Dacko S.G. The Advanced Dictionary of Marketing Putting Theory to Use
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gray markets 240
BIBLIOGRAPHY
Matyas, L. (1998). ‘The Gravity Model: Some Econometric Considerations,’ World
Economy (London), 21(3), 397–401.
gray markets
(also referred to by the alternate spelling ‘grey markets’)
DESCRIPTION
Markets involving the flow and purchase of new goods through channels of
distribution other than those intended by the supplier.
KEY INSIGHTS
Gray markets, as opposed to black markets, can potentially provide
purchasers with an alternative legal means of acquiring goods from a
supplier. Thus, although a producer of denim jeans varies the wholesale
prices of its jeans across countries in a way that seeks to maximize its
profits from retailers in each country, it may also be the case that a
retailer in one country could purchase large quantities of the jeans in
another country and resell them at a greater profit in its home country
relative to the practice whereby most retailers purchase them at whole-
sale prices in supplier-intended channels.
KEY WORDS Distribution, channels of distribution
IMPLICATIONS
Marketers concerned with distribution strategy and management should
examine the distribution channels for their firm’s—and competitor
firms’—offerings to determine to what extent there may be opportunities
for purchasers to acquire the offerings through gray market. Given that
gray markets vary significantly by industry (being relatively prevalent,
for example, in the automobile, wine, and photographic equipment
industries), marketers may benefit from a greater understanding of gray
market issues (e.g. their legal status and competitive implications) to
assess better the marketing and financial risks and opportunities facing
the firm from their current or possible use.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Lim, G. H., Lee, K. S., and Tan, S. J. (2001). ‘Gray Marketing as an Alternative Market
Penetration Strategy for Entrepreneurs,’ Journal of Business Venturing, 16(4), 405–
427.
Antia, D. Kersi, Bergen, Mark, and Dutta, Shantanu (2004). ‘Competing with Gray
Market,’ Sloan Management Review, 46(1), 63–69.
Marketing Management
Bergen, Mark, Heide, Jan, and Dutta, Shantanu (1998). ‘Managing Gray Markets
through Tolerance of Violations: A Transaction Cost Perspective,’ Managerial and
Decision Economics, 19(3), May, 157–165.
International Marketing
Duhan, Dale F., and Sheffet, Mary Jane (1988). ‘Gray Markets and the Legal Status
of Parallel Importation,’ Journal of Marketing, 52(3), July, 75–83.
241 greater fool theory
BIBLIOGRAPHY
Cross, James, Stephan, James, and Benjamin, Robert E. (1990). ‘Gray Markets: A
Legal Review and Public Perspectives,’ Journal of Public Policy & Marketing, 9, 183–
194.
greater fool theory
DESCRIPTION
The view that investing in a fully valued or questionable asset can still be
worthwhile if one can soon find a ‘greater fool’ in the market to whom the
investment can be resold.
KEY INSIGHTS
The greater fool theory provides a basis for the investment practices of
some investors in the stock market and other investment markets where,
although a certain investment may appear to be high, fully priced, or
overpriced by one or more measures, the investor thinks he or she can
still profit from it by soon reselling it at a higher price to a ‘greater
fool.’ Clearly, investors vary in the extent that they adopt the theory
in investment practice, but the theory is often used to partially explain
the existence of ‘bubbles,’ or large increments to asset prices that are
present only because the prices are expected to be even higher in the
near future. In such an instance, individuals believe they might be a fool
to purchase such assets but they believe they can soon find a greater fool
to sell to at a higher price. While the theory is often cited in reference to
stock market investing and stock market bubbles in particular, it can also
help to explain investment behaviors concerning a range of investment
opportunities.
KEY WORD Investments
IMPLICATIONS
Marketers concerned with investment opportunity evaluation and partic-
ipation who seek to understand better investment motives and behav-
iors should recognize that some investors may be adopting the greater
fool theory either implicitly or explicitly. As there may not always be a
‘greater fool’ for any given investment, marketers must, of course, exer-
cise caution in their advocacy of investment opportunities, particularly
ones seemingly characterized by ‘bubbles.’
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Dickson, P. R., Farris, P. W., and Verbeke, W. J. M. I. (2001). ‘Dynamic Strategic
Thinking,’ Journal of the Academy of Marketing Science, 29(3), 216–237.
Online Marketing
Oliva, R., Sterman, J. D., and Giese, M. (2003). ‘Limits to Growth in the New
Economy: Exploring the “Get Big Fast” Strategy in E-commerce,’ System Dynamics
Review, 19(2), 83–118.
BIBLIOGRAPHY
Lynch, A. (2000). ‘Thought Contagions in the Stock Market,’ Journal of Psychology and
Financial Markets, 1, 10–23.
green marketing 242
green marketing
(also called eco-marketing, eco-centric marketing, environmental market-
ing, environmentally responsible marketing, or responsible marketing)
DESCRIPTION
Marketing strategies and activities that emphasize sensitivity to environmen-
tal impact.
KEY INSIGHTS
Green marketing strategies and activities may involve any number of
means to protect, improve, or reduce damage to the natural environment
as well as human health. While green marketing seeks to maintain the
quality of the natural world in some way, a major benefit of its use is
often in its appeal to environmentally conscious consumers.
KEY WORDS Environmental impact
IMPLICATIONS
Marketers concerned with environmental impact may benefit from
a better understanding of green marketing strategies and tactics to
enable the firm to appeal to a greater extent to consumers with
similar concerns. At the same time, marketers will be in a better
position to evaluate the extent that green marketing can potentially
provide the firm with reputational, financial, and competitive advantages
over firms that are less environmentally focused in their marketing
efforts.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Mendleson, N., and Polonsky, M. J. (1995). ‘Using Strategic Alliances to Develop
Credible Green Marketing,’ Journal of Consumer Marketing, 12(2), 4.
Mcdaniel, Stephen W., and Rylander, David (1993). ‘Strategic Green Marketing,’
Journal of Consumer Marketing, 10(3), 4–10.
Menon, Ajay, and Menon, Anil (1997). ‘Enviropreneurial Marketing Strategy: The
Emergence of Corporate Environmentalism as Market Strategy,’ Journal of Mar-
keting, 61(1), January, 51–67.
Miles, M. P., and Covin, J. G. (2000). ‘Environmental Marketing: A Source of Rep-
utational, Competitive, and Financial Advantage,’ Journal of Business Ethics, 23(3),
299–311.
Marketing Management
Wasik, J. (1996). Green Marketing and Management: A Global Perspective. Cambridge,
Mass.: Blackwell Publishers Inc.
Marketing Research
Kalafatis, S. P., Pollard, M., East, R., and Tsogas, M. H. (1999). ‘Green Marketing and
Ajzen’s Theory of Planned Behaviour: A Cross-Market Examination,’ Journal of
Consumer Marketing, 16(4–5), 441–460.
BIBLIOGRAPHY
Coddington, W. (1993). Environmental Marketing. New York: McGraw-Hill.
Ottman, J. A. (1994). Green Marketing. Chicago: NTC Business Books.
Charter, Martin, and Polonsky, Michael J. (1999). Greener Marketing: A Global Perspec-
tive on Greening Marketing Practice. Sheffield: Greenleaf.
243 Gresham’s law
Gresham’s law
DESCRIPTION
The term characterizing the view that ‘bad money drives out good
money’ and originally referencing money in circulation but further used
with reference to instances where bad practices or products drive good
ones out of markets.
KEY INSIGHTS
Named after English financier Sir Thomas Gresham, Gresham’s law
encompasses the observation that individuals spending money prefer to
hand over bad money and keep the good, where bad money is money
that has a commodity market value lower than its exchange value and
where good money has little difference between its commodity market
value and exchange value. An example is in the case of a gold coin
and a gold bar or ingot having the same commodity market value but
where people prefer to trade in gold coins rather than in gold bars as
they attribute less intrinsic value to bullion and more intrinsic value to
coins, thereby leading to situations where coining frequently becomes
profitable.
KEY WORDS Value, exchange, market practice
IMPLICATIONS
While Gresham’s law originally applied to the specific context of money
in circulation, the view it encompasses can be used to characterize any
of a variety of instances where bad market practices are observed to
drive out good ones, as where an inferior product may drive a superior
product out of a market. In this context, Gresham’s law can be used
to characterize and provide additional insight to a range of phenomena
within domains including ethical decision making and competition in
the marketing of products and services.
APPLICATION AREAS AND FURTHER READINGS
Marketing Research
Nelson, J. E., and Kiecker, P. L. (1996). ‘Marketing Research Interviewers and their
Perceived Necessity of Moral Compromise,’ Journal of Business Ethics, 15(10), 107–
117.
Marketing Strategy
Cook, P. Lesley (1961). ‘Orderly Marketing or Competition?’ Economic Journal,
71(283), September, 497–511.
Marketing Education
Ashworth, K. (1980). ‘Gresham’s Law in the Marketplace of Ideas: Are Bad Degrees
Driving Out the Good?’ Chronicle of Higher Education, 21, October, 64.
Litten, Larry H. (1980). ‘Marketing Higher Education: Benefits and Risks for the
American Academic System,’ Journal of Higher Education, 51(1), January–February,
40–59.
BIBLIOGRAPHY
Rolnick, A. J., and Weber, W. E. (1986). ‘Gresham’s Law or Gresham’s Fallacy?’
Journal of Political Economy, 94, 185–199.
group polarization 244
group polarization
DESCRIPTION
The tendency for discussion among members of a group to result in more
extreme attitudes, opinions, inclinations, and decisions of group members.
KEY INSIGHTS
Based on research by Moscovici and Zavalloni (1969) and earlier
researchers, the group polarization phenomenon has been experimen-
tally observed as a significant tendency in many groups. A particular form
of group polarization is the risky shift effect, also referred to as choice
shift, where group decisions are found to be riskier than the average
of the individual decisions of the members before the group has met.
Explanations for the group polarization phenomenon tend to be based on
mechanisms related to social comparison (e.g. where culturally, people
tend to admire riskiness rather than caution in most circumstances) as
well as informational influences (e.g. where individual choices are based
on weighing remembered pro and con arguments).
KEY WORDS Groups, decision making, choice, risk
IMPLICATIONS
Marketers must be aware of how participation in groups, whether in a
group of an organization’s employers or in a group of consumers, can lead
to views which are more extreme than those of individuals prior to group
participation or where views are amplified and shift in the direction
of dominant norms. The effect may present itself in the form of more
extreme attitudes, opinions, or riskier decisions. Assessing individual
views prior to group discussions and decision making and comparing
individual views with group views is one way to identify the extent of
group polarization.
APPLICATION AREAS AND FURTHER READINGS
Decision Making
Whitney, John C., and Smith, Ruth A. (1983). ‘Effects of Group Cohesiveness on
Attitude Polarization and the Acquisition of Knowledge in a Strategic Planning
Context,’ Journal of Marketing Research, 20(2), May, 167–176.
Consumer Behavior
Rao, Vithala R., and Steckel, Joel H. (1991). ‘A Polarization Model for
Describing Group Preferences,’ Journal of Consumer Research, 18(1), June, 108–
118.
Woodside, Arch G. (1974). ‘Is There a Generalized Risky Shift Phenom-
enon in Consumer Behavior?’ Journal of Marketing Research, 11(2), May, 225–
226.
Ward, James C., and Reingen, Peter H. (1990). ‘Sociocognitive Analysis of
Group Decision Making among Consumers,’ Journal of Consumer Research, 17(3),
December, 245–262.
Sia, C. L., Tan, B. C. Y., and Wei, K. K. (2002). ‘Group Polarization and Computer-
Mediated Communication: Effects of Communication Cues, Social Presence, and
Anonymity’, Information Systems Research, 13(1), 70–90.
BIBLIOGRAPHY
Moscovici, S., and Zavalloni, M. (1969). ‘The Group as a Polarizer of Attitudes,’
Journal of Personality and Social Psychology, 12, 125–135.
245 groupthink
groupthink
DESCRIPTION
A term characterizing the situation where a group’s drive for consensus
overrides the drive to realistically evaluate alternative courses of action,
ultimately distorting the testing of reality, lessening critical thinking, and
generally rationalizing a shared illusion of invulnerability and infallibility. The
result of groupthink is typically poor or irrational decisions.
KEY INSIGHTS
Based on pioneering research by Janis (1972) and subsequent researchers,
groupthink is a potential risk in group decision making which may
increase in likelihood under conditions including that where the group is
acting in relation to and constrained by certain characteristics of an exter-
nal threat, being generally insulated from outside sources of information,
the group is cohesive and homogeneous, and the group has a persuasive,
directive leader. In addition, symptoms indicative of groupthink include
illusions of invulnerability, unquestioned belief in the group’s inherent
morality, collective rationalization of group decisions, shared stereotypes
of other groups including opponents, self-censorship where members
withhold criticisms, illusion of unanimity, pressure on dissenters to
conform to the group, and self-appointed individuals who protect the
group from negative information. Symptoms of decisions affected by
groupthink include incomplete surveys of alternatives, incomplete sur-
veys of objectives, failures to examine risks of preferred choices, fail-
ures to reappraise rejected alternatives, poor information search, selec-
tive bias in information processing, and failures to develop contingency
plans.
Mechanisms suggested for the prevention of groupthink include
appointing a devil’s advocate within a group whose purpose is to disagree
with any suggestion presented, allowing anonymous feedback as through
a suggestion box, and placing decision-making responsibility and author-
ity with one group member who is able to consult with other members
of the group.
KEY WORDS Groups, decision making, rationality
IMPLICATIONS
Marketers involved in group decision-making processes, as when for-
mulating marketing strategies, must be vigilant for various symptoms
of groupthink as well as its resultant influence on decision-making
processes and decisions. Adopting means to prevent or reduce the pos-
sibility of groupthink in groups may result in higher-quality decisions
than would otherwise be achieved.
APPLICATION AREAS AND FURTHER READINGS
Marketing Managment
Peterson, R. S., Owens, P. D., Tetlock, P. E., Fan, E. T., and Martorana, P. (1998).
‘Group Dynamics in Top Management Teams: Groupthink, Vigilance, and Alter-
native Models of Organizational Failure and Success,’ Organizational Behavior and
Human Decision Processes, 73(2–3), 272–305.
guerrilla marketing 246
Ayers, Doug, Dahlstrom, Robert, and Skinner, Steven J. (1997). ‘An Exploratory
Investigation of Organizational Antecedents to New Product Success,’ Journal of
Marketing Research, 34(1), Special Issue on Innovation and New Products, February,
107–116.
Andrews, Jonlee, and Smith, Daniel C. (1996). ‘In Search of the Marketing Imagi-
nation: Factors Affecting the Creativity of Marketing Programs for Mature Prod-
ucts,’ Journal of Marketing Research, 33(2), May, 174–187.
BIBLIOGRAPHY
Janis, I. (1972). Victims of Groupthink: A Psychological Study of Foreign-Policy Decisions and
Fiascoes. Boston: Houghton Mifflin.
Janis, I., and Mann, L. (1977). Decision Making: A Psychological Analysis of Conflict, Choice
and Commitment. New York: The Free Press.
growth-share matrix see product portfolio analysis
growth stage see product life cycle
growth strategies see product-market investment strategies
guerrilla marketing
(also referred to by the alternate spelling of guerilla marketing and some-
times incorrectly referred to as gorilla marketing)
DESCRIPTION
Guerrilla marketing involves the use of unconventional, creative marketing
strategies and activities to accomplish a firm’s objectives and where such
approaches typically require lower marketing expenditures in comparison to
more traditional means.
KEY INSIGHTS
Guerrilla marketing, with its emphasis on marketing approaches not
traditionally employed by other established firms in an industry, is often
associated with opportunities for use by smaller and/or ‘upstart’ firms
in an industry to compete more effectively with larger or traditional
competitors in their promotional and broader marketing efforts. In sup-
port of a firm’s strategic objectives, guerrilla marketing approaches may
therefore assist the firm in acquiring market share from a larger com-
petitor by discrediting the larger competitor in the minds of consumers.
An example is where a small, new airline labels a larger, established
airline as a ‘bully always trying to keep out new competition’ in peri-
odic public relations attacks, thereby swaying public opinion against
the larger airline and also demoralizing the larger airline’s staff in the
process, and where the outcome of the approach is to ultimately allow
the small airline to expand its flight operations and increase market
share.
KEY WORDS Unconventional marketing, promotion
IMPLICATIONS
While the ethics associated with various guerrilla marketing strategies
and tactics may be a matter of debate among marketers, it nevertheless
247 guerrilla marketing
is an approach that some firms can—and do—incorporate into their mar-
keting and promotion efforts. To be sure, the approach carries marketing
risks as well as the potential for greater cost-effectiveness. At the same
time, astute marketers will recognize that, regardless of whether or not
guerrilla marketing approaches are adopted to, say, discredit a competitor
through the media, the firm must ultimately deliver real value to its
customers if it is to remain viable in the longer term.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Stasch, S. F. (1999). ‘Guerilla Marketing in New Venture Marketing Strategies,’ in
G. Hills, W. Siu, and D. Malewicki (eds.), Research at the Marketing/Entrepreneurship
Interface—Proceedings of the UIC Symposium on Marketing and Entrepreneurship.
Chicago: University of Illinois at Chicago, 57–67.
Slack, M. (1999). Guerilla Marketing Breaking through the Clutter with Word-of-Mouth.
Darien, Conn.: Jupiter Research.
Online Marketing
Levinson, Jay Conrad, and Rubin, Charles (1996). Guerrilla Marketing Online Weapons:
100 Low-Cost, High-Impact Weapons for Online Profits and Prosperity. Boston: Houghton
Mifflin Co.
BIBLIOGRAPHY
Levinson, Jay Conrad (1984). Guerilla Marketing: Secrets for Making Big Profits from your
Small Business. Boston: Houghton-Mifflin.
H
habitual buying behavior see consumer buyer behavior
halo effect
(also called the horns and halo effect)
DESCRIPTION
A cognitive bias where a perception of a particular characteristic or quality has
an aural influence on perceptions and judgment beyond the characteristic or
quality as a result of some association.
KEY INSIGHTS
Based on pioneering research by Thorndike (1920), the halo effect charac-
terizes the situation where positive trait perceptions influence judgments
of related traits, while the ‘horns and halo effect’ term characterizes any
such influence. The effect is a form of cognitive bias which may present
itself in perceptions of judgments of individuals, organizations, products,
brands, service experiences, and the like. An example is where individu-
als perceiving a brand to be strong in an aspect such as name recognition
or aesthetics in product design have subsequent positive perceptions of
lesser-known qualities such as product durability and reliability. Whereas
halo effect refers to positive aural influences, negative influences are
sometimes referred to by the ‘horns effect’ term.
KEY WORDS Bias, perception, judgment, quality
IMPLICATIONS
Marketers must seek to be aware of halo effects in the consumer’s percep-
tions of a marketer’s offerings and should strive to leverage such effects.
In the case of a brand, certain halo effects may be used strategically,
as in the case where a well-received new product under the company’s
brand name enhances the perceived value of all of the company’s same-
branded products and enables the firm to introduce more easily another
new product under the same brand as well.
APPLICATION AREAS AND FURTHER READINGS
Branding
Leuthesser, L., Kohli, C. S., and Harich, K. R. (1995). ‘Brand Equity: The Halo Effect
Measure,’ European Journal of Marketing, 29(4), 57.
Marketing Modeling
Beckwith, Neil E., and Lehmann, Donald R. (1975). ‘The Importance of Halo Effects
in Multi-attribute Attitude Models,’ Journal of Marketing Research, 12(3), August,
265–275.
249 Hawthorne effect
Holbrook, Morris B. (1983). ‘Using a Structural Model of Halo Effect to Assess
Perceptual Distortion Due to Affective Overtones,’ Journal of Consumer Research,
10(2), September, 247–252.
Marketing Management
Wu, B., and Petrshiuses, S. (1987). ‘The Halo Effect in Store Image Management,’
Academy of Marketing Science Journal, 15(3), 25–45.
BIBLIOGRAPHY
Thorndike, E. L. (1920). ‘A Constant Error on Psychological Rating,’ Journal of Applied
Psychology, 4, 25–29.
handling objections see selling process
hard goods see goods
harvest strategy see decline strategies
Hawthorne effect
DESCRIPTION
The apparent phenomenon in group-based observational research where
behaviors of individuals in a group being studied change as a result of their
being aware that they are participating in a study as opposed to behaviors
changing as a result of any actual treatment or changes being made. More
broadly, the term is used in referring to unexpected influences of non-
experimental variables in experiments.
KEY INSIGHTS
Named after the plant where the effect was first observed and described
in the 1920s–1930s, the Hawthorne effect leads to a confounding situa-
tion where experimental effects are observed in the direction expected
but not necessarily for the reason expected, where effects may be
attributed to participants’ knowing they are being studied. Explanations
for the effect include the view that the extra attention given to individ-
uals as a result of their participation in a study positively motivates the
individuals to change their behaviors which may include their working
harder, faster, or more efficiently. Subsequent research focused on repli-
cating the Hawthorne effect in work situations has resulted in mixed and
alternatives interpretations of findings, however, as in cases where it can
be argued that individuals’ performance improved as a result of receiving
performance feedback that they would not have otherwise received and
where such feedback improved individuals’ learning.
KEY WORDS Experiments, observation, behavior, confounding influences
IMPLICATIONS
Given the ambiguity and controversy surrounding the original interpreta-
tions of the Hawthorne effect and the prevalence of alternative explana-
tions, the effect’s implications for marketers extend to the development
of proper research methodologies for experimental research as much
as actual influences of experimental observation on the behaviors of
individuals being studied. Marketing researchers must strive to eliminate