce but at high cost).
KEY WORDS Exporting, importing, production, trade policy
IMPLICATIONS
The law of comparative advantage clearly has implications for country
export and import policies, including the views that a country should
tend to produce those products for which it has the least comparative
advantage even if it has no comparative advantage at all and addition-
ally that a country is still able to gain from trade with other countries
even if it has an absolute disadvantage in the production of all of its
goods. Marketers should therefore seek to understand country trade and
import/export policies and exploit advantages associated with interna-
tional trade under these and other circumstances.
APPLICATION AREAS AND FURTHER READINGS
International Marketing
Ellis, Paul (2002). ‘Macromarketing and International Trade: Comparative Advan-
tage versus Cosmopolitan Considerations,’ Journal of Macromarketing , 22(1), 32–
56.
Howells, Jeremy, and Michie, Jonathan (1998). ‘Technological Competitiveness
in an International Arena,’ International Journal of the Economics of Business, 5(3),
November, 279–293.
BIBLIOGRAPHY
Buchholz, Todd G. (1990). New Ideas from Dead Economists. New York: Penguin Books.
comparative influence
DESCRIPTION
Influence on a consumer by a reference group where the consumer compares
his or her attitudes, beliefs, and behaviors to those of the reference group.
KEY INSIGHTS
The greater the similarity between a consumer’s attitudes, beliefs, and/or
behaviors and those of a particular reference group, the greater the
comparative influence of the reference group on the consumer.
KEY WORDS Reference groups, influence
IMPLICATIONS
Understanding the extent of comparative influence by reference groups
can be critical in certain marketing situations, such as in a retail clothing
store understanding and being able to anticipate what brands of clothing
for skateboarding will likely be considered fashionable by individuals
105 comparative judgment, law of
closely associating with serious skateboarding. Brand attitudes and
purchase intentions of many different consumer segments are potentially
affected by reference groups’ comparative influence.
APPLICATION AREAS AND FURTHER READINGS
Consumer Behavior
Park, C. Whan, and Lessig, V. Parker (1977). ‘Students and Housewives: Differences
in Susceptibility to Reference Group Influence,’ Journal of Consumer Research, 4(2),
September, 102–110.
Beaudoin, Pierre, and Lachance, Marie J. (2006). ‘Determinants of Adolescents’
Brand Sensitivity to Clothing,’ Family and Consumer Sciences Research Journal, 34(4),
312–331.
BIBLIOGRAPHY
Cocanougher, A. Benton, and Bruce, Grady D. (1971). ‘Socially Distant Reference
Groups and Consumer Aspirations,’ Journal of Marketing Research, 8(3), August,
379–381.
comparative judgment, law of
DESCRIPTION
A term referring to the specific mathematically represented conceptualization
andmeasurement model of L. L. Thurstone fora particular process of judgment
involving making comparisons and, more specifically, for such a process
involving the judgment of noticeable differences on a continuum scale.
KEY INSIGHTS
Conceived by Thurstone (1927) as a way to mathematically model the
process of making comparisons between pairs of a collection of entities,
e.g. as in a consumer making comparisons between pairs of items of
clothing in a collection of clothing in a retail store, the approach charac-
terized by the law of comparative judgment (LCJ) enables pairwise com-
parisons to be used to scale the collection of entities along a continuum.
The LCJ approach can be applied not only to physical entities but also
psychological ones such as attitudes.
KEY WORDS Judgment, comparisons, attitudes
IMPLICATIONS
As marketing researchers are often concerned with discerning consumer
attitudes, an LCJ-based approach could potentially be applied for this pur-
pose. For example, an LCJ-based approach would be used by a researcher
if he or she took a list of statements compiled from interviewing different
consumers, where each statement in the list reflected an attitude of a
particular intensity, and used a process involving making pairwise com-
parisons of statements in the list to create a list in the order of highest
to lowest attitude intensity. As such, LCJ-based approaches can form the
basis for an array of research methods aimed at modeling marketing or
consumer phenomena.
comparative marketing 106
APPLICATION AREAS AND FURTHER READINGS
Marketing Research
Droge, Cornelia, and Darmon, Rene Y. (1987). ‘Associative Positioning Strat-
egies through Comparative Advertising: Attribute versus Overall Similarity
Approaches,’ Journal of Marketing Research, 24(4), November, 377–388.
Sinha, Indrajit, and DeSarbo, Wayne S. (1998). ‘An Integrated Approach toward the
Spatial Modeling of Perceived Customer Value,’ Journal of Marketing Research, 35(2),
May, 236–249.
Rust, Roland T., Inman, J. Jeffrey, Jia, Jianmin, and Zahorik, Anthony (1999). ‘What
You Don’t Know about Customer-Perceived Quality: The Role of Customer Expec-
tation Distributions,’ Marketing Science, 18(1), 77–92.
BIBLIOGRAPHY
Curry, David J. (1985). ‘Measuring Price and Quality Competition,’ Journal of Market-
ing, 49(2), Spring, 106–117.
Thurstone, L. L. (1927). ‘A Law of Comparative Judgment,’ Psychological Review, 34,
July, 273–286.
comparative marketing
DESCRIPTION
Marketing that is focused on understanding how and why the marketing
systems of different nations perform and interact.
KEY INSIGHTS
Comparative marketing entails the systematic study of similarities and
differences between national marketing systems. As such, the area clearly
has relevance to marketing strategists and managers within firms oper-
ating in international and global marketing contexts. The emphasis of
research in the area is far broader than that which is typically con-
ducted within an internationally operating business, however, as the
area emphasizes the study of national marketing system similarities
and differences across time, space, and industry sector for the purpose
of building theory and applying theory. Comparative marketing thus
encompasses research on areas ranging from marketing institutions and
associated marketing activities to consumer behavior, where the aim is
a better understanding and explanation of different nations’ marketing
systems and the way they interact for the provision of goods for public
consumption. Methodologies for the study of comparative marketing
systems include that of institutional analysis.
KEY WORDS National marketing systems, global marketing
IMPLICATIONS
Marketers seeking a deeper theoretical and conceptual understanding
of global and international marketing issues may clearly benefit from
a better understanding of comparative marketing as a result of the area’s
broad research emphasis. While the area consists of multiple research
methodologies and theoretical perspectives, a greater knowledge of the
area provides marketers with an opportunity to focus either broadly
or more narrowly on particular elements of national marketing system
107 competition
similarities and differences such as distribution (e.g. wholesaling, retail-
ing) or economic development.
APPLICATION AREAS AND FURTHER READINGS
Marketing Research
Iyer, G. R. (1997). ‘Comparative Marketing: An Interdisciplinary Framework for
Institutional Analysis,’ Journal of International Business Studies, 28(3), 531–562.
Bartels, Robert (1963). Comparative Marketing: Wholesaling in Fifteen Countries. Home-
wood, Ill.: Irwin.
Global Marketing
Calantone, R. J., Lee, M. T., and Gross, A. C. (1990). ‘Evaluating International
Technology Transfer in a Comparative Marketing Framework,’ Journal of Global
Marketing, 3(3), 23–46.
BIBLIOGRAPHY
Boddewyn, J. J. (1981). ‘Comparative Marketing: The First Twenty Five Years,’ Journal
of International Business Studies, Spring/Summer, 61–79.
Barksdale, Hiram C., and Anderson, L. McTier (1982). ‘Comparative Marketing: A
Review of the Literature,’ Journal of Macromarketing, 2, Spring, 57–62.
Wright, R. W., and Ricks, D. A. (1994). ‘Trends in International Business Research:
Twenty-Five Years Later,’ Journal of International Business Studies , 25, 687–701.
competency see strategic competency
competition
DESCRIPTION
Rivalry in the provision of products and services to current and prospective
customers.
KEY INSIGHTS
Competition can take many forms, as indicated by the many different
competitive environments that a firm may face. Competitive environ-
ments can be characterized by terms including:
Buyer concentration—the extent to which a market is dominated by a
small number of typically large buyers.
Duopoly—a market structure in which two suppliers of a product
compete with each other, or, more generally, a market structure in
which two suppliers of a product dominate competition in the market.
Monopolistic competition—a market structure where there are a large
number of firms supplying similar but not identical products.
Monopoly—a market structure in which there is only one supplier of a
product for which there are no real substitutes and where there are
many buyers, or, more generally, a market structure in which one
supplier substantially dominates competition in the market.
Monopoly power—the ability of a firm or a set of firms to substantially
dictate the price or other attributes of a product or service in a market.
Monopsony—a market structure in which there is a single buyer for a
product or service.
competition 108
Non-price competition —the use of factors other than price (e.g. product
quality, advertising) by a firm to compete in a given market.
Oligopolistic competition—a market structure in which only a few suppliers
of a product compete with each other for a substantial share of the
market.
Oligopoly—a market structure in which only a few suppliers of a product
compete with each other and where such a small number of suppliers
leads to mutual interdependencies in their production and sales as
well as the anticipation of any single supplier’s competitive actions on
other suppliers and the market.
Oligopsony—a market structure in which a large number of suppliers
compete with each other for the business of a relatively small number
of buyers.
Perfect competition—a market structure characterized by conditions
including: there are a large number of suppliers in a market; each
supplier has a relatively insignificant share of the market; all suppliers
produce the same product using the same production processes; and
all suppliers possess perfect information (or complete knowledge and
foresight) about the market.
Pure competition—a market structure where price is the dominant factor
in the preference of a product by its customers and where the
relatively insignificant share of the market by each supplier is such
that each is relatively powerless to affect the product’s market price.
Pure monopoly—a market structure where there is a single firm that is
able to dictate completely the price and other attributes of a product
or service in the market.
KEY WORDS Competitive environment
IMPLICATIONS
Given the considerable diversity in competitive environments facing
firms involved in the marketing of their offerings, whether in compet-
ing locally, regionally, nationally, or worldwide, it is imperative that
marketers understand the nature and composition of their competitive
environments to enable realistic assessments of the challenges and oppor-
tunities for competing successfully over the long term. Futhermore, the
dynamic nature of most competitive environments necessitates an ongo-
ing assessment of the firm’s broad competitive environment to ensure
maximum responsiveness to changing competive demands.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Weitz, Barton A. (1985). ‘Introduction to Special Issue on Competition in Market-
ing,’ Journal of Marketing Research, 22(3), August, 229–236.
Jayachandran, Satish, Gimeno, Javier, and Varadarajan, P. Rajan (1999). ‘The The-
ory of Multimarket Competition: A Synthesis and Implications for Marketing
Strategy,’ Journal of Marketing, 63(3), July, 49–66.
Hunt, Shelby D., and Morgan, Robert M. (1995). ‘The Comparative Advantage
Theory of Competition,’ Journal of Marketing, 59(2), April, 1–15.
109 complexity theory
Smith, Wendell R. (1956). ‘Product Differentiation and Market Segmentation as
Alternative Marketing Strategies,’ Journal of Marketing, 21(1), July, 3–8.
Hunt, Shelby D., and Morgan, Robert M. (1996). ‘The Resource-Advantage Theory
of Competition: Dynamics, Path Dependencies, and Evolutionary Dimensions,’
Journal of Marketing, 60(4), October, 107–114.
Dickson, Peter Reid (1992). ‘Toward a General Theory of Competitive Rationality,’
Journal of Marketing, 56(1), January, 69–83.
BIBLIOGRAPHY
Easton, G. (1988). ‘Competition and Marketing Strategy,’ European Journal of Market-
ing, 22(2), 31–69.
competition-based pricing see pricing strategies
competitive advantage see sustainable competitive advantage
competitive parity method see promotion budget setting methods
complex buying behavior see consumer buyer behavior
complexity theory
DESCRIPTION
Theory or theories concerned with the study of complex systems and their
simplification.
KEY INSIGHTS
Complexity theory encompasses the study of a wide range of complex
systems phenomena, ranging from biological, chemical, and atmospheric
systems to those of complex organizations. In a marketing context, com-
plexity theory is primarily concerned with the simplification of systems
exhibiting, among other characteristics, relative complexity, non-linear
interactions among elements in the system, self-organizing networks,
and near-chaotic behavior. As such, complexity theory and chaos theory
are related and sometimes either theory is referenced by the use of the
other term. (See chaos theory.) Considerable marketing research focuses
on how principles of complexity theory can provide insights into how
organizations can become more effective and adaptive.
KEY WORDS Complex systems, organizations
IMPLICATIONS
At one level, a greater knowledge of complexity theory can provide mar-
keters with a useful, albeit broad, metaphor for organizational analysis.
At a deeper level, the theory can provide marketing strategists with
a basis for a rigorous approach to extensive organizational analyses,
recognizing, however, that the theoretical approach rests on assumptions
(e.g. systems that are self-organizing) that may or may not be present in
organizational systems examined and that organizational systems may
possess characteristics that are not fully captured by complexity theory
(e.g. organizational politics).