Dacko S.G. The Advanced Dictionary of Marketing Putting Theory to Use
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Table of Applications xxx
Term
Marketing Strategy
Marketing Management
Consumer Behavior
Marketing Research
Marketing Modeling
Services Marketing
Retail Marketing
Online Marketing
Business-to-Business Marketing
International Marketing
Other Application Areas
value-based marketing • •
value chain analysis • • • • marketing education
value proposition • • • •
variety effect •
viral marketing • • •
von Restorff effect •
Wal-Mart effect •
Walras’ law •
want • • • social marketing
warm/cold effect marketing education
Web marketing •
Weber–Fechner law pricing, promotion
wheel of retailing theory •
wholesale marketing • • • •
willingness to pay • • • •
winner’s curse auctions
word-of-mouth communication • •
word-of-mouth effect • • •
The Advanced Dictionary
of Marketing Terms
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A
a priori validity see validity
above-the-line marketing
DESCRIPTION
Marketingcomprisedofactivitythat,traditionally,entailscommissioncharges
by advertising agencies which, mainly, comprises mass media advertising.
KEY INSIGHTS
Above-the-line activity in marketing refers to marketing practices making
use of the mass media where, given a firm’s use of an advertising agency,
the agency would make a commission on advertisements which are
placed in media including television, newspapers, billboards, radio, maga-
zines, and cinema, and where the commission charged by the advertising
agency typically appears ‘above-the-line’ on the ad agency’s bill to the
firm. Above-the-line marketing activity can be contrasted with ‘below-
the-line’ marketing activity, which typically is that where an ad agency
would charge a firm a fixed fee. (See below-the-line marketing.) Through-
the-line marketing refers to a marketing approach that makes use of both
above-the-line marketing and below-the-line marketing. Above-the-line
marketing is generally associated with classic and traditional approaches
to marketing where advertising is used to build a brand’s image. As such,
to some marketers, the approach has been considered one of marketing’s
‘necessary evils,’ but, in some industries (e.g. tobacco), below-the-line
marketing approaches have gained momentum, or even overtaken above-
the-line marketing in importance, particularly as a result of increased
regulatory scrutiny of mass media advertising.
KEY WORDS Advertising, mass media advertising, commissions
IMPLICATIONS
In order to be in a position to evaluate the potential benefits and costs
of above-the-line marketing approaches, marketers should seek to under-
stand carefully their competitive and regulatory environments in addi-
tion to consumer buying behavior. While there may be clear benefits to
above-the-line approaches including that of brand image building, below-
the-line approaches may also be beneficial (as when there is considerable
advertising clutter in the marketplace), either alone or in being selec-
tively integrated with above-the-line marketing approaches.
absolute cost advantage 4
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Kim, W. Chan, and Mauborgne, Renee (2005). Blue Ocean Strategy: How to Create
Uncontested Market Space and Make the Competition Irrelevant. Cambridge, Mass.:
Harvard Business School Press.
Services Marketing
Clark, R. (1997). ‘Looking after Business: Linking Existing Customers to Profitabil-
ity,’ Managing Service Quality, 7(3), 146–149.
BIBLIOGRAPHY
Carter S. M. (2003). ‘Going below the Line: Creating Transportable Brands for
Australia’s Dark Market,’ Tobacco Control, 2 (suppl III), 87–94.
Smith, P. R., and Taylor, Jonathan (2002). Marketing Communications: An Integrated
Approach. London: Kogan Page.
absolute cost advantage
DESCRIPTION
A concept referring to the beneficial state where an incumbent firm is able
to achieve and sustain lower average total costs for its products or services
relative to that achievable by newer entrants.
KEY INSIGHTS
Influential early research on the concept by Bain (1956) suggests that an
absolute cost advantage can be achieved as a result of certain actions of
the firm including, but not limited to: obtaining access to lower costs
of capital, securing exclusive access to scarce raw materials or other
inputs, implementing low-cost production techniques through experi-
ence, and/or superior management skills. Once obtained, an absolute cost
advantage can create a form of entry barrier to the extent that new firms
will experience higher costs in comparison to the firm with the absolute
cost advantage.
KEY WORDS Entry barriers, competitive advantage
IMPLICATIONS
While the concept of this type of firm advantage is ultimately linked to
costs achievable by newer entrant firms, research on the concept suggests
that an absolute cost advantage does not automatically accrue to an
incumbent firm but rather is a result of the firm successfully acting upon
opportunities to achieve such an advantage. Firms must also consider the
extent that changes in the macroenvironment and microenvironment
may lead to the lessening of any absolute cost advantage over time, for
example, as a result of a new, lower-cost production technology available
for adoption by newer entrants that may be costlier for incumbent firms
to adopt due to their previous investment in an existing technology.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Schmalensee, Richard (1974). ‘Brand Loyalty and Barriers to Entry,’ Southern Eco-
nomic Journal, 40(4), April, 579–588.
5 absorptive capacity
Agarwal, Rajshree, and Gort, Michael (2001). ‘First-Mover Advantage and the Speed
of Competitive Entry, 1887–1986,’ Journal of Law and Economics, 44, 161–177.
Kerin, Roger A., Varadarajan, P. Rajan, and Peterson, Robert A. (1992). ‘First-Mover
Advantage: A Synthesis, Conceptual Framework, and Research Propositions,’
Journal of Marketing, 56(4), October, 33–52.
New Product Development
Golder, Peter N., and Tellis, Gerard J. (1997). ‘Will It Ever Fly? Modeling the Takeoff
of Really New Consumer Durables,’ Marketing Science, 16(3), 256–270.
BIBLIOGRAPHY
Bain, Joe Staten (1956). Barriers to New Competition: Their Character and Consequences in
Manufacturing Industries. Cambridge, Mass.: Harvard University Press.
absorptive capacity
DESCRIPTION
A conceptual term characterizing a firm’s ability to recognize value in infor-
mation arising outside the firm, internalize and assimilate such information,
and apply it for commercial purposes.
KEY INSIGHTS
According to research on the concept of absorptive capacity by Cohen
and Levinthal (1990), absorptive capacity as a capability is critical in sup-
porting firms’ innovation capabilities and successful innovation processes
within firms. In terms of explaining what determines the extent of a
firm’s absorptive capacity, Cohen and Levinthal (1990) argue the capa-
bility is driven to a large extent by the firm’s level of related prior
knowledge.
KEY WORDS External information, knowledge, innovation, learning
IMPLICATIONS
For those managing innovation within firms, a major implication of
the concept is that a greater absorptive capacity capability will lead
to strengthened innovation capabilities and a higher likelihood of suc-
cessfully developing innovations. As such, individuals throughout a firm
should strive to develop essential skills and a shared language of related
knowledge to be able to more readily identify and comprehend develop-
ments outside the firm and assimilate such knowledge with the aim of
establishing and pursuing appropriate commercial applications. Having a
strong internal R&D capability and conducting the firm’s R&D internally
can, for example, help to prepare a firm to make better use of external
information as part of strengthening the firm’s absorptive capacity.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Johnson, Jean L., Sohi, Ravipreet S., and Grewal, Rajdeep (2004). ‘The Role of
Relational Knowledge Stores in Interfirm Partnering,’ Journal of Marketing, 68(3),
July, 21–36.
Hurley, Robert F., and Hult, G. Tomas M. (1998). ‘Innovation, Market Orientation,
and Organizational Learning: An Integration and Empirical Examination,’ Journal
of Marketing, 62, July, 42–54.
accelerator principle 6
Van den Bosch, Frans A. J., Volberda, Henk W., and de Boer, Michiel (1999). ‘Coevo-
lution of Firm Absorptive Capacity and Knowledge Environment: Organizational
Forms and Combinative Capabilities,’ Organization Science, 10(5), September–
October, 551–568.
Lane, Peter J., and Lubatkin, Michael (1998). ‘Relative Absorptive Capacity and
Interorganizational Learning,’ Strategic Management Journal, 19(5), 461–477.
International Marketing
Lane, Peter J., Salk, Jane E., and Lyles, Marjorie A. (2001). ‘Absorptive Capacity,
Learning, and Performance in International Joint Ventures,’ Strategic Management
Journal, 22(12), 1139–1161.
BIBLIOGRAPHY
Cohen, Wesley M., and Levinthal, Daniel A. (1990). ‘Absorptive Capacity: A
New Perspective on Learning and Innovation,’ Administrative Science Quarterly, 35,
128–152.
accelerator principle
(also called the accelerator effect, acceleration principle, or acceleration
effect)
DESCRIPTION
The idea or theory that aggregate net investment by firms in an industry is
dependent on firms’ expectations about changes in outputs such as sales,
profits, and/or cash flow, and where such a relationship has the effect of
amplifying further the magnitude of changes in firms’ demands on suppliers.
KEY INSIGHTS
Research on the accelerator principle finds that the principle or effect can
and does operate within industries. While the actual extent of the acceler-
ation effect certainly varies among industries, the principle nevertheless
suggests that firms’ investment practices are influenced at least to some
extent by their expectations of their future prospects, where such expec-
tations are shaped by changes in the growth of the economy, for example,
and where such investment practices has the potential to accelerate
(or decelerate) further industry (and broader economic) growth. Thus,
firms will tend to adjust inventories in response to expected changes in
consumer demand, for example, where such inventory adjustments are
positive when the expected change in demand is positive and negative
when the expected change in demand is negative. Such changes to firm
inventories and other investments will not only have corresponding influ-
ences on suppliers but also further stimulate (or impede) industry growth
and also potentially accelerate (or decelerate) broader economic growth
or decline.
KEY WORDS Firm investment, economic growth, forecasting
IMPLICATIONS
Decisions to increase/decrease inventory levels, build factories, and invest
in plant and equipment, for example, will be influenced by profit and
7 achievement motivation theory
sales expectations and business confidence. Firms must therefore not
only strive to accurately forecast expected changes in their outputs
(e.g. sales) but also be sensitized to how associated changes to planned
investments by the firm or other firms in the industry may potentially
accelerate (or decelerate) favorable or unfavorable economic prospects
for the industry and the broader economy.
APPLICATION AREAS AND FURTHER READINGS
Marketing Modeling
Fousekis, Panos, and Stefanou, Spiro E. (1996). ‘Capacity Utilization under Dynamic
Profit Maximization,’ Empirical Economics, 21(3), September, 335–359.
Mergers and Acquisitions
Weston, J. Fred (2001). ‘Mergers and Acquisitions as Adjustment Processes,’ Journal
of Industry, Competition, and Trade, 1(4), December, 395–410.
BIBLIOGRAPHY
Kuehn, Alfred A., and Day, Ralph L. (1963). ‘The Acceleration Effect in Forecasting
Industrial Shipments,’ Journal of Marketing, 27(1), January, 25–28.
accessibility see segmentation viability
accordion theory see retail accordion theory
achievement motivation theory
DESCRIPTION
Theory or theories relating personal characteristics and background to a need
for achievement and the associated competitive drive to meet standards of
excellence.
KEY INSIGHTS
According to theoretical research by Murray (1938), McClelland, Atkin-
son, Clark, and Lowel (1953), and McClelland (1961), achievement moti-
vation or need for achievement is influenced by a combination of
internal factors including personal drives and external or environmen-
tal factors including pressures and expectations of relevant organiza-
tions and society. Related to an individual’s need for achievement and
overall motivation is the individual’s need for power and need for
affiliation.
KEY WORDS Drive, achievement, motivation, goals, sales, selling
IMPLICATIONS
Understanding and explaining individuals’ achievement motivation is
important within organizations where such characteristics are strongly
associated with ongoing organizational success, most notably in the sales
function. Staffing the organization with individuals having backgrounds
and personal characteristics that are suggestive of a high need for
achievement becomes an important consideration. While many factors
are potentially influential and interact, e.g. an individual’s values (e.g.
valuing the accomplishment of tasks over personal relationships), culture
acquiescence response set 8
and educational background, providing appropriate external support in
the form of organizational systems, structures, and culture (e.g. includ-
ing opportunities for promotion, recognizing and rewarding successes,
ensuring performance feedback, and matching individual control with
role responsibilities and role importance) becomes just as important
as the organization’s assessing and nurturing an individual’s personal
drives.
APPLICATION AREAS AND FURTHER READINGS
Marketing Management
Chowdhury, Jhinuk (1993). ‘The Motivational Impact of Sales Quotas on Effort,’
Journal of Marketing Research, 30(1), February, 28–41.
Silver, Lawrence S., Dwyer, Sean, and Alford, Bruce (2006). ‘Learning and Perfor-
mance Orientation of Salespeople Revisited: The Role of Performance-Approach
and Performance-Avoidance Orientations,’ Journal of Personal Selling and Sales Man-
agement, 26(1), Winter, 27–38.
BIBLIOGRAPHY
McClelland, D. C. (1961). The Achieving Society. Princeton: Van Nostrand.
McClelland, D. C., Atkinson, J. W., Clark, R. A., and Lowell, E. L. (1953). The Achieve-
ment Motive. Princeton: Van Nostrand.
Murray, H. A. (1938). Explorations in Personality. New York: Oxford University Press.
acquiescence response set
DESCRIPTION
A form of bias involving a consistent individual tendency to agree with state-
ments such as attitude statements regardless of the content or to consistently
answer yes/no questions either in the affirmative (yes) or in the negative (no)
irrespective of a question’s content.
KEY INSIGHTS
Research on acquiescence response set as a form of bias finds the ten-
dency varies in prevalence in responses to questionnaires and surveys
(where, for example, cross-cultural differences in its prevalence are
clearly observed). Nevertheless, the potential for its occurrence (with
similarly worded questions in particular) is of sufficient concern to expe-
rienced researchers including survey researchers and developers of ques-
tion or statement-based scales and that methods for controlling for and/or
compensating for the bias are typically implemented with the aim of
obtaining more meaningful responses.
KEY WORDS Bias, questionnaires, surveys, scale development
IMPLICATIONS
When acquiescence response set as a form of bias is a potential concern
in survey research or in scale development, a common approach for
attempting to control or compensate for it when providing multiple
statements or asking multiple questions is to have some statements or
questions positively worded and others negatively worded in a sense that
the two types of questions are far more opposite than similar. In doing
so, responding in agreement to all or in responding with a consistent
9 actor–observer difference
affirmative or negative answer to all would be found to be contradictory
and, as such, would require respondents to potentially engage more fully
with the statements or questions given.
APPLICATION AREAS AND FURTHER READINGS
Marketing Research
Podsakoff, P. M., MacKenzie, S. B., Lee, J. Y., and Podsakoff, N. P. (2003). ‘Common
Method Biases in Behavioral Research: A Critical Review of the Literature and
Recommended Remedies,’ Journal of Applied Psychology, 88(5), 879–903.
International Marketing
Baumgartner, Hans, and Steenkamp, Jan-Benedict E. M. (2001). ‘Response Styles in
Marketing Research: A Cross-National Investigation,’ Journal of Marketing Research,
38, May, 143–156.
Malhotra, Naresh K., Agarwal, James, and Peterson, Mark (1996). ‘Methodological
Issues in Cross-Cultural Research: A State of the Art Review,’ International Market-
ing Review, 13(5), 7–43.
BIBLIOGRAPHY
Winkler, J. D., Kanouse, D. E., and Ware, J. E., Jr. (1982). ‘Controlling for Acquies-
cence Response Set in Scale Development,’ Journal of Applied Psychology, 67, 555–
561.
action see buyer influence/readiness
actionability see segmentation viability
actor–observer difference
DESCRIPTION
The phenomenon where the attributed causes of an individual’s action(s)
tend to systematically differ depending on whether one is the actor or an
observer. More specifically, an observer tends to attribute an actor’s behavior
to the actor’s inherent personality, whereas the actor tends to attribute his/her
behavior to situational factors.
KEY INSIGHTS
Based on pioneering research by Jones and Nisbett (1972), explanations
for this observable phenomenon include the general fact that actors
tend to have more action-related information available than observers;
actors and observers have different motives in producing explanations
for actions; and a tendency for actors and observers to differ in where
they ultimately selectively attend to information concerning actions.
KEY WORDS Observers, actions, attitudes, attributions, sense making
IMPLICATIONS
As the actions of marketing managers and sales staff can sometimes be
very visible to customers or others outside an organization (e.g. suppli-
ers, business partners) as well as within the organization, the marketer
should not assume that individuals observing his/her (or the company’s)
action(s) will attribute the action(s) to the same causes as does the mar-
keter him/herself. For example, a bystander at an airport observing a
man being told by a ticketing agent that he is unable to check in for