Dacko S.G. The Advanced Dictionary of Marketing Putting Theory to Use
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macromarketing 310
IMPLICATIONS
While the marketing strategies supporting a firm’s offerings must clearly
take into account the firm’s immediate operating environment (e.g.
competitor and customer environment), astute marketers recognize the
importance of understanding the firm’s macroenvironment to ensure
the firm’s marketing strategy fits with broader forces of influence. Such
forces cannot be influenced but trends and events associated with such
forces may have a profound impact on firm success, as when a food
products firm anticipates a cultural trend toward healthier eating and
incorporates knowledge of the trend into new food offerings and their
supporting marketing communications.
APPLICATION AREAS AND FURTHER READINGS
Marketing Management
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.
Marketing Strategy
Mavondo, F. T. (1999). ‘Environment and Strategy as Antecedents for Marketing
Effectiveness and Organizational Performance,’ Developments in Marketing Science,
22, 363–370.
BIBLIOGRAPHY
Sheth, J. N. (1992). ‘Emerging Marketing Strategies in a Changing Macroeco-
nomic Environment: A Commentary,’ International Marketing Review, 9(1), 57–63.
macromarketing
DESCRIPTION
Marketing focused on issues relating to the broader environmental influences
on societies and economies.
KEY INSIGHTS
Macromarketing is concerned with the interplay between marketing
actions and the broad needs of societies and economies. As such, issues
such as quality of life, societal well-being, and sustainable consump-
tion receive primary (as opposed to secondary) focus in terms of how
marketing-led actions positively or negatively influence their current and
future levels and vice versa.
KEY WORDS Societal needs, economies
IMPLICATIONS
As marketing is performed in a broader societal context, it behooves mar-
keters to understand a broad range of issues having a possible influence
on marketing as well as the broad societal and economic issues that are
influenced, directly or indirectly, by marketing practice. A greater under-
standing of macromarketing-based research provides the marketer with
such a perspective and may further assist the marketer with considering
the longer-term consequences of the firm’s marketing actions.
311 magical number seven
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Kilbourne, W., McDonagh, P., and Prothero, A. (1997). ‘Sustainable Consumption
and the Quality of Life: A Macromarketing Challenge to the Dominant Social
Paradigm,’ Journal of Macromarketing, 17(1), 4–24.
Marketing Management
Priddle, J. (1994). ‘Marketing Ethics, Macromarketing, and the Managerial Perspec-
tive Reconsidered,’ Journal of Macromarketing, 14(2), 3, 47.
Marketing Research
Ahuvia, A. C., and Friedman, D. C. (1998). ‘Income, Consumption, and Subjective
Well-Being: Toward a Composite Macromarketing Model,’ Journal of Macromarket-
ing, 18(2), 153–168.
BIBLIOGRAPHY
Bartels, Robert, and Jenkins, Roger L. (1977). ‘Macromarketing,’ Journal of Marketing,
41(4), October, 17–20.
Hunt, S. D., and Burnett, J. J. (1982). ‘The Macromarketing–Micromarketing
Dichotomy: A Taxonomical Model,’ Journal of Marketing, 46(3), Summer, 11–
26.
magical number seven
DESCRIPTION
A term capturing the notion that individuals are limited in their capacity for
processing information, where the limitation consists of spans involving of
about seven distinct categories or items of information.
KEY INSIGHTS
Based on pioneering research by Miller (1956), evidence suggests that an
individual’s ability to process information is strictly limited. More specif-
ically, individual attention spans tend to encompass about six items of
information at any given time, while spans of short-term memory tend to
encompass about seven items, and spans of judgment tend to distinguish
about seven categories. One recognized approach for helping to overcome
such limitations involves grouping together items of information into
chunks, an approach referred to as chunking, where the individual items
of information can be more easily perceived, interpreted, and remem-
bered. An example is the telephone number 118 TAXI, which is more
easily remembered than the seven-digit telephone number 118 8294.
KEY WORDS Information processing capacity, individuals
IMPLICATIONS
Marketers should be critically sensitive to how individual’s information
processing capacities are limited and how such limitations may influence
memory, attention, and judgments of a marketer’s offerings. Specifically,
marketers should be wary of overloading consumer’s processing capabil-
ity and emphasize marketing communications and other actions that are
easily remembered, attended to, and judged as a result of being within
individual limits of information processing capacity.
majority fallacy 312
APPLICATION AREAS AND FURTHER READINGS
Consumer Behavior
Jacoby, Jacob, Speller, Donald E., and Kohn, Carol A. (1974). ‘Brand Choice Behavior
as a Function of Information Load,’ Journal of Marketing Research, 11(1), February,
63–69.
Jacoby, Jacob (1984). ‘Perspectives on Information Overload,’ Journal of Consumer
Research, 10(4), March, 432–435.
Marketing Research
Cox, Eli P., III (1980). ‘The Optimal Number of Response Alternatives for a Scale:
A Review,’ Journal of Marketing Research, 17(4), November, 407–422.
Green, Paul E., and Rao, Vithala R. (1970). ‘Rating Scales and Information Recov-
ery: How Many Scales and Response Categories to Use?’ Journal of Marketing, 34(3),
July, 33–39.
BIBLIOGRAPHY
Miller, George A. (1956). ‘The Magical Number Seven, Plus or Minus Two:
Some Limits on our Capacity for Processing Information,’ Psychological Review, 63,
81–97.
mail marketing see direct marketing
majority fallacy
DESCRIPTION
Generally, an error in logical reasoning stemming from inappropriate consid-
eration of a popular or majority view. In a more specific marketing context,
the view that larger markets or market segments will be more profitable than
smaller ones simply due to their size.
KEY INSIGHTS
The majority fallacy encompasses the notion that one’s actions, attitudes,
or beliefs can be inappropriately influenced by perceptions of behaviors,
attitudes, and beliefs held by a majority or sufficiently large-sized popula-
tion. Examples are when an individual views an action as more acceptable
as a result of its practice by the majority, or when an individual views an
action to be more commonly practiced by a majority in comparison to
the individual. Similarly, an individual deliberating an action may view
it as increasingly acceptable to the extent that the action is increasingly
practiced by a large enough number of others.
KEY WORDS Judgment, errors
IMPLICATIONS
Marketers can fall prey to the majority fallacy when erroneously adopting
the view that large markets and market segments are always better
than small ones (e.g. in terms of attractiveness, profitability, etc.), or in
believing that the majority position adopted by competitors in terms of
product attributes is likely to be best and should therefore be adopted
as well. In the former example, large markets may be less attractive
due to a greater number of competitors, while in the latter example,
adopting such a position results in a lack of product differentiation.
At the same time, consumers can fall prey to the fallacy in persuasive
313 management theory
arguments, as when told that, since the majority of consumers have
purchased a particular brand, the brand is clearly the right one for them
(e.g. ‘50 million consumers can’t be wrong’). Marketers should therefore
understand how the majority fallacy can intentionally or inadvertently
influence marketing or consumer judgments, where knowledge or beliefs
about majority views or actions have an influence on personal views,
decisions, and actions.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Holbrook, Morris B., and Holloway, Douglas V. (1984). ‘Marketing Strategy and the
Structure of Aggregate, Segment-Specific, and Differential Preferences,’ Journal of
Marketing, 48(1), Winter, 62–67.
Marketing Education
Smead, Raymond J., and Finn, David W. (1979). ‘Discovering the Majority Fallacy,’
Insights into Experiential Pedagogy, 6, 178–181.
BIBLIOGRAPHY
Kuehn, Alfred A., and Day, Ralph. L. (1962). ‘Strategy of Product Quality,’ Harvard
Business Review, 40(6), 100–110.
Moore, W. L. (1980). ‘Levels of Aggregation in Conjoint Analysis: An Empirical
Comparison,’ Journal of Marketing Research, 17, 516–523.
management theory
DESCRIPTION
Theory or theories of effective and efficient management.
KEY INSIGHTS
While management theory encompasses a broad base of research and
continues to receive considerable research attention, many theories of
management often refer to, and are based upon, the scientific view of
management theory as put forth by Taylor (1911). Principles embodied
in the classic view of management theory include: assuming full respon-
sibility for work planning, applying scientific methods to work design
to achieve maximum efficiency, staffing jobs with the most appropriate
individuals, adequately training such individuals, and providing such
individuals with feedback to ensure desired performance. Management
theory continues to advance beyond the classic view and now encapsu-
lates many complementary as well as competing views.
KEY WORDS Management, effectiveness, efficiency
IMPLICATIONS
Management theories, whether explicit or implicit, form a basis for
much marketing management practice. Issues such as determining the
most effective means to motivate a sales force (e.g. salary, commission, or
a combination), are the subject of debate and discussion in organizations
that are ultimately dependent on managerial views on what constitutes
effective and efficient management. The topic of management theory
therefore provides marketers with an ongoing source of concepts
market entry timing 314
for consideration in establishing effective and efficient marketing
management practices.
APPLICATION AREAS AND FURTHER READINGS
Marketing Management
Dean, James W., Jr., and Bowen, David E. (1994). ‘Management Theory and Total
Quality: Improving Research and Practice through Theory Development,’ Acad-
emy of Management Review, 19(3), Special Issue: ‘Total Quality’, July, 392–418.
Gummesson, E. (2002). ‘Practical Value of Adequate Marketing Management The-
ory,’ European Journal of Marketing, 36(3), 325–349.
Locke, Edwin A. (1982). ‘The Ideas of Frederick W. Taylor: An Evaluation,’ Academy
of Management Review, 7(1), January, 14–24.
BIBLIOGRAPHY
Cole, Kris (2005). Management: Theory and Practice. Frenchs Forest, NSW: Pearson-
Prentice Hall.
Nelson, Daniel (1980). Frederick W. Taylor and the Rise of Scientific Management. Madi-
son: University of Wisconsin Press.
Taylor, Frederick W. (1911/1967). The Principles of Scientific Management. New York:
Norton (originally published 1911).
managerial theories of the firm see firm, theory of the
many-to-many marketing see affiliate marketing
marginal cost pricing see pricing strategies
market development see product-market investment strategies
market entry timing
DESCRIPTION
The time at which a firm enters a market, either chronologically or in relation
to competitors or other market conditions.
KEY INSIGHTS
Market entry timing is an important element in a firm’s marketing strat-
egy when the firm seeks to make the most of its limited resources in rela-
tion to perceived market opportunities. Being ‘too early’ to market can
waste a firm’s resources, whereas being ‘too late’ to market can reduce
the opportunity available to a firm. In relation to other firms entering a
market, a firm may be a pioneer—the very first to enter a market, or one
of the first firms collectively entering a market in close temporal prox-
imity, or a follower firm—a firm which enters a market after the market
pioneer(s). A follower firm may be further characterized as being an early
follower—a firm that enters a market sooner after the market pioneer(s)
or a late follower or later market entrant—a firm that enters a market some
time after both the market pioneer(s) and after early follower firms. Firms
may therefore pursue a pioneering,ormarket pioneering strategy—where
the aim is to be first among competitors to enter a market, or a market
follower strategy—where the aim is to let other firms pioneer markets
before entering them. In deliberating pursuing a particular market entry
timing strategy a firm is either implicitly or explicitly concerned with
315 market entry timing
achieving particular advantages associated with time of market entry
in relation to competitors. Specifically, pioneers seek an opportunity to
pursue and exploit some form of first mover advantage, where the firm’s
entry timing enables it to reap greater economic or behaviorally based
benefits in relation to those achieveable by follower firms, such as more
favorable distribution terms with retailers or increased ability to shape
consumer preferences. On the other hand, a firm either implicitly or
explicitly pursuing a market follower strategy seeks opportunities to
pursue and exploit some form of follower advantage, where the firm’s
entry strategy enables it to obtain greater economic or behavior benefits
in comparison to those achievable by pioneering firms, such as lower-
cost product development (as a result of evaluations of the pioneer’s new
product) or more effective product positioning (as a result of learning
from the pioneer’s marketing mistakes).
As it is usually the case that multiple firms enter a given market with
their new products once the markets are pioneered, it is almost always
the case that there will be many more followers in the market than
pioneers. In such a case, order-of-entry effects, or those effects on marketing
performance that are directly attributable to the precise sequence of
entry of a firm into a market relative to that of competitors, can also
be an important consideration having both strategic and tactical impli-
cations. For example, research on frequently purchased consumer goods
has found that, as a firm’s order-of-entry increases (e.g. the later it enters
in relation to competitors), market share, probability of consumer trial
and probability of repeat purchase by the consumer are all observed to
decrease, but at different relative rates (Kalyanaram and Urban 1992).
KEY WORDS Timing, order of entry
IMPLICATIONS
In order to make the most of a firm’s limited resources in accomplishing
the firm’s objectives, marketers should take care to consider market
entry timing strategy in their overall marketing strategy. As there are
benefits, costs, and risks associated with each of the different approaches,
marketers should analyze factors including the firm’s objectives, char-
acteristics of the firm, its current products, competitors, competitors’
products, and characteristics of the market to enable the firm to identify,
evaluate, and pursue market entry timing strategies that may be more
beneficial to the firm than others.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Lilien, G., and Yoon, E. (1990). ‘The Timing of Competitive Market Entry: An
Exploratory Study of New Industrial Products,’ Management Science, 36(5), 568–
585.
Kalish, Shlomo, and Lilien, Gary L. (1986). ‘A Market Entry Timing Model for New
Technologies,’ Management Science, 32, February, 194–205.
Wilson, L., and Norton, J. (1989). ‘Optimal Entry Timing for a Product Line Exten-
sion,’ Marketing Science, 8(1), Winter, 1–17.
market share 316
Shankar, Venkatesh, Carpenter, Gregory S., and Lakshman, Krishnamurthi (1998).
‘Late Mover Advantage: How Innovate Late Entrants Outsell Pioneers,’ Journal of
Marketing Research, 35, February, 54–70.
Dacko, Scott G. (2002). ‘Understanding Market Entry Timing Decisions: The
Practitioner–Academic Gap,’ Marketing Intelligence and Planning, 20, 70–81.
Marketing Management
Dacko, Scott G. (2000). ‘Benchmarking Competitive Responses to Pioneering New
Product Introductions,’ Benchmarking: An International Journal, 7(5), 324–342.
International Marketing
Mitra, D., and Golder, P. N. (2002). ‘Whose Culture Matters? Near-Market Know-
ledge and its Impact on Foreign Market Entry Timing,’ Journal of Marketing
Research, 39(3), 350–365.
BIBLIOGRAPHY
Kerin, Roger A., Varadarajan, Rajan, and Peterson, Robert A. (1992). ‘First-Mover
Advantage: A Synthesis, Conceptual Framework, and Research Propositions,’
Journal of Marketing, 56(4), 33–52.
Lambkin, Mary (1988). ‘Order of Entry and Performance in New Markets,’ Strategic
Management Journal, 9, Summer, 127–140.
Kalyanaram, G., and Urban, G. L. (1992). ‘Dynamic Effects of the Order of Entry on
Market Share, Trial Penetration and Repeat Purchases for Frequently Purchased
Consumer Goods,’ Marketing Science, 11, 235–250.
market expansion see product-market investment strategies
market factor index method see forecasting methods
market follower see market entry timing
market penetration see product-market investment strategies
market pioneering see market entry timing
market segmentation see segmentation
market share
DESCRIPTION
Expressed in percentage terms, a firm’s or brand’s sales (or unit) volume
divided by the total category sales (or unit) volume for the market or market
segment within which the firm or brand competes.
KEY INSIGHTS
Market share-based objectives (such as capturing a certain market share
or maintaining a particular market share) are among the most common
marketing objectives as such objectives enable relative performance com-
parisons with other firms or brands. Additionally market share measures
of firm performance, as opposed to total sales or total unit volume mea-
sures may be generally less dependent on, or sensitive to, fluctuations
in macroeconomic conditions to the extent that other firms or brands
competing in the same market or market segment and similarly affected
by the same fluctuating conditions.
KEY WORDS Markets, share, competitive position
317 market share effect
IMPLICATIONS
Marketers often use market share-based measures as part of firm objec-
tives. Market share calculations, however, depend on the marketer’s
definition of the market in which the firm or brand competes, which
may broadly include substitute products or narrowly be restricted to a
group of well-defined competitors within a particular industry who are
competing in a specific market segment. As such, the ultimate choices of
market definitions should be those which provide the marketer with the
most strategic insight into a firm’s or brand’s competitive position.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Urban, Glen L., Carter, Theresa, Gaskin, Steven, and Mucha, Zofia (1986). ‘Market
Share Rewards to Pioneering Brands: An Empirical Analysis and Strategic Impli-
cations,’ Management Science, 32(6), June, 645–659.
Anderson, Eugene W., Fornell, Claes, and Lehmann, Donald R. (1994). ‘Customer
Satisfaction, Market Share, and Profitability: Findings from Sweden,’ Journal of
Marketing, 58(3), July, 53–66.
BIBLIOGRAPHY
Cooper, Lee G., and Nakanishi, Masa (1988). Market-Share Analysis: Evaluating Compet-
itive Marketing Effectiveness. Boston: Kluwer Academic Publishers.
market share effect
DESCRIPTION
The enhancing effect of a high market share on firm performance.
KEY INSIGHTS
Some research on the effect of market share on firm performance
has suggested that firm performance is enhanced to the extent a firm
achieves a high market share. While results of studies suggesting evi-
dence of such a linkage are a subject of debate among marketing
researchers, theories have nevertheless been put forth to explain possible
mechanisms for such an effect. Specifically, there is the quality explana-
tion, where high market share can act as a signal of superior quality to
consumers; there is the market power explanation, where high market
share creates the ability to command higher prices, more favorable ven-
dor terms, better shelf space, etc.; and there is the efficiency explanation,
where the scale and experience associated with high market share can
lead to lower costs and higher profits. Ultimately, multiple explanations
may apply in explaining such a relationship, where unobservable factors
such as luck may also be a contributor.
KEY WORDS Firm performance, market share
IMPLICATIONS
While strategic efforts to increase market share by a firm may be a goal
in and of itself, it is also possible that a firm’s increased market share
may positively influence other firms’ performance measures. Yet, what is
most important for marketing managers to understand is the mechanism
marketing 318
or mechanisms by which market share may have a possible facilitating
effect. Understanding the state of research on the market share effect and
exploring competing theories on the topic may provide marketers with
insights into likely mechanisms given the context of their firm’s product
offerings, market, and competitors.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Hellofs, Linda L., and Jacobson, Robert (1999). ‘Market Share and Customers’ Per-
ceptions of Quality: When Can Firms Grow their Way to Higher versus Lower
Quality?’ Journal of Marketing, 63(1), January, 16–25.
Szymanski, David M., Bharadwaj, Sundar G., and Varadarajan, P. Rajan (1993).
‘An Analysis of the Market Share–Profitability Relationship,’ Journal of Marketing,
57(3), July, 1–18.
Jacobson, Robert, and Aaker, David A. (1985). ‘Is Market Share All That It’s Cracked
up to Be?’ Journal of Marketing, 49(4), Autumn, 11–22.
Jacobson, Robert (1990). ‘Unobservable Effects and Business Performance,’ Market-
ing Science, 9(1), Winter, 74–85.
Wensley, R. (1997). ‘Explaining Success: The Rule of Ten Percent and the Example
of Market Share,’ Business Strategy Review, 8(1), 63–70.
BIBLIOGRAPHY
Jacobson, Robert (1988). ‘Distinguishing among Competing Theories of the Market
Share Effect,’ Journal of Marketing, 52(4), October, 68–80.
market-skimming pricing see pricing strategies
marketing
DESCRIPTION
An organizational function and a set of processes for creating, communicating,
and delivering value to customers and for managing customer relationships
in ways that benefit the organization and its stakeholders.
KEY INSIGHTS
The definition of marketing has changed over the years. Defined by the
Board of Directors of the American Marketing Association (AMA) in July
2004, the current definition of marketing reflects the changes in the
nature of marketing which have occurred in the last two decades. Prior to
the current definition, marketing was defined by the AMA in 1985 as the
process of planning and executing the conception, pricing, promotion,
and distribution of ideas, goods, and services to create exchanges that
satisfy individual and organizational objectives. In 1935, the AMA orig-
inally defined marketing as the performance of business activities that
direct the flow of goods and services from producers to consumers. Unlike
previous definitions, the current definition reflects a paradigm that
accounts for the continuous nature of relationships among marketing
actors.
KEY WORDS Organizational function, processes, value, customer relation-
ships, stakeholders
319 marketing, laws of
IMPLICATIONS
While some marketers may have a different personal definition of mar-
keting, the current view of marketing emphasizes a need to deliver
value to customers and managing customer relationships, where the
ultimate aim of such activity is to benefit the organization and its many
stakeholders. In this regard, marketing can be viewed as having a broad
charter within an organization. As such, regardless of the nature of an
organization’s marketing function and offerings, it is imperative that
marketers strive to actively manage the organization’s many value deliv-
ery processes as well as its ongoing relationships with its customers to
ensure maximum organizational and stakeholder benefits.
APPLICATION AREAS AND FURTHER READINGS
Marketing’s Definition
Lichtenthal, J. D., and Beik, L. L. (1984). ‘A History of the Definition of Marketing,’
in J. N. Sheth (ed.), Research in Marketing, 7, Greenwich, Conn.: JAI Press, 133–163.
Gronroos, C. (1990). ‘Marketing defined,’ Management Decision, 28, 5–9.
Marketing Management
Webster, Frederick E., Jr. (1992). ‘The Changing Role of Marketing in the Corpora-
tion,’ Journal of Marketing, 56(4), October, 1–17.
BIBLIOGRAPHY
Keefe, Lisa M. (2004). ‘What is the Meaning of “Marketing”?’ Marketing News, 15,
September, 17–18.
marketing, laws of
DESCRIPTION
Broad generalizations concerning the nature or practice of effective
marketing.
KEY INSIGHTS
Unlike disciplines and practices governed by one or more physical laws
or laws of nature which are widely accepted as a result of extensive
empirical observation and scientific investigation, marketing has at most
laws consisting of broad generations which appear to have considerable
merit based on empirical observation and scientific investigation into the
domain and practice of marketing.
One of the earliest statements in a marketing-related journal referring
to a law of marketing is the First Law of Marketing, given by Dik Warren
Twedt, Director of Marketing Research, Oscar Mayer & Company, which
reads:
‘The consumer psychologist helps the manufacturer to observe the First Law of
Marketing, “Make what people want to buy, don’t try to sell what you happen
to make” ’ (Twedt 1965).
In a subsequent publication in the Journal of Marketing by the same author
(Twedt 1966), the law is again referenced:
‘The First Law of Marketing has been suggested as, “Make what people want to
buy; don’t try to sell what you happen to make.” ’