Dacko S.G. The Advanced Dictionary of Marketing Putting Theory to Use
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iceberg principle 260
iceberg principle
DESCRIPTION
A general view that only a small part of an issue will often be visible initially.
More specifically, the view that in aggregate or summary data, there can be
hidden much good or important information.
KEY INSIGHTS
As where approximately 90% of an iceberg is below the surface of the
water, the iceberg principle points to how initial or summary views of
a phenomenon may miss drawing attention to details which may be
deemed important upon further inspection or analyses.
KEY WORDS Data analysis, information, aggregate data
IMPLICATIONS
Marketers must consider how summary data and information obtained in
research may potentially conceal further findings which may be impor-
tant or essential. For example, while summary knowledge of average con-
sumer responses to a marketer’s offerings may be useful for marketing
planning, it can also be misleading if such information hides important
understandings of dramatic variation in the range of responses.
APPLICATION AREAS AND FURTHER READINGS
Marketing Analysis
Ramaprasad, M. V. (2004). ‘Trends in Marketing Cost Analysis,’ Management Accoun-
tant (Calcutta), 39(2), 145–147.
BIBLIOGRAPHY
Palia, Aspy (2005). ‘Online Cumulative Simulation Team Performance Package,’
Developments in Business Simulations and Experiential Learning, 32, 233–241.
idea generation see new product development
idea marketing see social marketing
idea screening see new product development
I-knew-it-all-along effect see hindsight bias
illusion of control
DESCRIPTION
The tendency for individuals to believe they have the ability to control or
influence outcomes over which they have no demonstrable influence, as
where outcomes are actually determined by chance.
KEY INSIGHTS
Based on pioneering research by Langer and Roth (1975), the illusion of
control phenomenon characterizes the finding that people often behave
as if chance events have a potential for influence through personal con-
trol. The likelihood of the phenomenon occurring may increase under sit-
uations where there is a resemblance to situations where skill is involved
261 imitation effect
and where situations appear familiar and involve free choice among
other factors. Some research (e.g. Taylor and Brown 1988) argues that the
illusion of control, when positive, is adaptive in that it acts to increase
motivation and persistence. The illusion of control is often evident in
gambling and lottery play.
KEY WORDS Control, influence, behavior, chance
IMPLICATIONS
While marketers may perceive and sometimes act in ways that reinforce
the illusion of control among consumers as in certain cases of gambling
and lottery play, where it may contribute to consumers’ anticipation and
enjoyment of participating, for example, marketers must recognize how
the illusion of control may also contribute to irrational behaviors. Beyond
consumers, the illusion of control may also be present in activities within
a firm, as where it may influence organizational forecasts.
APPLICATION AREAS AND FURTHER READINGS
Consumer Behavior
Hoch, Stephen J., and Ha, Young-Won (1986). ‘Consumer Learning: Advertising
and the Ambiguity of Product Experience,’ Journal of Consumer Research, 13(2),
September, 221–233.
Clotfelter, Charles T., and Cook, Philip J. (1990). ‘On the Economics of State Lotter-
ies,’ Journal of Economic Perspectives, 4(4), Autumn, 105–119.
Forecasting
Durand, R. (2003). ‘Predicting a Firm’s Forecasting Ability: The Roles of Organi-
zational Illusion of Control and Organizational Attention,’ Strategic Management
Journal, 24(9), 821–838.
BIBLIOGRAPHY
Langer, E. J., and Roth, J. (1975). ‘Heads I Win, Tails it’s Chance: The Illusion of
Control as a Function of the Sequence of Outcomes in a Purely Chance Task,’
Journal of Personality and Social Psychology, 32(6), 191–198.
Langer, E. J. (1982). ‘The Illusion of Control’, in D. Kahneman, P. Slovic, and A. Tver-
sky (eds.), Judgment under Uncertainty: Heuristics and Biases . New York: Cambridge
University Press.
Taylor, S. E., and Brown, J. D. (1988). ‘Illusion and Well-Being: A Social Psychological
Perspective on Mental-Health,’ Psychological Bulletin, 103(2), 193–210.
imitation effect
DESCRIPTION
An effect of social influence in the diffusion of innovations whereby an
innovation’s diffusion in the marketplace is a result of the interaction of non-
adopters with adopters.
KEY INSIGHTS
The imitation effect is considered to be one of two important param-
eters in models of demand and diffusion of innovation, where the other
key parameter is the innovation effect. The new-product growth model
developed by Bass (1969) is one of the first to formally characterize its role
in diffusion of innovation descriptions, explanations, and predictions.
In essence, the imitation effect is due to what has also been referred
inbound marketing 262
to as social contagion, where in the case of innovation diffusion, the
spread of an innovation is due to non-adopters interacting with and
learning about an innovation (e.g. in terms of its features and benefits)
through its adopters, with some non-adopters subsequently adopting the
innovation themselves, thereby leading to further innovation diffusion in
the marketplace.
KEY WORDS Diffusion, imitation, social influence
IMPLICATIONS
Marketers should seek to understand how the imitation effect may assist
in explaining the rate and extent of diffusion of an innovation such as a
new product if the aim is to enhance an innovation’s diffusion. Such an
effect may be critical in some instances, as where positive word-of-mouth
is a primary driver of new product or service acceptance in a marketplace.
The overall popularity of a new restaurant, for example, may be highly
dependent on communication dynamics characterized by the imitation
effect.
APPLICATION AREAS AND FURTHER READINGS
Marketing Modeling
Mahajan, Vijay, and Muller, Eitan (1979). ‘Innovation Diffusion and New
Product Growth Models in Marketing,’ Journal of Marketing, 43(4), Autumn,
55–68.
Dolan, Robert J., and Jeuland, Abel P. (1981). ‘Experience Curves and Dynamic
Demand Models: Implications for Optimal Pricing Strategies,’ Journal of Marketing,
45(1), Winter, 52–62.
Dekimpe, Marnik G., and Hanssens, Dominique M. (1995). ‘The Persistence of
Marketing Effects on Sales,’ Marketing Science, 14(1), 1–21.
Swami, S., and Khairnar, P. J. (2003). ‘Diffusion of Products with Limited
Supply and Known Expiration Date,’ Marketing Letters (New York), 14(1),
33–46.
BIBLIOGRAPHY
Bass, Frank M. (1969). ‘A New-Product Growth Model for Consumer Durables,’
Management Science, 15, January, 215–227.
inbound marketing
(also referred to as in-bound marketing)
DESCRIPTION
Any marketing approach where it is the current or prospective customer that
initiates contact with an organization.
KEY INSIGHTS
Inbound marketing, as where current or prospective customers can call a
company call center, reach an interactive voice response system, and/or
visit a company website, can be considered in some ways to be more
effective than outbound marketing where the organization initiates con-
tact with the customer. Specifically, inbound marketing approaches may
263 income effect
be a relatively effective way of meeting customers’ personal needs and
helping to build customer relationships, since individuals who contact a
company are more apt to give the organization their time and attention
in comparison to approaches where the organization cold-calls its cus-
tomers on the telephone, for example. In addition, inbound marketing
provides a means for the firm to obtain information from customers that
customers wish to share with the firm (e.g. ideas, complaints, compli-
ments).
KEY WORDS Customer contact
IMPLICATIONS
Inbound marketing provides marketers with a means to become acutely
aware of current and prospective customers’ particular needs and wants,
where such information can be used by the marketers’ firm to build
stronger relationships with such individuals as well as to become more
responsive to overall customer needs.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Moffett, T., Stone, M., and Crick, P. (2002). ‘The Use of New Customer-Facing
Technology in Fast-Moving Consumer Goods,’ Journal of Brand Management, 9(6),
437–451.
Pawsey, N. (2005). ‘Ideas Factory: Planning for Success,’ Engineering Management
Journal, 15(3), June–July, 40–43.
BIBLIOGRAPHY
Thomas, G. S., and Kleiner, B. H. (1995). ‘New Developments in Organizing around
Markets,’ Work Study, 44(8), 4–8.
incipient demand see demand
income effect
DESCRIPTION
Any effect on consumer behaviors as a result of a consumer’s change in real
income. In economic terms, the income effect may also be viewed as any
change in a consumer’s real income resulting from a change in the price of a
good or service.
KEY INSIGHTS
As a consumer’s real income changes, consumer purchasing and con-
sumption behaviors may also change. For example, when a consumer
faces greater increased real income, such a change may prompt him
or her to eat more often at restaurants as opposed to eating at home.
Beyond actual consumption behavior, consumer perceptions of products
and services may also be influenced by income, as when a consumer’s
income influences his or her perceptions of product quality (Wheatley
and Chiu 1991).
KEY WORDS Consumer behavior, consumption, perception
indirect marketing 264
IMPLICATIONS
For many products and services, an understanding of the income effect
may be essential for understanding how consumer purchase behaviors
and consumer perceptions may change with real income. When an indi-
vidual receives additional income through a new job after a university
education, for example, the income effect on consumption behavior and
perceptions of product quality can be quite dramatic.
APPLICATION AREAS AND FURTHER READINGS
Consumer Behavior
Chiang, Jeongwen (1991). ‘A Simultaneous Approach to the Whether, What and
How Much to Buy Questions,’ Marketing Science, 10(4), Autumn, 297–315.
Wheatley, John J., and Chiu, John S. Y. (1977). ‘The Effects of Price, Store Image,
and Product and Respondent Characteristics on Perceptions of Quality,’ Journal of
Marketing Research, 14(2), May, 181–186.
BIBLIOGRAPHY
Kingma, Bruce Robert (1989). ‘An Accurate Measurement of the Crowd-out Effect,
Income Effect, and Price Effect for Charitable Contributions,’ Journal of Political
Economy, 97(5), October, 1197–1207.
income segmentation see segmentation
increasing opportunity cost, law of see diminishing returns, law of
incremental validity see validity
in-cultural marketing see multicultural marketing
indirect marketing
DESCRIPTION
Marketing activities that rely on any indirect means for attracting, persuad-
ing, or otherwise influencing and eliciting a desired response from a firm’s
customers or end-users of its offerings.
KEY INSIGHTS
Indirect marketing encompasses any of a range of marketing approaches
where there is a reliance on intervening marketing approaches to reach
and interact with the customer. Thus, firms using wholesalers, brokers,
or other independent distributors as part of their marketing channels
engage indirect marketing, where such firms rely upon motivating such
intermediaries to market the firm’s offerings to consumers. A benefit of
the approach is that, compared to direct marketing approaches, it may
take less time and marketing effort, involve a lower capital expenditure,
and allow the firm to reach a larger number of customers.
Another less common meaning attached to indirect marketing relates
to the marketing value of any firm activity or action that is not directly
associated with the firm’s main marketing activities, as where spotless
offices, well-dressed staff, and courteous receptionists can indirectly cre-
ate positive, lasting impressions or influences on customers, or any other
instance where elements of a firm’s service quality indirectly facilitate its
major efforts in product marketing.
265 industrial buyer behavior
KEY WORDS Intermediaries, marketing intermediaries
IMPLICATIONS
Given that marketing exchanges are often indirect, marketers should
seek to understand how such exchanges can be enhanced by the firm’s
many indirect marketing efforts. In particular, marketers may find it
beneficial to compare indirect marketing approaches with those of direct
marketing (see direct marketing) to determine to what extent either
or both contribute to the marketer’s objectives, which may include
expanding customer reach as well as cost-effectively meeting individual
customer needs.
APPLICATION AREAS AND FURTHER READINGS
Marketing Management
Rolnicki, Kenneth (1998). Managing Channels of Distribution: The Marketing Executive’s
Complete Guide. New York: Amacom.
International Marketing
Bello, Daniel C., and Williamson, Nicholas C. (1985). ‘Contractual Arrangement
and Marketing Practices in the Indirect Export Channel,’ Journal of International
Business Studies, 16(2), Summer, 65–82.
Online Marketing
De Koster, M. B. M. (2003). ‘Distribution Strategies for Online Retailers,’ IEEE
Transactions on Engineering Management, 50(4), 448–457.
Services Marketing
Danaher, P. J., and Rust, R. T. (1996).‘Indirect Marketing Benefits from Service
Quality,’ Quality Management Journal, 3(2), 63–88.
BIBLIOGRAPHY
Bagozzi, Richard P. (1975). ‘Marketing as Exchange,’ Journal of Marketing, 39, Octo-
ber, 32–39.
individual marketing see one-to-one marketing
industrial buyer behavior
(also called business buyer behavior or organizational buyer behavior)
DESCRIPTION
The buying behavior of organizations involved in the purchase of goods or
services for resale or for use in the production of other goods or services by
the firm.
KEY INSIGHTS
Given that a major proportion of all marketing activity is in the area
of business-to-business marketing, industrial buyer behavior constitutes
a major area of research in marketing and involves many related con-
cepts. The buygrid framework, for example, is a common way of charac-
terizing the organizational buying process and the associated behavior
of industrial buyers, where the framework comprises two dimensions:
buyclass and buyphase. Buyclass categorizes or frames the nature of the
industrial buyer behavior 266
business buying situation: new task—situations where the buyer is a first-
time buyer of a product or service; straight rebuy—situations where the
buyer is reordering the same product or service previously purchased;
and modified rebuy—situations where the buyer wants to make adjust-
ments to product or service specifications relative to a previous pur-
chase. Buyphase relates to the stages in the industrial buying process—i.e.
need recognition, need definition, need description, seller identification,
proposal solicitation, proposal evaluation, proposal selection, ordering
procedures, and a review of performance.
Further concepts related to the business buying process—the busi-
ness process comprising multiple stages of business-to-business buying
activity—include that of product specification (the stage where the organi-
zation establishes the desired specifications or characteristics according
to which purchased products or services are needed and to which they
must conform) and order-routine specification (the stage where the buyer
incorporates such specifications, along with further requirements for
delivery, service, and warranty, into a final order with chosen supplier(s)).
Finally, the concept of the buying center is key to much of industrial buyer
behavior as it focuses on the roles that multiple individuals perform in
the customer organization in industrial buying. Given that the buying
center comprises the set of individuals involved in business buying in
the customer organization, such roles can be further decomposed into:
deciders—those individuals with formal or informal influence over the
final selection of a supplier; influencers—those individuals who affect the
buying decision through specification definition or alternative evalua-
tion, for example; and gatekeepers—those individuals who, through their
position in the buying organization, are able to restrict external access to
key individuals in the organization or, similarly, impede or facilitate the
flow of information to key others in the organization.
KEY WORDS Organizations, buying behavior
IMPLICATIONS
As much of industrial buying is characterized by sophisticated buyers and
complex product and services, an in-depth understanding of the buyer
behavior and the decision process actually followed for a firm’s products
or services can help to increase both the effectiveness and efficiency of
the firm’s business-to-business marketing efforts. Drawing upon concep-
tual and empirical research on industrial buyer behavior can not only
assist the marketer in evaluating and refining the firm’s current strategic
and tactical approaches to be consistent with such buying behavior, but
also help to increase buying receptivity to the firm’s business-to-business
marketing initiatives, given diverse customer needs and a highly compet-
itive marketing environment (See also buyer decision process).
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Choffray, Jean-Marie, and Lilien, Gary L. (1978). ‘Assessing Response to Industrial
Marketing Strategy,’ Journal of Marketing, 42(2), April, 20–31.
267 information processing theory
Sheth, Jagdish N. (1996). ‘Organizational Buying Behavior: Past Performance and
Future Expectations,’ Journal of Business & Industrial Marketing, 11(3/4), June, 7–24.
McQuiston, Daniel H. (1989). ‘Novelty, Complexity, and Importance as Causal
Determinants of Industrial Buyer Behavior,’ Journal of Marketing, 53(2), April, 66–
79.
Lehmann, Donald R., and O’Shaughnessy, John (1974). ‘Difference in Attribute
Importance for Different Industrial Products,’ Journal of Marketing, 38(2), April,
36–42.
Marketing Management
Anderson, Erin, Chu, Wujin, and Weitz, Barton (1987). ‘Industrial Purchasing: An
Empirical Exploration of the Buyclass Framework,’ Journal of Marketing, 51(3), July,
71–86.
Johnston, Wesley J., and Bonoma, Thomas V. (1981). ‘The Buying Center: Structure
and Interaction Patterns,’ Journal of Marketing, 45(3), Summer, 143–156.
International Marketing
Money, R. Bruce, Gilly, Mary C., and Graham, John L. (1998). ‘Explorations of
National Culture and Word-of-Mouth Referral Behavior in the Purchase of Indus-
trial Services in the United States and Japan,’ Journal of Marketing, 62(4), October,
76–87.
Online Marketing
Klein, Lisa R., and Quelch, John A. (1997). ‘Business-to-Business Market Making on
the Internet,’ International Marketing Review, 14(5), 345–361.
Deeter-Schmelz, Dawn R., Bizzari, Aric, Graham, Rebecca, and Howdyshell, Cather-
ine (2001). ‘Business-to-Business Online Purchasing: Suppliers’ Impact on Buyers’
Adoption and Usage Intent,’ Journal of Supply Chain Management, 37(1), December,
4–10.
Lucking-Reiley, David, and Spulber, Daniel F. (2001). ‘Business-to-Business Elec-
tronic Commerce,’ Journal of Economic Perspectives, 15(1), Winter, 55–68.
BIBLIOGRAPHY
Sheth, Jagdish N. (1973). ‘A Model of Industrial Buyer Behavior,’ Journal of Marketing,
37(4), October, 50–56.
Webster, Frederick E., Jr., and Wind, Yoram (1972). ‘A General Model for Under-
standing Organizational Buying Behavior,’ Journal of Marketing, 36(2), April, 12–
19.
industrial marketing see business-to-business marketing
inelastic demand see elasticity of demand
inferior goods see goods
influencers see industrial buyer behavior
information processing theory
DESCRIPTION
Theory or theories related to describing, understanding, and explaining how
individuals or organizations process, analyze, or change information, as where
information is gathered, stored, retrieved, manipulated, and transformed for
some purpose.
KEY INSIGHTS
Information-processing theory encompasses a broad base of research
sharing a view that cognition can be characterized as computational in
information systems theory 268
nature, with information being transformed and converted. Information-
processing theory is often concerned with the depth with which incom-
ing information is processed as well as its quality (e.g. processed free of
distortion), and its short- and long-term influences. Such a view further
suggests that the properties of information have an influence on the way
information is processed.
KEY WORDS Information, communication, processing
IMPLICATIONS
Information-processing theory provides a means to model and frame a
wide range of phenomena involving both consumers and organizations.
For example, viewing individuals or organizations as information proces-
sors enables marketers to focus attention on the ways that the means
by which information is communicated (e.g. formally or informally) may
influence the nature and extent of information reception and process-
ing and its effects on individual or organization behaviors. Consumer
responses to advertising and an organization’s competitive response time
are specific areas that may be viewed in terms of information-processing
dynamics.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Tybout, Alice M., Calder, Bobby J., and Sternthal, Brian (1981). ‘Using Information
Processing Theory to Design Marketing Strategies,’ Journal of Marketing Research,
18(1), February, 73–79.
Egelhoff, William G. (1991). ‘Information-Processing Theory and the Multinational
Enterprise,’ Journal of International Business Studies, 22, 341–368.
Consumer Behavior
MacInnis, Deborah J., and Jaworski, Bernard J. (1989). ‘Information Processing from
Advertisements: Toward an Integrative Framework,’ Journal of Marketing, 53(4),
October, 1–23.
Bettman, James R. (1979). An Information Processing Theory of Consumer Choice. Reading,
Mass.: Addison-Wesley.
BIBLIOGRAPHY
Craik, F. I. M., and Lockhart, R. S. (1972). ‘Levels of Processing: A Framework
for Memory Research,’ Journal of Verbal Learning and Verbal Behavior, 11, 671–
684.
Shannon, Claude E., and Weaver, Warren (1949). The Mathematical Theory of Commu-
nication. Urbana, Ill: University of Illinois Press.
information search see buyer decision process
information systems theory
DESCRIPTION
Theory or theories of information systems where information or data are
collected, transmitted, processed, or disseminated by some means.
269 innovation effect
KEY INSIGHTS
Information systems theory, of which an earlier contributor was Shannon
(1948), currently encompasses a broad base of research where a common
aim is the examination of information systems in relation to their role in
obtaining or developing meaningful information. Information processing
is a key concept within information systems theory. Characteristics of
information systems examined by theory in the area include structures
or repositories for holding data, interfaces for exchanging information,
channels for connecting repositories, and the subsequent meanings and
value provided to its users.
KEY WORDS Systems, information, data, processing, value
IMPLICATIONS
The effective development of marketing information systems owes much
to information systems theory. Subsequent developments of effective
marketing information systems and, more broadly, effective systems for
electronic commerce may also draw upon information systems theory-
related research to obtain potentially useful insights for increased value
to their developers and users.
APPLICATION AREAS AND FURTHER READINGS
Online Marketing
Venkatesh, Alladi, Member, Laurie, and Firat, A. Fuat (1998). ‘Cyberspace as the
Next Marketing Frontier (?): Questions and Issues,’ in S. Brown and D. Turley
(eds.), Consumer Research: Postcards from the Edge. London: Routledge, 301–321.
Suh, Bomil, and Han, Ingoo (2003). ‘The Impact of Customer Trust and Perception
of Security Control on the Acceptance of Electronic Commerce,’ International
Journal of Electronic Commerce, 7(3), Spring, 135–161.
Marketing Information Systems
Talvinen, J. M. (1995). ‘Information Systems in Marketing: Identifying Opportuni-
ties for New Applications,’ European Journal of Marketing, 29(1), 8–26.
Banker, R. D., and Kauffman, R. J. (2004). ‘The Evolution of Research on Informa-
tion Systems: A Fiftieth-Year Survey of the Literature in Management Science,’
Management Science, 50(3), 281–298.
BIBLIOGRAPHY
Hirschheim, R., Klein, H. K., and Lyytinen, K. (1995). Information Systems Development
and Data Modeling: Conceptual and Philosophical Foundations. Cambridge: Cambridge
University Press.
Khazanchi, D., and Munkvold, B. E. (2000). ‘Is Information Systems a Science?
An Inquiry into the Nature of the Information Systems Discipline,’ DataBase for
Advances in Information Systems, 31(3), 24–42.
Shannon, Claude E. (1948). ‘A Mathematical Theory of Communication,’ Bell System
Technical Journal, 27, 379–423, 623–656.
innovation effect
DESCRIPTION
An effect in the diffusion of innovations whereby an innovation’s diffusion and
adoption in the marketplace are the result of a tendency for individuals in a
population to innovate, where such activity is independent of the availability
of social influence.