Dacko S.G. The Advanced Dictionary of Marketing Putting Theory to Use
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new product development 360
new product development
DESCRIPTION
The set of actions of an organization aimed at developing a new product
intended for introduction into the market.
KEY INSIGHTS
While every organization differs in its specific approach to new product
development (NPD), the process of developing new products is often
viewed as consisting of a number of interrelated and overlapping activi-
ties. These activities may include: idea generation, where the firm system-
atically searches for new ideas and seeks to generate a large number of
ideas from which to draw upon for further development; idea screening,
where the firm performs an initial cut to filter out the many bad ideas and
keep the smaller number of good ones; business analysis, where the firm
conducts reviews of sales, cost, and profit projections for the envisioned
new product to determine if it is likely to contribute sufficiently to
meeting the firm’s overall objectives; concept testing, where the firm tests
new product concepts with small numbers of consumers to assess better
the appeal associated with each concept; product development, where the
product concept is transformed into a physical product; test marketing,
where the product is marketed realistically on a small scale and in a
controlled manner so as to be able to learn about the new product’s recep-
tivity and fine-tune the overall marketing approach; and commercialization,
where the firm enters the new product into the market on a larger scale
than the test marketing and where the firm commits to competing with
the new product for some substantial period of time. Depending on the
nature of the good to be developed and the preferences of the firm’s
management, a firm may choose to pursue such NPD activities either
sequentially, where a next step in the process is only begun when the
previous step is completely finished, or simultaneously, where the firm
performs multiple activities in parallel. One advantage of a simultaneous
approach is that it may help the firm to reduce the overall time of NPD.
Aside from the many possible benefits accruing from new product
development, there are, of course, many challenges and risks associated
with NPD. One general challenge that may be encountered across one or
more areas of NPD within the organization is the not-invented-here syndrome
(or NIH syndrome), where there is resistance to the acceptance or adoption
of others’ new ideas or actions as a result of such ideas or actions not
having been developed within the organization already (e.g. ‘if we didn’t
think of it or do it already, it must not be worth doing’). In addition, there
are clear risks associated with individual NPD activities that must also be
managed. In idea generation, too few ideas may be generated and/or such
ideas may be of insufficient quality. In idea screening, there is the risk of
rejecting a good idea as well as the risk of accepting a bad idea. In business
analysis, there are risks of bias or inadequate analysis. In concept testing,
there is the risk that the concepts developed are sub-optimal in some
way. In product development, there is the risk that quality problems are
361 niche marketing
missed that only surface when larger quantities are produced later on.
In test marketing, there is a risk that competitors may learn from the
presence of the offering in the market and gain from the knowledge
to develop a more effective competitive response. In commercialization,
there is the risk that the product will fail to meet either the expectations
of customers or the firm’s management or both.
KEY WORDS Product development, market introduction process
IMPLICATIONS
In order to increasing the likelihood of success of a firm’s NPD efforts,
marketers may benefit from developing a greater knowledge of the dif-
ferent considerations and risks associated with NPD. For example, astute
marketers will recognize that not only are time and money required
for effective NPD, commitment from the organization is essential, and
gaining commitment is a responsibility of management that can be facil-
itated by many different managerial actions (e.g. showing how the effort
is aligned with the firm’s strategy, encouraging risk-taking behavior,
providing managerial guidance).
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Cohen, M. A., Eliashberg, J., and Ho, T. H. (1996). ‘New Product Development:
The Performance and Time-to-Market Tradeoff,’ Management Science, 42(12), 1753–
1755.
Leonard-Barton, D. (1992). ‘Core Capabilities and Core Rigidities: A Paradox in
Managing New Product Development,’ Strategic Management Journal, 13, 111–125.
Marketing Management
Schilling, M. A., and Hill, C. W. L. (1998). ‘Managing the New Product Development
Process,’ Academy of Management Executive, 12(3), 67–81.
Services Marketing
de Brentani, U. (1991). ‘Success Factors in Developing New Business Services,’
European Journal of Marketing, 25(2), 33–59.
Marketing Education
Dacko, Scott G. (2001). ‘Narrowing Skill Development Gaps in Marketing and MBA
Programs: The Role of Innovative Technologies for Distance Learning,’ Journal of
Marketing Education, 23, 228–239.
BIBLIOGRAPHY
Cooper, R. G., and Kleinschmidt, E. J. (1995). ‘Benchmarking the Firm’s Critical
Success Factors in New Product Development,’ Journal of Product Innovation Man-
agement, 12(5), 374–391.
new task see industrial buyer behavior
niche marketing
(also called concentrated marketing)
DESCRIPTION
The approach of making a particular small group or segment of buyers the
focus of a firm’s marketing efforts.
niche marketing 362
KEY INSIGHTS
Marketers often engage in niche marketing with the aim of uniquely serv-
ing the needs of one or a few segments and achieving niche dominance.
When firms serve the needs of particular niches, they also have the
opportunity to develop specialized knowledge of the needs and wants
of customers in the niches, which may provide them with a competitive
advantage relative to firms focusing their marketing efforts more broadly.
In addition, the small size of some niches can also mean there is rela-
tively little competition as a result of the niches being either ignored or
overlooked by competitors. Finally, niche marketing may be beneficial to
firms having relatively limited resources since the approach enables the
firm to concentrate their resources on a niche with greater effectiveness.
KEY WORDS Focused marketing, market segments
IMPLICATIONS
Increasing market fragmentation in some markets may provide the mar-
keter with an opportunity to identify and ultimately serve certain emerg-
ing market niches more profitably than competitors. Given the attrac-
tiveness of niche marketing to firms with limited resources, marketers
should also recognize that new competitors may enter a market using a
niche marketing approach but eventually expand to become competitors
in the broader market for a firm’s offerings.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Raynor, M. E. (1992). ‘The Pitfalls of Niche Marketing,’ Journal of Business Strategy,
13(2), 19–24.
Dalgic, T., and Leeuw, M. (1994). ‘Niche Marketing Revisited: Concept, Applications
and Some European Cases,’ European Journal of Marketing, 28(4), 39.
Shani, D., and Chalasani, S. (1993). ‘Exploiting Niches Using Relationship Market-
ing,’ Journal of Business and Industrial Marketing, 8(4), 58.
Marketing Research
Weinstein, Art (1994). Market Segmentation: Using Demographics, Psychographics, and
Other Niche Marketing Techniques to Predict and Model Customer Behavior. Chicago:
Probus Pub. Co.
Leeming, E. Janice, and Tripp, Cynthia F. (1994). Segmenting the Women’s Market:
Using Niche Marketing to Understand and Meet the Diverse Needs of Today’s Most Dynamic
Consumer Market. Chicago: Probus.
BIBLIOGRAPHY
Linneman, R. E., and Stanton, J. L. (1991). Making Niche Marketing Work: How to Grow
Big by Acting Smaller. New York: McGraw Hill.
niche strategy see decline strategies
NIH syndrome see new product development
nine effect see odd price effect
nominal scale see scale
nomological validity see validity
363 non-profit marketing
non-cooperative game theory see game theory
non-durable goods see goods
non-price competition see competition
non-profit marketing
(also referred to as nonprofit marketing; also called non-profit sector
marketing, non-profit marketing, not-for-profit marketing, mission-based
marketing, third sector marketing, or voluntary sector marketing)
DESCRIPTION
Marketing with an emphasis on achieving organizational objectives that are
not commercially motivated, where income generated is for its operations
and stated purpose rather than for the private gain of any individual having an
interest in the organization.
KEY INSIGHTS
Given that a non-profit organization’s goals are not focused directly
on profitability, the organization’s purpose or mission clearly becomes
prominent in guiding and shaping the non-profit firm’s marketing
efforts. At the same time, there are also markets where multiple non-
profit firms vie for the same customers, thereby creating a need within
the firm to increase its competitiveness. Adopting this perspective of non-
profit marketing, Brinckerhoff (1997) uses the term mission-based marketing
to denote the set of mission-directed marketing actions that help a non-
profit organization pursue its organizational goals more effectively in
relation to the marketing actions of competitors. Non-profit marketing
may therefore involve marketing activities directed at individuals whom
it seeks to serve or other individuals or organizations which may, for
example, serve as sources of funding for the non-profit organization’s
activities. Numerous marketing approaches are therefore potentially rel-
evant to the non-profit organization, with affinity marketing, event mar-
keting, internal marketing, counter-marketing, and demarketing being
just some examples. (See affinity marketing; event marketing; internal
marketing; counter-marketing; demarketing.)
KEY WORDS Mission, organizational mission
IMPLICATIONS
The increasingly competitive environment facing many non-profit orga-
nizations is leading some to adopt marketing practices that have
been traditionally associated with commercial or for-profit marketing.
Marketers within non-profit organizations thus have an opportunity to
become more familiar with a wide array of marketing approaches as
a means to evaluate better their appropriateness in supporting their
organization’s mission.
non-profit marketing 364
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Kotler, P., and Andreasan, A. (1991). Strategic Marketing for Nonprofit Organizations, 4th
edn. Upper Saddle River, NJ: Prentice-Hall.
Hatten, M. L. (1982). ‘Strategic Management in Not-for-Profit Organisations,’ Stra-
tegic Management Journal, 3, 89–104.
Marketing Management
Lovelock, Christopher H., and Weinberg, Charles B. (1984). Marketing for Public and
Nonprofit Managers. New York: John Wiley & Sons.
Arnett, D. B., German, S. D., and Hunt, S. D. (2003). ‘The Identity Salience Model
of Relationship Marketing Success: The Case of Nonprofit Marketing,’ Journal of
Marketing, 67(2), 89–105.
Brinckerhoff, Peter C. (2003). Mission-Based Marketing: An Organizational Development
Workbook: A Companion to Mission-Based Marketing, 2nd edn. Hoboken, NJ: Wiley.
BIBLIOGRAPHY
Rados, D. L. (1996). Marketing for Nonprofit Organizations, 2nd edn. London: Auburn
House.
Brinckerhoff, P. (1997). Mission-Based Marketing: How your Not-for-Profit Organization
can Succeed in a More Competitive World. Dillon, Colo.: Alpine Guild, Inc.
non-profit sector marketing see non-profit marketing
non-response bias see bias
normal goods see goods
not-for-profit marketings see non-profit marketing
not-invented-here syndrome see new product development
NPD see new product development
O
O, theory see E and O theories of change
objective-and-task method see promotion budget setting methods
observation bias see bias
observational marketing research see marketing research
Occam’s razor see parsimony, law of
occasion segmentation see segmentation
odd price effect
DESCRIPTION
Any effect on product purchase amounts or purchase frequencies resulting
from a product’s price ending in odd-numbered digits.
KEY INSIGHTS
Pricing decisions where odd numbered prices are used (or avoided) indi-
cates that the pricing approach is a form of psychological pricing, where
the aim is to manipulate consumers’ perceptions of price desirability
through the selection of a price’s ending digits. Research on the topic
for a wide array of products clearly suggests that most managers believe
that price endings are important in influencing product sales as a result of
believing that most customers are more receptive to some price endings
over others. While many managers are found to advocate the use of odd
pricing to generate additional demand and increase sales at the level of
an individual brand, particularly where endings of five or nine are used as
means to make the product appear significantly cheaper in comparison
to pricing to the next round number or even number, other managers
are also observed to advocate the use of even-numbered pricing. Actual
influences of price endings are observed to vary among product cate-
gories and price amounts. Beyond operational considerations, explan-
ations for managerial use of price endings to achieve desired effects
include the acknowledgment of consumer behaviors such as tendencies
for consumers to round prices down, limited consumer memories, and
consumers using price endings to draw conclusions about whether or
not a product is on sale.
KEY WORDS Pricing, perception
offensive marketing 366
IMPLICATIONS
Marketers involved in price setting should seek to understand both
through prior research and experience how price endings can be used
as a means to influence subtly a consumer’s perceptions of a product’s or
brand’s price or its attributes such as value or quality.
APPLICATION AREAS AND FURTHER READINGS
Pricing
Estelami, H. (1999). ‘The Computational Effect of Price Endings in Multi-
Dimensional Price Advertising,’ Journal of Product and Brand Management, 8(2–3),
244–256.
Gendall, P., Holdershaw, J., and Garland, R. (1997). ‘The Effect of Odd Pricing on
Demand,’ European Journal of Marketing, 31(11–12), 799–813.
Naipaul, S., and Parsa, H. G. (2001). ‘Menu Price Endings that Communicate Value
and Quality,’ Cornell Hotel and Restaurant Administration Quarterly, 42(1), 26–37.
BIBLIOGRAPHY
Stiving, Mark, and Winer, Russell S. (1997). ‘An Empirical Analysis of Price Endings
with Scanner Data,’ Journal of Consumer Research, 24(1), June, 57–67.
Gendall, Philip (1998). ‘Title: Estimating the Effect of Odd Pricing,’ Journal of Product
& Brand Management, 7(5), October, 421–432.
offensive marketing
DESCRIPTION
Marketing focused on attacking, directly or indirectly, the strategic positions
of any number of a firm’s competitors.
KEY INSIGHTS
In adopting an offensive marketing approach, a firm may use any num-
ber of ‘attack’ or ‘assault’ strategies to strengthen its own position
and weaken the positions of its current or future competitors in the
marketplace. In some situations, offensive marketing may be used to
challenge a firm which is either dominant or which has greater domi-
nance in the marketplace. In this context, examples of offensive market-
ing approaches—where each is based on a military analogy—include: a
‘frontal attack,’ where the firm matches the dominant firm’s marketing
in some area (e.g. pricing, product features, or promotions); a ‘flanking
assault,’ where the firm pits its strengths against a competitor’s identi-
fied weaknesses (e.g. entering a geographic market where the competi-
tor’s presence is very limited); an ‘encirclement attack,’ where the firm
pursues a multi-pronged onslaught against the competitor to dilute its
resources (e.g. introducing numerous new product lines to overwhelm
the competitor’s ability to respond in any one area); a ‘bypass attack,’
where the firm pursues markets where the competitor is absent (e.g.
diversifying into an unrelated product market), and ‘guerrilla warfare,’
where the firm engages in a series of small intermittent attacks on
the competitor’s position in an effort to disorient the competitor and
ultimately obtain some kind of concession from the competitor (e.g. using
public relationships campaigns to put a market-monopolizing competitor
367 offensive marketing
in a bad light in the eyes of the public, prompting the competitor to
loosen its stranglehold on the market; see guerrilla marketing).
In other situations, offensive marketing may be used by a market
leader to defend its position, such as when a firm initiates a ‘pre-emptive
strike’ against one or more firms who are encroaching on its position. An
example of a pre-emptive strike in this context is when a firm engages
in a strategy of saturating the market with multiple product offerings,
thereby leaving less space for current and future competitors to gain
a foothold. Such an approach may be viewed as an ‘offensive defense’
marketing strategy.
KEY WORDS Attack strategies, proactive marketing strategy
IMPLICATIONS
There are a number of proactive strategies available to the marketer
seeking to strengthen its firm’s position in the marketplace through
offensive means. Ultimately, marketers must evaluate such approaches
for their benefits and costs—not only in relation to other offensive strat-
egies but perhaps in relation to different defensive strategies as well.
In addition, as there are many marketing strategies that correspond to
different military strategies, marketers may benefit from a greater under-
standing of military analogies for marketing and business strategy. One
marketing lesson to be reinforced from military strategy, for example, is
that frontal attacks have a number of disadvantages when compared to
other strategies, including that of an increased likelihood that they will
provoke strong competitor retaliation.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Keegan, W. J., and Davidson, H. (2004). ‘Offensive Marketing: An Action Guide to
Gaining Competitive Advantage,’ Elsevier (Amsterdam), 1–36.
Trout, J., and Ries, A. (1985). Marketing Warfare. New York: McGraw Hill,
Paley, N. (1989). The Manager’s Guide to Competitive Marketing Strategies. New York:
AMACOM.
BIBLIOGRAPHY
Ho, S. K., and Choi, A. S. F. (1997). ‘Achieving Marketing Success Through Sun Tzu’s
Art of Warfare,’ Marketing Intelligence & Planning, 15(1), 38–47.
Davidson, J. H. (1997). Even More Offensive Marketing: An Exhilarating Action Guide to
Winning in Business. London: Penguin Books.
Sun, Tzu (1963). The Art of War, trans. S. B. Griffith. Oxford: Oxford University Press.
offline marketing see entry at online marketing
OLI paradigm see eclectic paradigm
oligopolistic competition see competition
oligopoly see competition
oligopsony see competition
omnibus survey see survey research
one price, law of 368
one price, law of
DESCRIPTION
The economic view that in an efficient market, all identical goods will have
only one price at any given time.
KEY INSIGHTS
The law of one price encapsulates the view that the forces of competition
operating in an efficient market act to ensure that any given good will be
sold for the same price everywhere after adjusting for exchange rates and
allowing for transport and transaction costs. While the law is observed to
hold most strongly for commodities that are standardized and heavily
traded internationally, the law is also observed to be violated in many
empirical research studies. Factors that may explain observed deviations
from the law include those related to the costs of firms ascertaining
rivals asking prices, buyers’ search costs, and the occurrence of new and
inexperienced buyers and sellers entering a market. Other studies finding
deviations from the law suggest that price differences between locations
are attributable to the markets not being fully integrated.
KEY WORDS Pricing, efficient markets, international markets, goods, com-
modities
IMPLICATIONS
Marketers involved in pricing decisions, particularly ones involving inter-
national markets, should seek to understand through careful market
analysis the extent that market characteristics support adherence to, or
deviations from, the law of one price for the firm’s good. At the same
time, to the extent that a firm’s goods are commodity-like, marketers may
wish to explore opportunities for de-commoditizing or differentiating
such goods if an important aim is to enable further pricing flexibility
by the firm.
APPLICATION AREAS AND FURTHER READINGS
Pricing
Hviid, M., and Shaffer, G. (1999). ‘Hassle Costs: The Achilles’ Heel of Price-Matching
Guarantees,’ Journal of Economics and Management Strategy, 8(4), 489–522.
Consumer Behavior
Frank, R. G. (2001). ‘Prescription Drug Prices: Why Do Some Pay More Than Others
Do?’ Health Affairs, 20(2), 115–128.
Online Marketing
Schmitz, S. W., and Latzer, M. (2002). ‘Competition in B2C E-commerce: Analytical
Issues and Empirical Evidence,’ Electronic Markets, 12(3), 163–174.
BIBLIOGRAPHY
Engel, Charles, and Rogers, John H. (1996). ‘How Wide is the Border?’ American
Economic Review, 86(5), 1112–1125.
Isard, Peter (1977). ‘How Far Can We Push the Law of One Price?’ American Economic
Review, 67(5), 942–948.
one-to-many marketing see traditional marketing
369 one-to-one marketing
one-to-one marketing
(also called custom marketing, customized marketing, individual market-
ing, markets-of-one marketing, personal marketing, personalized market-
ing, or tailored marketing)
DESCRIPTION
Tailoring a firm’s offerings to meet the specific needs of individual customers.
KEY INSIGHTS
In contrast to a mass marketing or even differentiated marketing
approach where the wants or needs of all or some customers are provided
with the same marketing approach, one-to-one marketing involves an
approach that tailors the marketing effort according to the wants or
needs of individual customers. Customization of marketing frequently
occurs in business-to-business marketing, for example, when customers
express unique wants or needs and the magnitude of customer purchases
(e.g. order size) is relatively high, thereby providing a greater incentive
for a firm to supply business customers with tailored offerings. At the
same time, one-to-one marketing is clearly not just business-to-business
marketing’s domain; it can be a viable option in business-to-consumer
marketing where, even though customer purchase quantitites may be
low, the expense of tailored marketing offerings can also be held low such
as through the use of advanced information technologies, for example.
KEY WORDS Tailored offerings, unique offerings
IMPLICATIONS
Firms pursuing one-to-one marketing approaches may be involved in
the tailoring or customization of any number of elements of the firm’s
offerings to meet the unique needs and wants of its individual customers
in both industrial and consumer markets. Given the increasing ease with
which customer knowledge can be understood and managed as a result
of advances in information technologies, marketers may find that one-to-
one marketing will only grow in importance.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Shapiro, C., and Varian, H. R. (1998). Information Rules. Cambridge, Mass.: Harvard
University Press.
Wind, Jerry, and Rangaswamy, Arvind (2001). ‘Customerization: The Next Revolu-
tion in Mass Customization,’ Journal of Interactive Marketing, 15(1), 13–32.
Marketing Management
Peppers, D., and Rogers, M. (1999). The One to One Manager: Real-World Lessons in
Customer Relationship Management. New York: Doubleday.
Marketing Research
Pitta, D. A. (1998). ‘Marketing One-to-One and its Dependence on Knowledge
Discovery in Databases,’ Journal of Consumer Marketing, 15(5), 468–480.
Kahan, R. (1998). ‘Using Database Marketing Techniques to Enhance your One-to-
One Marketing Initiatives,’ Journal of Consumer Marketing, 15(5), 491–493.