Dacko S.G. The Advanced Dictionary of Marketing Putting Theory to Use
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demand 150
strength, in an attempt to maintain or stem erosion in its current mar-
ket share, profitability, or positioning. A defensive marketing approach
in which the firm chooses to redefine its business as a result of mar-
ket or technological change, for example, involves the identification of
new product markets that the firm moves into as a result of innova-
tive activity within the firm. In contrast, one of the riskiest forms of
defense is that of remaining stationary in terms of the firm’s offerings,
thereby leaving the firm vulnerable to competitors with more dynamic
strategies.
KEY WORDS Market position
IMPLICATIONS
There are many unique options available to the marketer concerned
with defending the firm’s position, where each approach must be eval-
uated relative to the strengths and weaknesses of the firm in rela-
tion to competitors as well as assessments of opportunities and threats
posed by the firm’s external environment. Regardless of the need for a
defensive marketing strategy, marketers must recognize that adopting a
fortress-like approach to defending the firm—even if it is the current
market leader—may ultimately be short-sighted in highly competitive
markets.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Roberts, John (2005). ‘Defensive Marketing: How a Strong Incumbent can Protect
its Position,’ Harvard Business Review, 83(11), 150–157.
Fornell, C., and Wernerfet, B. (1987). ‘Defensive Marketing Strategy by Customer
Complaint Management: A Theoretical Analysis,’ Journal of Marketing Research, 24,
337–346.
Boyd, Eric D. (1996). ‘Defensive Marketing’s Use of Post-Purchase Telecommunica-
tions to Create Competitive Advantages: A Strategic Analysis,’ Journal of Consumer
Marketing, 13(1), 26–34.
BIBLIOGRAPHY
Hauser, John R., and Shugan, Steven M. (1983). ‘Defensive Marketing Strategies,’
Marketing Science, 3, Fall, 327–351.
deficient products see societal classification of products
delayed response effect see lagged effect
Delphi technique see forecasting methods
demand
DESCRIPTION
The amount of something that is sought after for purchase, use, or consump-
tion.
KEY INSIGHTS
Demand, as it relates to the extent that products or services are needed
or wanted by their markets, may be characterized any number of ways
including primary, secondary, latent, incipient, derived, and negative.
151 demand
Primary demand refers to instances where products are demanded by
the customers themselves, as where canned soft drinks are purchased
by consumers for their own consumption or for consumption by their
families.
Secondary demand refers to the demand for a particular brand or product
within a broader product category, as where, within demand for the
product category of running shoes, there is secondary demand for Nike
running shoes.
Latent demand refers to demand that is dormant, not observable, or
not yet realized, as in the case where demand for a product exists but
is constrained because of a lack of product supply or availability.
Incipient demand refers to demand which is emerging and only partly
in existence as it is early in its development, as where new technologies
have created an incipient demand for movies delivered directly via the
World Wide Web.
Derived demand refers to instances where the demand for a prod-
uct arises indirectly from some other downstream demand, as where
demand for passenger jet fuel is derived from consumers’ demand for air
travel.
Negative demand refers to instances where consumers would prefer not
to have a product in that they would go out of their way to avoid it and
also pay more than its value to not have it, as would be the case for certain
painful medical treatments.
Further characterizations of demand include those by Kotler (1973)
which are: non-existent, irregular, faltering, full, overfull, and unwhole-
some demand.
KEY WORDS Market needs, need(s), want(s), consumption
IMPLICATIONS
Much of marketing is focused on meeting, stimulating, and creat-
ing demand in the marketplace. Additionally, where consumption
of a product or service is to be societally discouraged (e.g. exces-
sive water consumption or wastage), marketing’s focus then becomes
reducing demand. Understanding the many dimensional characteris-
tics of demand for a marketer’s product or service is essential in
managing market demand effectively through appropriate marketing
strategies.
APPLICATION AREAS AND FURTHER READINGS
Marketing Research
Allenby, G. M., Arora, N., and Ginter, J. L. (1998). ‘On the Heterogeneity of Demand,’
Journal of Marketing Research, 35(3), 384–389.
Hamilton-Gibbs, Derek, Esslemont, Don, and McGuinness, Dalton (1992), ‘Predict-
ing the Demand for Frequently Purchased Items,’ Marketing Bulletin, 3, 18–23.
Wiser, R. H. (1998). ‘Green Power Marketing: Increasing Customer Demand for
Renewable Energy,’ Utilities Policy, 7(2), 107–119.
Business-to-Business Marketing
Bishop, William S., Graham, John L., and Jones, Michael H. (1984). ‘Volatility of
Derived Demand in Industrial Markets and its Management Implications,’ Journal
of Marketing, 48(4), Autumn, 95–103.
demand, law of 152
Marketing Modeling
Arora, Neeraj, Allenby, Greg M., and Ginter, James L. (1998). ‘A Hierarchical Bayes
Model of Primary and Secondary Demand,’ Marketing Science, 17(1), 29–44.
Kim, J., Allenby, G. M., and Rossi, P. E. (2002). ‘Modeling Consumer Demand for
Variety,’ Marketing Science, 21(3), 229–250.
Jain, Dipak C., and Rao, Ram C. (1990). ‘Effect of Price on the Demand for Durables:
Modeling, Estimation, and Findings,’ Journal of Business & Economic Statistics, 8(2),
April, 163–170.
BIBLIOGRAPHY
Kotler, Philip (1973). ‘The Major Tasks of Marketing Management,’ Journal of Mar-
keting, 37(4), October, 42–49.
demand, characteristics theory of see characteristics theory
demand, law of
DESCRIPTION
The economic principle that states the amount of a product demanded
increases with a fall in price and diminishes with a rise in price.
KEY INSIGHTS
Developed by economist Alfred Marshall, the law of demand suggests
that the demand for most products will tend to vary inversely with their
prices. Although since its inception, it has been recognized that there are
other factors beside price that are able to influence demand, the general
relationship suggested is consistent with the demand–price relationship
observed for most products and services.
KEY WORDS Demand, price, modeling
IMPLICATIONS
All else equal, the law of demand predicts that consumers will typically
buy more of a product at a low price than at a high price. Models based
on the law of demand can thus be developed that enable further analyses
of the sensitivity of product demand to changes in its price.
There are, of course, exceptions to the law of demand, where it is
observed that demand for a product or service actually increases when
price increases, as where demand for enrolling in a leading university’s
MBA program is observed to increase after the program announces
an increase in its tuition fees. Exceptions to the law of demand can
sometimes be explained by the signaling effect of price on quality,
where a higher price suggests even higher quality, thereby attracting
more quality-conscious consumers. Similarly, demand for a product may
decrease when price decreases, if, for example, quality-conscious con-
sumers suspect that the quality of an offering is being compromised.
APPLICATION AREAS AND FURTHER READINGS
Marketing Modeling
Bishop, William S., Graham, John L., and Jones, Michael H. (1984). ‘Volatility of
Derived Demand in Industrial Markets and its Management Implications,’ Journal
of Marketing, 48(4), Autumn, 95–103.
Song, Haiyan, and Wong, Kevin K. F. (2003). ‘Tourism Demand Modeling: A Time-
Varying Parameter Approach,’ Journal of Travel Research, 42(1), 57–64.
153 demand characteristics
BIBLIOGRAPHY
Buchholz, Todd G. (1990). New Ideas from Dead Economists. New York: Penguin Books.
Sraffa, Piero (1926). ‘The Laws of Returns under Competitive Conditions,’ Economic
Journal, 36(144), December, 535–550.
demand characteristics
DESCRIPTION
Undesirable and unintended characteristics of an experimentally based
research study where the outcome is influenced by conditions or cues which
have assisted in leading subjects to perform certain behaviors, as in doing what
was desired or expected of them.
KEY INSIGHTS
The actual or possible presence of demand characteristics presents a
confounding influence in the interpretation of experimental research
findings. Approaches for uncovering the extent of demand characteris-
tics in a particular research design can be through methods including
those aimed at assessing subjects’ thoughts on an experiment’s intent,
as in interviewing subjects upon the experiment’s completion or re-
enacting experimental procedures with new subjects from the popu-
lation of subjects or using multiple, different methods for examining
the phenomena in question to increase the robustness of experimental
findings.
KEY WORDS Experimental research, bias
IMPLICATIONS
Marketers must be aware of the possibility of demand characteristics
being present in experimental research designs and should consider
evaluating and adopting recognized approaches for their elimination or
control if the aim is to obtain robust research findings.
APPLICATION AREAS AND FURTHER READINGS
Consumer Behavior
Shimp, Terence A., Hyatt, Eva M., and Snyder, David J. (1991). ‘A Critical Appraisal
of Demand Artifacts in Consumer Research,’ Journal of Consumer Research, 18(3),
December, 273–283.
Experimental Research
Sawyer, Alan G. (1975). ‘Demand Artifacts in Laboratory Experiments in Consumer
Research,’ Journal of Consumer Research, 1(4), March, 20–30.
Sawyer, A. G. (1975). ‘Detecting Demand Characteristics in Laboratory Experiments
in Consumer Research: The Case of Repetition-Affect Research,’ in M. J. Schlinger
(ed.), Advances in Consumer Research, 2. Ann Arbor: Association for Consumer
Research, 712–723.
Sawyer, Alan G., Worthing, Parker M., and Sendak, Paul E. (1979). ‘The Role of
Laboratory Experiments to Test Marketing Strategies,’ Journal of Marketing, 43(3),
Summer, 60–67.
BIBLIOGRAPHY
Orne, M. T. (1969). ‘Demand Characteristics and the Concept of Quasi-Controls,’
in R. Rosenthal and R. L. Rosnow (eds.), Artifact in Behavioral Research. New York:
Academic Press, 143–179.
demarketing 154
McGuire, W. J. (1969). ‘Suspiciousness of experiment’s intent,’ in R. Rosenthal and
R. L. Rasnow (eds.), Artifact in Behavioral Research. New York: Academic Press, 13–
57.
demand pull see pull marketing
demarketing
DESCRIPTION
Marketing aimed at discouraging customer demand.
KEY INSIGHTS
While uncommon in mainstream marketing, demarketing involves the
application of marketing principles and practices to curtail customer
purchase and use of particular products and services which are typically
considered undesirable from a societal perspective. Some products or
services are sought to be demarketed out of scarcity in supply or a
perceived need for rationing (e.g. water). For other products, however,
the issue driving demarketing isn’t product scarcity but rather the spill-
over effects of product consumption, such as the pollution caused by
automobiles.
KEY WORDS Demand reduction
IMPLICATIONS
Whether a government agency is concerned with reducing the level of
cigarette smoking by the general public out of concern for its burden on
the public healthcare system, or whether a government-regulated water
supplier is tasked by the government to encourage its customers to use
less water during a drought, a demarketing approach, as with marketing
itself, necessarily involves the development of a set of clear market-
ing objectives, a deep understanding of consumer behavior, and effec-
tive marketing strategy development and implementation. Marketers
concerned with demarketing may not only benefit from understand-
ing the many principles of effective marketing but also by examining
effective and ineffective demarketing approaches for analogous products
and services as developed and implemented by a range of organizations
worldwide.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Gerstner, E., Hess, J. D., and Chu, W. (1993). ‘Demarketing as a Differentiation
Strategy,’ Marketing Letters, 4(1), 49–57.
Kindra, G. S., and Taylor, W. D. (1995). ‘Demarketing Inappropriate Health Care
Consumption,’ Journal of Health Care Marketing, 15(2), 10–14.
Cullwick, D. (1975). ‘Positioning Demarketing Strategy,’ Journal of Marketing , 39(2),
April, 51–57.
Marketing Management
Lawther, S., Hastings, G. B., and Lowry, R. (1997). ‘Demarketing: Putting Kotler
and Levy’s Ideas into Practice,’ Journal of Marketing Management, 13, 315–
325.
155 dialectic process theory
BIBLIOGRAPHY
Kotler, Philip, and Levy, Sidney J. (1971). ‘Demarketing, Yes, Demarketing,’ Harvard
Business Review, 49(6), November–December, 74–80.
demographic segmentation see segmentation
derived demand see demand
descriptive marketing research see marketing research
desirable products see societal classification of products
desire see buyer influence/readiness
destination marketing see place marketing
dialectic process theory
DESCRIPTION
A theory of organizational development and change whereby new organiza-
tional characteristics arise through the adoption of characteristics of other
organizations.
KEY INSIGHTS
Dialectic process theory as developed by van de Ven and Poole (1995)
is based on the premise that organizations evolve. Thus, new organ-
izational formats as well as episodes of change within an organiza-
tion can be explained in relation to characteristics adopted from other
organizations.
KEY WORDS Organizational evolution, development, change
IMPLICATIONS
Marketers can seek to understand and explain change in their own
organizations as well as those of competitors by drawing upon concepts
found in dialectic process theory. The development of new specialty retail
formats, for example, can be understood better in terms of their relation-
ship to the formats of existing retailers and the adoption of characteristics
from such retailers.
APPLICATION AREAS AND FURTHER READINGS
Strategic Change
Sminia, Harry (2003). ‘The Failure of the Sport7 TV-Channel: Controversies in a
Business Network,’ Journal of Management Studies, 40(7), November, 1621.
Sminia, Harry (2002). ‘Sector Process and Episodes of Change: An Analysis of Daily
Newspapers in the Netherlands,’ Strategic Change, 11(4), 215–223.
Retail Marketing
Michman, Ronald D., and Mazze, Edward M. (2001). Specialty Retailers. Westport,
Conn.: Quorum/Greenwood.
BIBLIOGRAPHY
Van de Ven, Andrew H., and Poole, Marshall Scott (1995). ‘Explaining Development
and Change in Organizations,’ Academy of Management Review , 20(3), July, 510–540.
differential threshold see Weber–Fechner law
differentiated marketing 156
differentiated marketing
(also called segmented marketing or selective marketing)
DESCRIPTION
The strategic approach of focusing on two or more groups of consumers and
using a different marketing approach for each.
KEY INSIGHTS
Differentiated marketing’s scope ranges from the use of different retail-
ing approaches for different consumer groups to the provision of dif-
ferent product or service offerings. The aim of differentiated mar-
keting is to achieve a strong competitive position within each seg-
ment pursued, where the net result is superior individual and aggre-
gate performance in relation to that achievable by an undifferenti-
ated marketing approach reaching all segments in a market. Such
an approach, however, does result in higher marketing costs rela-
tive to that for undifferentiated marketing since there is a need to
develop and implement distinct marketing plans and strategies for each
segment.
KEY WORDS Market segmentation
IMPLICATIONS
Many firms, particularly large consumer products firms, use a differ-
entiated marketing approach by offering multiple products or services
to carefully defined customer segments, as where a clothing manufac-
turer and retailer uses several retail store formats as a means for each
to provide greater appeal to a specific customer segment. Ultimately,
however, the relative emphasis a firm gives to differentiated marketing
must depend on projections of its development and implementation costs
versus the potential to increase sales in relation to an undifferentiated
marketing approach.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Cui, G., and Choudhury, P. (2002). ‘Marketplace Diversity and Cost-Effective Mar-
keting Strategies,’ Journal of Consumer Marketing, 19(1), 24–74.
Dickson, Peter R., and Ginter, James L. (1987). ‘Market Segmentation, Product
Differentiation, and Marketing Strategy,’ Journal of Marketing, 51(2), April, 1–
10.
Biggadike, E. Ralph (1981). ‘The Contributions of Marketing to Strategic Manage-
ment,’ Academy of Management Review, 6(4), October, 621–632.
Duffus, Lee R. (1981). The Tourist Industry in Jamaica: Mass versus Differentiated Mar-
keting. Knoxville, Tenn.: College of Business Administration, University of Ten-
nessee.
BIBLIOGRAPHY
Kotler, Philip, and Levy, Sidney J. (1969). ‘Broadening the Concept of Marketing,’
Journal of Marketing, 33(1), January, 10–15.
differentiation strategy see strategies, generic
157 diffusion of responsibility
diffusion of innovation
DESCRIPTION
The concept that adoption of innovations by individuals or other customers in
a market is generally spread out over time as a result of, among other factors,
variation in individuals’ willingness and readiness to adopt innovations.
KEY INSIGHTS
The diffusion of innovation concept recognizes and highlights the impor-
tance of consumer readiness to adopt innovations. A common character-
ization of groupings of innovation adoption readiness in any given pop-
ulation is that of innovators (2.5%), early adopters (13.5%), early majority
(34%), late majority (34%), and laggards (16%).
KEY WORDS Innovation, adoption, readiness
IMPLICATIONS
Marketers involved in new product development (NPD) efforts must seek
to understand how, why, and to what extent new products are likely
to diffuse in the market given their particular innovative characteristics
when the aim is to maximize as well as accelerate diffusion in the market.
To the extent that factors facilitating as well as hindering the diffusion
of particular innovations are understood, models can be constructed
which take into account a potentially rich set of factors, including that of
variation in consumers’ willingness and readiness to adopt innovations.
APPLICATION AREAS AND FURTHER READINGS
New Product Development
Mahajan, Vijay, and Muller, Eitan (1979). ‘Innovation Diffusion and New Product
Growth Models in Marketing,’ Journal of Marketing, 43(4), Autumn, 55–68.
Mahajan, Vijay, Muller, Eitan, and Bass, Frank M. (1995). ‘Diffusion of New Prod-
ucts: Empirical Generalizations and Managerial Uses,’ Marketing Science, 14(3),
Part 2 of 2: Special Issue on Empirical Generalizations in Marketing, G79–G88.
Gatignon, Hubert, and Robertson, Thomas S. (1985). ‘A Propositional Inventory for
New Diffusion Research,’ Journal of Consumer Research, 11(4), March, 849–867.
BIBLIOGRAPHY
Robertson, Thomas S. (1967). ‘The Process of Innovation and the Diffusion of
Innovation,’ Journal of Marketing, 31(1), January, 14–19.
Rogers, E. M. (1995). Diffusion of Innovations, 4th edn. New York: Free Press.
diffusion of responsibility
DESCRIPTION
A social phenomenon associated with groups where responsibility is not
explicitly assigned, whereby individuals in the group perceive less personal
responsibility and accountability for actions taken or to be taken.
KEY INSIGHTS
While the phenomenon of diffusion of responsibility does not occur in
all groups, it nevertheless has the potential to manifest itself in groups
of varying size and member composition in ways that include a mindset
of reduced personal responsibility and accountability as well as group
diminishing marginal utility, law of 158
actions or inactions that individuals would tend not to allow to occur on
their own.
KEY WORDS Group behavior, responsibility, accountability
IMPLICATIONS
Marketers must be aware of, and strive to mitigate, potential dangers
associated with diffusion of responsibility when part of larger groups
where responsibility is not explicitly assigned. Dangers include prolonged
inaction (e.g. a prolonged delay in publicly acknowledging and respond-
ing to a problem of product contamination) as well as taking inappropri-
ate action (e.g. immediately denying publicly that there is a problem with
product contamination).
APPLICATION AREAS AND FURTHER READINGS
Ethical Decision Making
Trevino, Linda Klebe (1986). ‘Ethical Decision Making in Organizations: A Person-
Situation Interactionist Model,’ Academy of Management Review, 11(3), July, 601–
617.
Dozier, Janelle Brinker, and Miceli, Marcia P. (1985). ‘Potential Predictors of
Whistle-Blowing: A Prosocial Behavior Perspective,’Academy of Management Review,
10(4), October, 823–836.
Trevino, Linda Klebe (1992). ‘Behavioral Aspects of Business Ethics: Moral Reason-
ing and Business Ethics. Implications for Research, Education, and Management,’
Journal of Business Ethics, 11(5–6), May, 445–459.
BIBLIOGRAPHY
Darley, J. M., and Latane, B. (1968). ‘Bystander Intervention in Emergencies: Diffu-
sion of Responsibility,’ Journal of Personality and Social Psychology, 8(4), April 377–
383.
digital marketing see e-marketing
diminishing marginal utility, law of
DESCRIPTION
An economic principle summarizing the situation where, in each additional
unit of a good consumed by an individual, less and less utility is derived from
the consumption.
KEY INSIGHTS
As utility in the context of the consumption of goods is often associated
with benefits including satisfaction, pleasure, enjoyment, and the like,
the law of diminishing marginal utility essentially summarizes the fre-
quent observation in human nature that individuals tend to perceive and
obtain less incremental benefit from a good as more and more of it is
consumed.
KEY WORDS Consumption, utility, satisfaction, value
IMPLICATIONS
Marketers should seek to understand how a consumer of a given product
or user of a particular service is likely to experience decreased utility
from increased consumption on any given occasion or over a longer
period of time. In doing so, marketers can attempt to assign values to
159 diminishing returns, law of
incremental and successive units of consumption over time, which may
be of assistance in establishing the most appropriate quantities and prices
for the offering, among other marketing mix elements.
APPLICATION AREAS AND FURTHER READINGS
Consumer Behavior
Monroe, Kent B., and Lee, Angela, Y. (1999). ‘ Remembering versus Knowing: Issues
in Buyers’ Processing of Price Information,’ Journal of the Academy of Marketing
Science, 27(2), 207–225.
Marketing Strategy
Heilbrun, James, and Gray, Charles M. (2001). The Economics of Art and Culture.
Cambridge: Cambridge University Press.
Marketing Research
Yang, Ching-Chow (2003). ‘Improvement Actions Based on the Customers’ Satisfac-
tion Survey,’ Total Quality Management and Business Excellence, 14(8), October, 919–
930.
BIBLIOGRAPHY
Lange, O. (1934). ‘The Determinateness of the Utility Function,’ Review of Economic
Studies, 1(3), June, 218–225.
Latane, Henry Allen (1959). ‘Criteria for Choice among Risky Ventures,’ Journal of
Political Economy, 67(2), April, 144–155.
diminishing returns, law of
(also called the law of increasing opportunity cost; sometimes referred to
as the law of variable proportions)
DESCRIPTION
An economic principle summarizing the situation where the output for a given
unit of input increases but at a decreasing rate with each additional unit of
input.
KEY INSIGHTS
The law of diminishing returns is widely recognized outside of eco-
nomics given the extent it appears to apply to a wide array of phe-
nomena including consumption situations as described in the law of
diminishing marginal utility. In its simplest form, the law refers to the
effect on output when there is only one input involved. When there
are multiple inputs involved, the effect generally refers to the situation
where one input is increased but where all other inputs remain the
same.
KEY WORDS Processes, decreasing returns, outputs, inputs
IMPLICATIONS
As marketers seek to make the best use of marketing resources in sup-
port of marketing strategies aimed at achieving particular objectives,
marketers must seek to avoid a ‘more is better’ mentality of marketing
resource use. Whether in efforts to establish appropriate advertising
expenditures or an appropriate number of product options to present
to consumers, the law of diminishing returns suggests marketers must
attempt to establish what level of inputs is ultimately optimal given the
effect on outputs such as consumer awareness or purchase interest.