Dacko S.G. The Advanced Dictionary of Marketing Putting Theory to Use
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ERG theory 190
Consumer Behavior
Oliver, Richard L., and Swan, John E. (1989). ‘Consumer Perceptions of Interper-
sonal Equity and Satisfaction in Transactions: A Field Survey Approach,’ Journal
of Marketing, 53(2), April, 21–35.
Business-to-Business Marketing
Frazier, Gary L. (1983). ‘Interorganizational Exchange Behavior in Marketing Chan-
nels: A Broadened Perspective,’ Journal of Marketing, 47(4), Autumn, 68–78.
Marketing Strategy
Gundlach, Gregory T., and Murphy, Patrick E. (1993). ‘Ethical and Legal Founda-
tions of Relational Marketing Exchange,’ Journal of Marketing, 57(4), October, 35–
46.
BIBLIOGRAPHY
Homans, George (1950). The Human Group. New York: Harcourt, Brace & Company.
Homans, George C. (1968). The Human Group. London: Routledge & Kegan Paul.
Homans, George Casper (1961). Social Behavior: Its Elementary Forms. New York: Har-
court, Brace & World.
Adams, J. Stacy (1965). ‘Inequity in Social Exchange,’ in L. Berkovitz (ed.), Advances
in Experimental Psychology, New York: Academic Press, 267–300.
ERG theory
DESCRIPTION
A theory or model of human needs involving the three categories of needs
comprising existence, relatedness, and growth and their influence on individ-
ual behavior.
KEY INSIGHTS
Formulated by Clayton Aldefer in 1969, the model involves three non-
stepped need categories of existence (e.g. physiological and safety needs
such as hunger, thirst, and sex), relatedness (e.g. social and external
esteem needs such as family and co-worker involvement), and growth
(e.g. internal esteem and self-actualization such as the desire to be cre-
ative) where the relative importance of the three categories varies among
individuals. According to the theory, an unfulfilled need may result in
frustration and regression to attending to needs that appear easier to
satisfy.
KEY WORDS Need(s), behavior
IMPLICATIONS
Concepts from ERG theory may be potentially useful to marketers seek-
ing to satisfy consumer needs as well as marketing managers involved
in meeting the needs of employees as it provides a basis for systematic
evaluations of individual needs and how such needs may impinge upon
individual behaviors.
APPLICATION AREAS AND FURTHER READINGS
Consumer Behavior
Scherf, Gerhard W. H. (1977). ‘Consumer Dissatisfaction: Search for Causes and
Alleviation Outside the Marketplace,’ Journal of Consumer Policy, 1(2), March, 101–
108.
191 escalation of commitment
Services Marketing
Chiu, Hung-Chang, and Lin, Neng-Pai (2004). ‘A Service Quality Measurement
Derived from the Theory of Needs,’ Service Industries Journal, 24(1), January, 187–
204.
BIBLIOGRAPHY
Aldefer, Clayton P. (1969). ‘An Empirical Test of a New Theory of Human Need,’
Organizational Behavior and Human Performance, 4, 142–175.
escalation of commitment
DESCRIPTION
Becoming increasingly locked into a particular course of action where ever
greater commitments of resources to the course of action are made in an
effort to recoup past losses or investments.
KEY INSIGHTS
A cycle of escalating commitment can be produced when individuals
or organizations make ongoing efforts to recoup some or all prior
investment through increasing commitments of resources to a particular
course of action irrespective of its likelihood of success. Explanations for
escalations of commitment include the need for internal justification (e.g.
protecting one’s own self-image), external justification (e.g. proving to
others that they were not wrong in an earlier decision), and possible
norms of consistency, where, in the case of managers, those who are
more consistent in their actions may be viewed as better managers than
those switching from one line of behavior to another.
KEY WORDS Action, commitment, investment
IMPLICATIONS
Escalation of commitment may potentially occur in any area of marketing
where resource commitments are required to accomplish objectives. One
area particularly prone to escalation of commitment is that of new prod-
uct development, where an individual or an organization may continue
to pursue a development effort which has received considerable past
investment to a point beyond economic desirability.
APPLICATION AREAS AND FURTHER READINGS
New Product Development
Boulding, William, Morgan, Ruskin, and Staelin, Richard (1997). ‘Pulling the Plug
to Stop the New Product Drain,’ Journal of Marketing Research, 34(1), Special Issue
on Innovation and New Products, 164–176.
Schmidt, Jeffrey B., and Calantone, Roger J. (2002). ‘Escalation of Commitment
during New Product Development,’ Journal of the Academy of Marketing Science,
30(2), 103–118.
Marketing Management
Armstrong, J. S., Coviello, N., and Safrane, B. (1993). ‘Escalation Bias: Does it Extend
to Marketing?’ Journal of the Academy of Marketing Science, 21(3), 247.
BIBLIOGRAPHY
Staw, Barry M. (1981). ‘The Escalation of Commitment to a Course of Action,’
Academy of Management Review, 6(4), October, 577–587.
ethical marketing 192
Brockner, Joel (1992). ‘The Escalation of Commitment to a Failing Course of Action:
Toward Theoretical Progress,’ Academy of Management Review, 17(1), January, 39–
61.
ethical marketing
(also called responsible marketing or sociomarketing)
DESCRIPTION
Marketing concerned with conformance to morally acceptable standards of
conduct.
KEY INSIGHTS
Even though marketing may adhere to laws and regulations governing
its practice, certain practices of marketing that are within the law may
nevertheless be questionable from an ethical perspective. Examples of
such practices might include ‘confusion marketing’ (see confusion mar-
keting) and the use of the ‘lowball technique’ (see low-ball technique).
Ethical marketing is therefore concerned with making and implementing
ethical marketing decisions. The values, attitudes, and beliefs of mar-
keters that influence marketing decisions, the culture of a marketer’s
firm, the decision-making processes within the firm, the decision cri-
teria, the marketing decisions themselves, the actions associated with
marketing decisions, and the outcomes and consequences of marketing
actions can all be evaluated from an ethical standpoint as opposed to one
of simple legality.
KEY WORDS Ethics, marketing ethics, standards of conduct, moral conduct
IMPLICATIONS
The practice of marketing involves many ethical decisions. While con-
sumers are tolerant of (or resigned to seeing) many marketing practices
that present a firm’s offering in a favorable light (e.g. packaging for bacon
showing the meat but concealing the fat), ethical marketing recognizes
that such practices and others may benefit from greater scrutiny to
ensure they are morally acceptable. Marketers concerned with such eval-
uations, where the perspectives of multiple stakeholders (e.g. the firm’s
employees, consumers, broader society) and multiple timeframes (past,
present, near future, distant future) are taken into account, may therefore
benefit from a greater understanding of the growing body of research on
ethical marketing. In addition, a greater knowledge of the ethical codes of
professional marketers (e.g. the code of ethics of the American Marketing
Association, available online at marketingpower.com) may also assist
the marketer in making ethical decisions.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Robin, Donald, and Reidenbach, Eric (1987). ‘Social Responsibility, Ethics, and
Marketing Strategy: Closing the Gap between Concept and Application,’ Journal
of Marketing, 51(1), 44–58.
193 even price effect
Marketing Management
Robin, Donald P., Reidenbach, R. Eric, and Forrest, P. J. (1996). ‘The Perceived
Importance of an Ethical Issue as an Influence on the Ethical Decision-Making of
Ad Managers,’ Journal of Business Research, 35, 17–28.
Laczniak, Eugene R., and Murphy, Patrick E. (1993). Ethical Marketing Decisions: The
Higher Road. Boston: Allyn & Bacon.
Online Marketing
Bush, Victoria S., Venable, Beverly T., and Bush, Alan J. (2000). ‘Ethics and Market-
ing on the Internet: Practitioners’ Perceptions of Societal, Industry and Company
Concerns,’ Journal of Business Ethics, 23(3), 237–248.
Marketing Research
Sirgy, M. J. (2001). Handbook of Quality-Of-Life Research: An Ethical Marketing Perspective.
Dordrecht: Kluwer.
Rao, S., and Quester, P. (2006).’Ethical Marketing in the Internet Era: A Research
Agenda,’ International Journal of Internet Marketing and Advertising, 3(1), 19–34.
Marketing Education
Lane, J. C. (1995). ‘Ethics of Business Students: Some Marketing Perspectives,’
Journal of Business Ethics, 14, 571–580.
BIBLIOGRAPHY
Murphy, P. E., Laczniak, G. R., Bowie, N. E., and Klein, T. A. (2005). Ethical Marketing.
Upper Saddle River, NJ: Pearson Prentice-Hall.
Laczniak, Gene R., and Murphy, Patrick E. (1991). ‘Fostering Ethical Marketing
Decisions,’ Journal of Business Ethics, 11, 259–271.
Reidenbach, R. Eric, and Robin, Donald P. (1995). ‘A Response to “On Measuring
Ethical Judgments,” ’ Journal of Business Ethics, 14, 159–162.
Sturdivant, Fredrick D., and Cocanougher, A. Benton (1973). ‘What are Ethical
Marketing Practices?’ Harvard Business Review, November–December, 10–12.
ethnic marketing see multicultural marketing
ethnomarketing see multicultural marketing
evaluation see adoption process
evangelism marketing see word-of-mouth marketing
even price effect
DESCRIPTION
Any effect on product purchase amounts or purchase frequencies resulting
from a product’s price ending in even-numbered digits.
KEY INSIGHTS
Pricing decisions involving setting product prices where even-numbered
prices are sought or avoided indicates that the pricing approach is a
form of psychological pricing, where there is an effort to manipulate con-
sumers’ perceptions of price desirability through the selection of a price’s
ending digits. Research on the topic of price-setting behaviors for a wide
array of products clearly suggests that most managers believe that price
endings are important in influencing product sales as a result of believing
that most customers are more receptive to some price endings over
others. While some managers advocate the use of even pricing to increase
sales, particularly where endings of zero are used, other managers are
event marketing 194
observed to advocate the use of odd pricing, especially where endings
of nine are used. Actual influences of price endings are observed to vary
among product categories and price amounts. Beyond operational con-
siderations, explanations for managerial use of price endings to achieve
desired effects include the acknowledgment of consumer behaviors such
as tendencies for consumers to round prices down, limited consumer
memories, and consumers using price endings to draw conclusions about
whether or not a product is on sale.
KEY WORDS Pricing, perception
IMPLICATIONS
Marketers involved in price setting should seek to understand both
through prior research and experience how price endings can be used
as a means to influence subtly a consumer’s perceptions of a product’s
price or the product’s attributes such as its value or quality.
APPLICATION AREAS AND FURTHER READINGS
Pricing
Estelami, H. (1999). ‘The Computational Effect of Price Endings in Multi-
dimensional Price Advertising,’ Journal of Product and Brand Management, 8(2/3),
244–256.
Gendall, P., Holdershaw, J., and Garland, R. (1997). ‘The Effect of Odd Pricing on
Demand,’ European Journal of Marketing, 31(11–12), 799–813.
Naipaul, S., and Parsa, H. G. (2001). ‘Menu Price Endings That Communicate Value
and Quality,’ Cornell Hotel and Restaurant Administration Quarterly, 42(1), 26–37.
BIBLIOGRAPHY
Stiving, Mark, and Winer, Russell S. (1997). ‘An Empirical Analysis of Price Endings
with Scanner Data,’ Journal of Consumer Research, 24(1), June, 57–67.
event marketing
DESCRIPTION
Marketing aimed at consumers attending or similarly exposed to a particular
public or private event.
KEY INSIGHTS
While event marketing overlaps with sponsorship marketing to some
extent, sponsorship marketing does not necessarily need to involve an
event, whereas event marketing makes the event—that something which
happens at a particular place and time—focal to the firm’s marketing
efforts. Events marketed may be large (e.g. a major charity concert) or
quite small (e.g. an in-store product tasting). Common to all events,
however, is their ability to provide consumers with positive experiences,
particularly ones that stimulate multiple senses, and an opportunity to
use personal contact with the consumer to communicate the organ-
ization’s brand identity. Instead of learning about a new branded cola
product through a television advertisement, for example, an in-store
tasting enables consumers to see, taste, and smell the branded product.
In addition, when an event is associated with a single organization (e.g. a
195 evoked set
charity run organized to raise funds for a specific charitable cause led by
a specifically named charitable organization), the consumer’s attention
is relatively captive in that it is directed to, or at least connected to, the
organization without interference from competing organizations.
KEY WORDS In-person communication, sensory experience
IMPLICATIONS
Whether an event is pre-communicated with controlled attendance or
it merely ‘happens’ with any and all passers-by observing or taking
part, event marketing provides the marketer with an opportunity to
communicate in person the firm’s brand identity. Marketers seeking to
provide consumers with rich sensory experiences as an alternative or
supplement to other marketing approaches may clearly benefit from a
greater understanding of event marketing approaches spanning a wide
range of events.
APPLICATION AREAS AND FURTHER READINGS
Marketing Management
Wohlfeil, M., and Whelan, S. (2005). ‘Event-Marketing as Innovative Marketing
Communications: Reviewing the German Experience,’ Journal of Customer Behav-
ior, 4(2), July, 181–207.
Marketing Strategy
Cunningham, M. H., and Taylor, S. F. (1995). ‘Event Marketing: State of the Industry
and Research Agenda,’ Festival Management and Event Tourism, 2, 123–137.
BIBLIOGRAPHY
Hoyle, Leonard H. Jr., (2002). Event Marketing: How to Successfully Promote Events,
Festivals, Conventions, and Expositions. New York: John Wiley & Sons, Inc.
evoked set
DESCRIPTION
The set of alternatives that are activated directly from consumer memory in
response to some stimuli, where such alternatives are typically products or
brands considered by the consumer in a buying decision process.
KEY INSIGHTS
In the context of a consumer’s buying decision process, an evoked set
can be viewed as a selected shortlist or top-of-mind set of alternatives
that the consumer generates. In order for a firm’s products or brands to
have a chance of being evaluated by a consumer, such products or brands
need to be in the consumer’s evoked set.
KEY WORDS Buying decision process
IMPLICATIONS
Given the importance of evoked set inclusion in subsequent consumer
evaluation of buying alternatives, marketers should seek to understand
through marketing research to what extent their products or brands
are likely to be found in consumers’ evoked sets for the category (or
categories) associated with the products or brands. Beyond influencing
exchange, law of 196
their products’ and brands’ mere inclusion in such sets with marketing
communications, however, marketers should additionally be concerned
with understanding consumers’ evoked set sizes and influencing the
relative standing of their products and brands in such sets.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Gronhaug, Kjell (1973–1974). ‘Some Factors Influencing the Size of the Buyer’s
Evoked Set,’ European Journal of Marketing, 7, 232–241.
Marketing Modeling
Roberts, John H., and Lattin, James M. (1991). ‘Development and Testing of a Model
of Consideration Set Composition,’ Journal of Marketing Research, 28(4), November,
429–440.
Marketing Research
Alba, Joseph W., and Chattopadhyay, Amitava (1985). ‘Effects of Context and Part-
Category Cues on Recall of Competing Brands,’ Journal of Marketing Research, 22(3),
August, 340–349.
BIBLIOGRAPHY
Williams, T. G., and Etzel, M. J. (1976). ‘An Investigation and Extension of the
Evoked Set Concept Applied to Consumer Durables,’ in Henry Nash and Donald
Robin (eds.), Proceedings of the Southern Marketing Association. Starkville, Miss.:
Southern Marketing Association, 237–239.
exchange see exchange theory
exchange, law of
DESCRIPTION
A view that exchange can take place between two entities, under conditions
where one entity holds assortment A and the other assortment B, with
elementsx andy within assortments A and Brespectively when: (a) x is different
than y, (b) the potency of assortment A is increased by dropping x and adding
y, and (c) the potency of assortment B is increased by dropping y and adding x.
KEY INSIGHTS
Put forth by Alderson and Martin (1967), the law of exchange addresses
the situation where two parties each give something of value to the
other to satisfy needs. In broadly characterizing that which is exchanged,
that which has value may include money, tangible goods, intangible
services, or even an individual’s support for a cause. While the law of
exchange limits the exchange context to just two entities—even though
more are possible—it is nevertheless considered influential to the field
of marketing as marketing itself can be viewed as involving organized
systems of exchange.
KEY WORDS Value, need(s)
IMPLICATIONS
To marketers, the law of exchange can be viewed as identifying con-
ditions necessary for exchange to occur. However, the complexities of
exchange in terms of that which has value and the number of entities
197 exchange theory
involved (e.g. individuals, organizations, or social actors more generally)
also suggests that many exchange processes may involve dimensions
which are not necessarily captured by the law of exchange. Nevertheless,
given that exchange can be viewed as a fundamental ‘building block’ in
marketing, the law of exchange provides marketers with one starting
point on which to base further marketing theory and practice.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Bagozzi, R. P. (1974). ‘Marketing as an Organized Behavioral System of Exchanges,’
Journal of Marketing, 38, October, 77–81.
Marketing Theory
Dixon, D. F. (1999). ‘Some Late Nineteenth-Century Antecedents of Marketing
Theory,’ Journal of Macromarketing, 19(2), 115–125.
Non-profit Marketing
Clarke, P., and Mount, P. (2001). ‘Nonprofit Marketing: The Key to Marketing’s
“Mid-Life Crisis”?’ International Journal of Nonprofit and Voluntary Sector Marketing,
6(1), 78–91.
BIBLIOGRAPHY
Alderson, Wroe, and Martin, Miles W. (1967). ‘Toward a Formal Theory of Transac-
tions and Transvections,’ in Bruce Mallen (ed.), The Marketing Channel: A Conceptual
Viewpoint. New York: John Wiley & Sons, 50–51.
exchange theory
DESCRIPTION
Theory or theories aimed at understanding, explaining, and/or predicting
exchange events and relationships.
KEY INSIGHTS
The concept of exchange, or the process of giving something in return
for something received, is considered by many to be at the core of
marketing. While much of marketing is focused on exchanges involv-
ing the direct transfer of tangible entities between two parties, there
are also many exchanges in marketing that are indirect, intangible, or
symbolic, and involve more than two parties. Exchange therefore exists
in many forms and is not limited to simple money-for-product trans-
actions, nor is it limited to marketing-related contexts. For example,
exchange theory is also an alternative term for social exchange theory,
a theory of human relationships and social interaction which also has
tremendous significance to marketing. (See social exchange theory .) In
a marketing context, elements of exchange theory can be considered to
include understandings, explanations, and predictions for: prerequisites
for exchange (e.g. there are at least two parties and where each party is
free to accept or reject an exchange offer), forms that value can take (e.g.
goods, services, ideas, places), assessments of value, and conditions that
may turn exchange events into exchange relationships.
KEY WORDS Transactions, marketing
exclusion principle 198
IMPLICATIONS
Given the centrality of exchange in marketing, marketers should seek
to understand carefully the nature of exchanges the firm has not
only with its customers but all others in the marketing system (e.g.
distributors and suppliers). For example, marketers should not under-
estimate the significance to the firm of creating satisfying indirect
exchanges and multi-party exchanges in support of accomplishing the
firm’s marketing objectives. While exchange theory embraces a rela-
tively pervasive phenomenon, a better understanding of exchange
theory elements and related research can potentially provide the
marketer with insights into not only the many different types of
exchanges but a greater knowledge of exchange characteristics use-
ful for managing their effectiveness in a wide range of marketing
contexts.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Bagozzi, Richard P. (1975). ‘Marketing as Exchange,’ Journal of Marketing, 39(4),
October, 32–39.
Frazier, Gary L. (1983). ‘Interorganizational Exchange Behavior in Marketing Chan-
nels: A Broadened Perspective,’ Journal of Marketing, 47(4), Autumn, 68–78.
Gundlach, Gregory T., Achrol, Ravi S., and Mentzer, John T. (1995). ‘The Structure
of Commitment in Exchange,’ Journal of Marketing, 59(1), January, 78–92.
Marketing Research
Kaufmann, P. J., and Dant, R. P. (1992). ‘The Dimensions of Commercial Exchange,’
Marketing Letters, 3(2), 171–185.
Consumer Behavior
Brinberg, D., and Wood, R. (1983). ‘A Resource Exchange Theory Analysis of Con-
sumer Behavior,’ Journal of Consumer Behavior, 10(3), 330–338.
BIBLIOGRAPHY
Houston, Franklin S., and Gassenheimer, Jule B. (1987). ‘Marketing and Exchange,’
Journal of Marketing, 51(4), October, 3–18.
exclusion principle
DESCRIPTION
A criterion used to distinguish a public good from a non-public good, where
the ability of a producer to prevent others, particularly non-buyers, from
consuming the product is indicative of a non-public good.
KEY INSIGHTS
Not to be confused with the physics-based exclusion principle, the prin-
ciple provides one means of distinguishing between public goods and
non-public (or private) goods, where public goods are those goods that,
once supplied to one individual, can be consumed by others at no extra
cost and where the individual’s consumption precludes the consumption
of the good by others.
KEY WORDS Public goods
199 exercise, law of
IMPLICATIONS
Marketers concerned with the provision of goods that are of broader eco-
nomic or social benefit may gain additional decision-making and policy
insights from an understanding of the exclusion principle criterion. Of
particular concern in evaluating the public/non-public good distinction is
in identifying the extent to which individuals will have no incentive to
pay for particular goods but will be able to benefit from them and where
government action and intervention may be required.
APPLICATION AREAS AND FURTHER READINGS
Societal Marketing
Hansen, U., and Schrader, U. (1997). ‘Modern Model of Consumption for a Sustain-
able Society,’ Journal of Consumer Policy, 20(4), 443–468.
Peacock, Alan T. (1978). ‘Preserving the Past: An International Economic Dilemma,’
Journal of Cultural Economics, 2(2), 1–11.
BIBLIOGRAPHY
Plott, C. R., and Meyer, R. A. (1975). ‘The Technology of Public Goods, Externalities,
and the Exclusion Principle,’ in E. S. Mills (ed.), Economic Analysis of Environmental
Problems. New York: National Bureau of Economic Research, Columbia University
Press, 65–90.
exclusive distribution see distribution strategies
exercise, law of
DESCRIPTION
A principle stating that repetition tends to strengthen the association between
a stimulus and a response, thereby making a response more likely to occur on
the next presentation of a stimulus.
KEY INSIGHTS
Formulated by psychologist Edward Lee Thorndike, the law of exercise
suggests that, as the association between a stimulus and a response is
strengthened through repetition, presentation of the next stimulus will
make the response increasingly likely to occur.
KEY WORDS Behavior, stimulus, response, education
IMPLICATIONS
The law of exercise clearly has many implications for marketing, where
marketing stimuli (e.g. television commercials showing happy people
eating a particular brand of ice cream) are intended by marketers to have
the effect of responses such as a positive attitude toward a product, a
desire to purchase the product, and/or associations with satisfaction as a
result of consuming the product. Given that a consumer’s initial response
to a particular marketing initiative is favorable, the implication of the
law of exercise is that further repetition of the marketing stimuli will
be increasingly beneficial in that such a favorable response (e.g. desire
to purchase the brand of ice cream) will become increasingly likely to
occur upon subsequent presentation of the stimuli. Of course, a limitation
to the strengthening effects of repetition is suggested with the law of