Dacko S.G. The Advanced Dictionary of Marketing Putting Theory to Use
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expectancy theory 200
diminishing returns and the possibility of burnout occurring as a result
of too much repetition.
APPLICATION AREAS AND FURTHER READINGS
Marketing Education
Brewer, Ernest W., DeJonge, Jacquelyn O., and Stout, Vickie J. (2001). Moving to
Online: Making the Transition From Traditional Instruction and Communication Strategies.
Thousand Oaks, Calif.: Corwin Press.
Mitchell, Garry (1998). The Trainer’s Handbook. New York: AMACOM.
Tomlinson, Stephen (1997). ‘Edward Lee Thorndike and John Dewey on the Science
of Education,’ Oxford Review of Education, 23(3), September, 365–383.
BIBLIOGRAPHY
Thorndike, Edward L. (1911). Animal Intelligence. New York: Macmillan.
expectancy theory
(also called expectancy-value theory)
DESCRIPTION
A theory of motivation aimed at explaining why individuals follow particular
courses of action, where motivation is viewed as a function of an individual’s
beliefs characterized in terms of expectancy, valence, and instrumentality.
KEY INSIGHTS
Expectancy theory as developed by Victor Vroom in 1964 views a motiva-
tional force F to be equal to the products of Expectancy, Instrumentality,
and Valence, that is, F = E (I × V ). In the equation, Valence refers to the
emotional orientations an individual holds about outcomes or rewards
such as money or intrinsic satisfaction. Expectancy refers to expectations
and levels of confidence about what one is capable of doing. Instrumen-
tality refers to the expressed probability that a particular reward will
actually be associated with a particular course of action.
KEY WORDS Motivation, behavior, beliefs
IMPLICATIONS
The expectancy theory of motivation has implications for understanding
and explaining better many areas of employee management including
an individual’s view of job satisfaction, the likelihood of an individual
staying in a particular job, and the level of effort that an individual may
put into their job.
APPLICATION AREAS AND FURTHER READINGS
Sales
Oliver, Richard L. (1974). ‘Expectancy Theory Predictions of Salesmen’s Perfor-
mance,’ Journal of Marketing Research, 11(3), August, 243–253.
Business-to-Business Marketing
Walker, Orville C., Jr., Churchill, Gilbert A., Jr., and Ford, Neil M. (1977). ‘Motivation
and Performance in Industrial Selling: Present Knowledge and Needed Research,’
Journal of Marketing Research, 14(2), May, 156–168.
Marketing Management
Chowdhury, Jhinuk (1993). ‘The Motivational Impact of Sales Quotas on Effort,’
Journal of Marketing Research, 30(1), February, 28–41.
201 expectation–disconfirmation model
Services Marketing
Solomon, Michael R., Surprenant, Carol, Czepiel, John A., and Gutman, Eve-
lyn G. (1985). ‘A Role Theory Perspective on Dyadic Interactions: The Service
Encounter,’ Journal of Marketing, 49(1), Winter, 99–111.
Ethics
Fudge, R. S., and Schlacter, J. L. (1999). ‘Motivating Employees to Act Ethically: An
Expectancy Theory Approach,’ Journal of Business Ethics, 18(3), 295–304.
BIBLIOGRAPHY
Vroom, Victor H. (1995). Work and Motivation, rev. edn. New York: Jossey-Bass
Classics.
expectancy–value theory see expectancy theory
expectation–disconfirmation model
DESCRIPTION
A cognitive model of satisfaction involving the view that satisfaction depends
on the consistency between an individual’s expectations regarding the perfor-
mance of something (e.g. a product or a service) and actual performance.
KEY INSIGHTS
Cognitive models based on an expectation–disconfirmation view consider
satisfaction to be a consequence when actual performance equals or
exceeds an individual’s expectations and dissatisfaction to be a conse-
quence when performance is below the individual’s expectations.
KEY WORDS Expectations, performance, satisfaction
IMPLICATIONS
Marketers can benefit from understanding the expectation–
disconfirmation modeling approach in knowing more about how
customer satisfaction may be determined. The model suggests that
customer expectations for product or service performance are just as
important as the actual product or service experience in establishing the
degree of a customer’s satisfaction or dissatisfaction.
APPLICATION AREAS AND FURTHER READINGS
Customer Satisfaction
Churchill, Gilbert A., Jr., and Surprenant, Carol (1982). ‘An Investigation into
the Determinants of Customer Satisfaction,’ Journal of Marketing Research, 19(4),
Special Issue on Causal Modeling, November, 491–504.
Oliver, Richard L., and DeSarbo, Wayne S. (1988). ‘Response Determinants in Satis-
faction Judgments,’ Journal of Consumer Research, 14(4), March, 495–507.
International Marketing
Spreng, R. A., and Chiou, J.-S. (2002). ‘A Cross-Cultural Assessment of the Satisfac-
tion Formation Process,’ European Journal of Marketing, 36(7/8), 829–839.
Customer Loyalty
Yoon, S.-J., and Kim, J.-H. (2000). ‘An Empirical Validation of a Loyalty Model Based
on Expectation Disconfirmation,’ Journal of Consumer Marketing, 17(2/3), 120–136.
BIBLIOGRAPHY
Oliver, Richard L. (1980). ‘A Cognitive Model of the Antecedents and Consequences
of Satisfaction Decisions,’ Journal of Marketing Research, 17(4), November, 460–469.
expected utility theory 202
expected utility theory
DESCRIPTION
An economic theory of individual choice for situations involving uncertainty,
risk, and/or ambiguity whereby an individual’s utility for a situation is calcu-
lated by considering the individual’s utility in each possible state and arriving
at a weighted average.
KEY INSIGHTS
The expected utility theory (EUT) view of decision making is that a deci-
sion maker chooses between risky or uncertain prospects by comparing
their expected utility values. Quantitatively, such expected utility values
are weighted sums obtained by adding the utility values of outcomes mul-
tiplied by their respective probabilities. EUT is accepted as the standard
theory of individual decision making in economics and, as such, consti-
tutes a key building block of a vast range of other economic theories.
KEY WORDS Choice, decision making, risk, uncertainty
IMPLICATIONS
Expected utility theory provides a basis for many different models of
decision making under risk or uncertainty. Marketers involved in the
development of any such model, as when seeking to model possible
consumer purchase behavior, may therefore benefit from understanding
EUT’s assumptions, variable relationships, and associated concepts in
establishing explanations or forecasts of individual choice.
APPLICATION AREAS AND FURTHER READINGS
Consumer Behavior
Simonson, Itamar (1990). ‘The Effect of Purchase Quantity and Timing on Variety-
Seeking Behavior,’ Journal of Marketing Research, 27(2), May, 150–162.
Decision Making
Schoemaker, Paul J. H. (1982). ‘The Expected Utility Model: Its Variants, Purposes,
Evidence and Limitations,’ Journal of Economic Literature, 20(2), June, 529–563.
Machina, Mark J. (1989). ‘Dynamic Consistency and Non-Expected Utility Models of
Choice under Uncertainty,’ Journal of Economic Literature, 27(4), December, 1622–
1668.
Kahn, Barbara E., and Sarin, Rakesh K. (1988). ‘Modeling Ambiguity in Decisions
under Uncertainty,’ Journal of Consumer Research, 15(2), September, 265–272.
BIBLIOGRAPHY
Von Neumann, John, and Morgenstern, Oskar (1944). Theory of Games and Economic
Behavior. Princeton: Princeton University Press. 2nd edn. 1947; 3rd edn. 1953.
Section 3, chapter I reprinted in Alfred N. Page, Utility Theory: A Book of Readings.
New York: Wiley, 1968, 215–233.
experience, law of see experience curve effect
experience curve effect
DESCRIPTION
The effect of accumulated production experience in systematically reducing
per-unit product costs.
203 experience curve effect
KEY INSIGHTS
The experience curve effect is a widely recognized phenomenon in
production operations. Increases in cumulative production experience
provide opportunities for increased labor efficiency due to learning; cost
reductions due to adoption of technological innovation in the use of pro-
duction inputs or processes; and increased efficiency due to economies of
scale resulting from production operations size increases. Quantification
of the experience curve effect is typically in the form of a percentage
reduction in unit costs (e.g. 20%) each time accumulated production is
doubled. Such quantifications can be portrayed numerically or graphic-
ally to show how expected cost reductions can be determined for any
given future volume of production. The general relationship observed by
the experience curve effect is also what the Boston Consulting Group
has termed the law of experience, or BCG’s law of experience, where the
doubling of cumulative production is associated with costs reducing by a
constant percentage.
The experience curve concept is closely related to the learning curve
concept in that both emphasize the change that occurs with learn-
ing. Thus, the experience curve effect is sometimes called the learning
curve effect. Unlike the learning curve effect, however, which empha-
sizes changes in human performance due to learning, the experience
curve effect refers to a production context where the emphasis is
on understanding changes in cost, which may be due in part to a
learning curve effect among production workers. (See learning curve
effect.)
KEY WORDS Production, cost reductions, experience
IMPLICATIONS
Marketers understanding the extent that unit production costs will pre-
dictably decline due to the experience curve effect can use such know-
ledge in establishing more appropriate pricing strategies for new prod-
ucts where such costs may be very high initially but much lower over
planned time horizons corresponding to planned production volume and
experience increases.
APPLICATION AREAS AND FURTHER READINGS
Pricing
Krishnan, Trichy V., Bass, Frank M., and Jain, Dipak C. (1999). ‘Optimal Pricing
Strategy for New Products,’ Management Science, 45(12), December, 1650–1663.
Marketing Strategy
Gatignon, Hubert, Weitz, Barton, and Bansal, Pradeep (1990). ‘Brand Introduction
Strategies and Competitive Environments,’ Journal of Marketing Research, 27(4),
November, 390–401.
Hedley, B. (1976). ‘A Fundamental Approach to Strategy Development,’ Long Range
Planning, December, 2–11.
BIBLIOGRAPHY
Day, George S., and Montgomery, David B. (1983). ‘Diagnosing the Experience
Curve,’ Journal of Marketing, 47(2), Spring, 44–58.
experiential marketing 204
Alberts, William W. (1989). ‘The Experience Curve Doctrine Reconsidered,’ Journal
of Marketing, 53(3), July, 36–49.
Boston Consulting Group (1972). Perspectives on Experience. Boston: BCG Ltd.
experience goods see goods
experience marketing see experiential marketing
experiential marketing
(also called customer experience marketing or experience marketing)
DESCRIPTION
Marketing aimed at getting customers to sense, feel, think, act, and relate
strongly to a brand or a company.
KEY INSIGHTS
Experiential marketing attempts to build an emotional bond between
the company’s brand and its customers via a sensory-rich experience.
Experiential marketing approaches to marketing communication are
characterized by a relatively high level of interactivity, multi-sensory
communication (e.g. sight, sound, touch), and personal engagement with
consumers and where such conditions are directed at eliciting favor-
able emotional responses on the part of the consumer. An example is
an agricultural firm’s use of an interactive, multi-media exhibit at a
regional fair which consumers can walk through and experience, where
the many elements of the exhibit demonstrate and communicate to
consumers how the firm and its brands have improved the quality of
life. Experiential marketing’s effectiveness stems from the ability of the
totality of such experiences to communicate the essence, or identity, of
a brand or a firm, thereby enhancing the firm’s relationship with the
consumer.
KEY WORDS Senses, sensory communication, interactivity, engagement
IMPLICATIONS
Marketers can develop and implement experiential marketing
approaches on a relatively large scale (e.g. a walk-through branded
pavilion at a theme park) or small scale (e.g. a small traveling display
for the company’s brand). Further, it can be the primary marketing
methodology of the firm or it can be one of its complementary
methodologies. Regardless of the way in which an experiential marketing
opportunity is developed and presented to consumers, the approach gives
marketers an opportunity to communicate with and involve consumers
in a way that may be much more holistic relative to that provided by
traditional marketing media (e.g. television or print advertising).
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Petkus, E. (2004). ‘Enhancing the Application of Experimental Marketing in the
Arts,’ International Journal of Nonprofit and Voluntary Sector Marketing, 9(1), 49–56.
205 experimenter effect
Marketing Management
Berry, Leonard L., Carbone, Lewis P., and Haekel, Stephan H. (2002). ‘Managing
the Total Customer Experience,’ MIT Sloan Management Review, 43(3), Spring, 85–
89.
Pullman, M. E., and Gross, M. A. (2004). ‘Ability of Experience Design Ele-
ments to Elicit Emotions and Loyalty Behaviors,’ Decision Sciences, 35(3), 551–
578.
BIBLIOGRAPHY
Schmitt, B. (1999), ‘Experiential Marketing,’ Journal of Marketing Management, 15(1/3),
53–67.
Schmitt, Brend H. (1999). Experiential Marketing : How to Get Customers to Sense, Feel,
Think, Act and Relate to your Company and Brands. New York: The Free Press.
experimenter effect
DESCRIPTION
Any generally unintended influence or bias of an experimenter on his or her
results.
KEY INSIGHTS
Systematically examined by Rosenthal (1966), experimenter effects are
viewed as undesirable in experimental research studies where it is
recognized that experimental results or outcomes may be a result
of systematic, inadvertent experimenter influence. Ultimately, there
are many possibilities and opportunities for unintended experimenter
influence, as where subjects interviewed by a researcher are inad-
vertently influenced by the researcher’s manner of relating to the
subjects.
KEY WORDS Research, experiments, bias
IMPLICATIONS
Marketers must be aware of the possibility of experimenter effects influ-
encing or confounding research findings. An emphasis on robust method-
ologies aimed at combating experimenter effects is desirable to the extent
marketers seek to eliminate or control for such effects, as when subjects
are interviewed by a researcher who has expectations regarding the
desired outcome of the research.
APPLICATION AREAS AND FURTHER READINGS
Marketing Research
Venkatesan, M. (1967). ‘Laboratory Experiments in Marketing: The Experimenter
Effect,’ Journal of Marketing Research, 4(2), May, 142–146.
Armstrong, J. Scott (1979). ‘Advocacy and Objectivity in Science,’ Management Sci-
ence, 25(5), May, 423–428.
BIBLIOGRAPHY
Rosenthal, Robert (1966). Experimenter Effects In Behavioral Research . New York:
Appleton-Century-Crofts.
experimenter expectancy effect 206
experimenter expectancy effect
(also called the Rosenthal effect)
DESCRIPTION
A particular type of experimenter effect whereby the experimenter’s expecta-
tions act to influence or bias the findings of an experiment.
KEY INSIGHTS
Experimenter expectancy effects may be present in experimental
research in many forms including unconscious experimental manipula-
tion on the part of the experimenter as a result of knowledge of expected
findings or selective interpretation or misinterpretation of data aimed at
obtaining results which support an experimenter’s established expecta-
tions.
KEY WORDS Research, expectations, bias, influence
IMPLICATIONS
When experimenters or researchers have clear expectations about the
outcome of their research activities, experimenter expectancy effects
may be a concern when assessing the adequacy of research designs and
interpreting research findings.
APPLICATION AREAS AND FURTHER READINGS
Marketing Research
Rosenthal, R. (1985). ‘From Unconscious Experimenter Bias to Teacher Expectancy
Effects,’ in J. B. Dusek, V. C. Hall, and W. J. Meyer (eds.), Teacher Expectancies.
Hillsdale, NJ: Erlbaum.
Hoogstraten, Johan, and Vorst, Harrie C. M. (1978). ‘Group Cohesion, Task Per-
formance, and the Experimenter Expectancy Effect,’ Human Relations, 31(11),
939–956.
Barone, M. J., Shimp, T. A., and Sprott, D. E. (1997). ‘The Mere-Ownership Effect:
“More There Than Meets their Eyes” or “Less There Than They Would Have Us
Believe”?,’ Journal of Consumer Psychology, 6(3), 299–311.
BIBLIOGRAPHY
Minor, Marshall W. (1967). ‘Experimenter Expectancy Effect as a Function of Eval-
uation Apprehension.’ Dissertation, University of Chicago.
Finkelstein, Jonathan C. (1976). ‘Experimenter Expectancy Effects,’ Journal of Com-
munication, 26(3), September, 31.
exploratory marketing research see marketing research
extensive distribution see distribution strategies
external validity see validity
F
face validity see validity
factorial validity see validity
fallacy of composition
DESCRIPTION
The mistaken assumption that, if something is true for the individual parts of
a whole (e.g. members of a group), it will also hold true for the whole (e.g.
group).
KEY INSIGHTS
The fallacy of composition can lead individuals or groups of individuals
to mistakenly draw incorrect conclusions concerning the relationship
between individual and collective behaviors. For example, the fallacy
may lead an individual to believe that actions taken that are in the best
interest of individuals in a group will also be in the best interest of
the group—something which is inappropriately inferred. An economic
illustration is the case where increased savings by an individual can
clearly be beneficial to the individual but may actually be detrimental
to an economy if such collective action leads to a reduction in consumer
demand.
KEY WORDS Decision making, beliefs
IMPLICATIONS
Marketers concerned with the study of individual and group beliefs
regarding the relationship between individual and group actions may
benefit from a deeper understanding of the fallacy of composition
concept. Given the broad range of phenomena where the fallacy of
composition has been both observed and demonstrated (e.g. small group
behaviors, economic policy), marketers should not assume that the
decision-making assumptions of others will always exclude this fallacy.
APPLICATION AREAS AND FURTHER READINGS
Marketing Research
Wensley, Robin (2002). ‘A Bridge over Troubled Water?’ European Journal of Marketing,
36(3), April, 391–400.
Public Policy
Calfee, J. E. (2000). ‘The Historical Significance of Joe Camel,’ Journal of Public Policy
and Marketing, 19(2), 168–182.
fallacy of misplaced concreteness 208
Marketing Modeling
Smith, Carol A. (1974). ‘Economics of Marketing Systems: Models from Economic
Geography,’ Annual Review of Anthropology, 3, 167–201.
BIBLIOGRAPHY
Caballero, Ricardo J. (1992). ‘A Fallacy of Composition,’ American Economic Review
(American Economic Association), 82(5), 1279–92.
Mayer, J. (2002). ‘The Fallacy of Composition: A Review of the Literature,’ World
Economy (London), 25(6), 875–894.
fallacy of misplaced concreteness
DESCRIPTION
Fallaciously believing that an abstraction is actually something material or
concrete.
KEY INSIGHTS
The fallacy of misplaced concreteness involves the concept of reification,
or the process whereby concepts become material. As a fallacy, misplaced
concreteness can lead individuals to mistakenly draw incorrect conclu-
sions concerning the nature of ideas, concepts, and models. For example,
the fallacy may lead a marketing manager to treat an ideal conceptual
model of the consumer buying decision process as if it were a description
of a real or actual consumer buying decision process.
KEY WORDS Abstractions, concepts
IMPLICATIONS
Marketers should be wary of the fallacy of misplaced concreteness when
examining conceptual material to avoid drawing incorrect conclusions
about the true nature of such material. In addition, in an effort to ensure a
sense of realism in understanding and evaluating a wide range of market-
ing phenomena in terms of concepts and models, marketers should also
be wary of the possibility that the views of others may inappropriately
embody such a fallacy.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Lane, P. J., Koka, B., and Pathak, S. (2006). ‘The Reification of Absorptive Capacity:
A Critical Review and Reconceptualization,’ Academy of Management Review, 31(4),
833–863.
Angelmar, R., and Pinson, C. (1975). ‘The meaning of “marketing”,’ Philosophy of
Science, June, S. 208–214.
Marketing Research
Zinkhan, George M., and Hirschheim, Rudy (1992). ‘Truth in Marketing Theory and
Research: An Alternative Perspective,’ Journal of Marketing, 56(2), April, 80–88.
Hunt, Shelby D. (1989). ‘Reification and Realism in Marketing: In Defense of
Reason,’ Journal of Macromarketing, 9(2), Fall, 4–10.
Hunt, Shelby D. (1992). ‘For Reason and Realism in Marketing,’ Journal of Marketing,
56(2), April, 89–102.
BIBLIOGRAPHY
Whitehead, Alfred North (1925). Science and the Modern World. New York: The Free
Press.
209 false consensus effect
false consensus effect
DESCRIPTION
Thetendency forindividualsor groupsofindividualsto overestimatetheextent
that others are in agreement with their views.
KEY INSIGHTS
The false consensus effect is a cognitive bias among individuals or groups
of individuals that leads them to believe that the collective view of others
is more likely to reflect their view than is actually the case. In other
words, it is the tendency to see oneself as more representative of others
than one really is. While there may be multiple causes for the effect’s
prevalence among both individuals and groups in the general population,
one explanation for the effect’s prevalence among groups is the tendency
for some groups to be in consensus on matters of group opinion but
where the opinion is unchallenged to a large extent by others outside
the group.
KEY WORDS Cognitive bias, consensus
IMPLICATIONS
In the conduct of marketing research, management, and strategy devel-
opment, marketers should be aware of the general human tendency for
an individual to believe their views are shared by others to a greater
extent than they really are, since the existence of the false consensus
effect can lead to biased perceptions and inaccurate conclusions by the
marketer. For example, the effect may lead a group of marketing strat-
egists in a firm to believe that certain views regarding consumers are
also shared to a great extent by competing firms in the industry when
it may not be the case at all, thereby leading the firm to fail to predict
certain competitive actions.
APPLICATION AREAS AND FURTHER READINGS
Sponsorship Marketing
Bennett, Roger (1999). ‘Sports Sponsorship, Spectator Recall and False Consensus,’
European Journal of Marketing, 33(3–4), 291–312.
Marketing Research
Sherman, S. J., Presson, C. C., Chassin, L., Corty, E., and Olshavsky, P. (1983).
‘The False Consensus Effect in Estimates of Smoking Prevalence: Underlying
Mechanisms,’ Personality and Social Psychology Bulletin, 9, 197–207.
Moore, M., and Urbany, J. (1994). ‘Blinders, Fuzzy Lenses, and the Wrong Shoes,’
Marketing Letters, 5(3), 247–258.
BIBLIOGRAPHY
Fields, James M., and Schuman, Howard (1976–7). ‘Public Beliefs about the Beliefs
of the Public,’ Public Opinion Quarterly, 40, 427–448.
Ross, L., Greene, D., and House, P. (1977). ‘The False Consensus Effect: An Egocen-
tric Bias in Social Perception and Attribution Processes,’ Journal of Experimental
Social Psychology, 13, 279–301.
Marks, G., and Miller, N. (1987). ‘Ten Years of Research on the False Consen-
sus Effect: An Empirical and Theoretical Review,’ Psychological Bulletin, 102,
72–81.