Dacko S.G. The Advanced Dictionary of Marketing Putting Theory to Use
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overlearning 380
by confirming or verifying the consistency of one’s views with those of
a number of objective others, is one way of seeking to minimize the
overconfidence effect in individual and organizational decision making.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Camerer, Colin, and Lovallo, Dan (1999). ‘Overconfidence and Excess Entry: An
Experimental Approach,’ American Economic Review, 89(1), March, 306–318.
Marketing Research
Van Bruggen, G. H., Lilien, G. L., and Kacker, M. (2002).‘Informants in Organiza-
tional Marketing Research: Why Use Multiple Informants and How to Aggregate
Responses,’ Journal of Marketing Research, 39(4), 469–478.
Marketing Education
Kennedy, E. J., Lawton, L., and Plumlee, E. L. (2002). ‘Blissful Ignorance: The
Problem of Unrecognized Incompetence and Academic Performance,’ Journal of
Marketing Education, 24(3), 243–252.
BIBLIOGRAPHY
Mahajan, Jayashree (1992). ‘The Overconfidence Effect in Marketing Management
Predictions,’ Journal of Marketing Research, 29(3), August, 329–342.
Lichtenstein, S., and Fischhoff, B. (1977). ‘Do Those Who Know More Also Know
More About How Much They Know? The Calibration of Probability Judgments,’
Organizational Behavior and Human Performance, 20, 159–183.
overlearning
DESCRIPTION
The additional learning achieved after something has already been learned to
a high standard.
KEY INSIGHTS
While research studying the influence of overlearning, as in learning a
particular concept, association, or skill, has found that it is not generally
associated with improvements in individual performance in the short
term, it is found to be associated with improvements in long-term reten-
tion. In addition, research on overlearning has found it can help increase
one’s resistance to distractive influences.
KEY WORDS Learning, performance, retention
IMPLICATIONS
Marketers concerned with the extent of consumer learning about a firm’s
offerings should seek to understand how, why, and to what extent con-
sumer overlearning through marketing communications, and advertising
in particular, may be beneficial in consumers’ responding favorably to a
firm’s offerings over the longer term. At a minimum, the concept of over-
learning and evidence of its demonstrated effects suggests a reason for
extending marketing communications beyond the point in time where a
high degree of consumer learning has already occurred.
381 overlearning
APPLICATION AREAS AND FURTHER READINGS
Advertising
Craig, C. Samuel, Sternthal, Brian, and Leavitt, Clark (1976). ‘Advertising Wearout:
An Experimental Analysis,’ Journal of Marketing Research , 13(4), November, 365–
372.
Consumer Behavior
Craig, C. S., Sternthal, B., and Olshan, K. (1972). “Effect of Overlearning on Reten-
tion,’ Journal of General Psychology, 87, 85–94.
Alba, Joseph W., and Hutchinson, J. Wesley (1987). ‘Dimensions of Consumer
Expertise,’ Journal of Consumer Research, 13(4), March, 411–454.
BIBLIOGRAPHY
Carrick, Paul M., Jr. (1959). ‘Why Continued Advertising Is Necessary: A New
Explanation,’ Journal of Marketing, 23(4), April, 386–398.
Krueger, W. C. F. (1929). ‘The Effects of Overlearning on Retention,’ Journal of
Experimental Psychology, 12, 71–78.
own label see private label
P
panel data see marketing research
Pareto principle
(also called Pareto rule, Pareto effect, Pareto’s law, eighty-twenty princi-
ple, eighty-twenty rule, or the law of the heavy half)
DESCRIPTION
The Pareto principle characterizes the situation where a disproportionately
large percentage (e.g. 80%) of a particular phenomenon is caused by a
disproportionately small percentage (e.g. 20%) of another phenomenon.
(For example, 80% of company profit is derived from 20% of the company’s
customers.)
KEY INSIGHTS
The Pareto principle was originally developed by economist Vilfredo
Pareto to understand and explain the relationship between national
income and the benefit of such income to the population. The principle is
now more broadly understood and interpreted to suggest there are often
many instances where it is a relatively small fraction of some phenom-
enon, rather than the larger fraction, that has the most significant effect
on some other phenomenon, such as where it may be found that 80%
of a firm’s sales volume is a result of the purchases of 20% of a firm’s
customers.
KEY WORDS Cause, effect, disproportional influence
IMPLICATIONS
The Pareto principle can be used as a guide to managers in deciding how
to allocate limited resources. In particular, the principle suggests that pri-
ority should be given to identifying and acting upon the most significant
20% of a cause as it may have a large (e.g. 80%) influence over the desired
effect. Quantitative analyses (e.g. cost analyses and profitability analyses)
may be useful to identify cause and effect relationships that are found
to generally follow the Pareto principle, where the exact proportion of
an observed or desired effect stemming from a proportion of a particular
cause may, of course, vary from 80% to 20%. The Pareto principle can be
widely extended to apply to numerous areas of marketing and manage-
ment ranging from advertising to marketing strategy development where
the aim is to accomplish particular objectives with limited resources.
383 Parkinson’s law
APPLICATION AREAS AND FURTHER READINGS
Advertising
Anschuetz, N. (1997). ‘Profiting from the 80–20 Rule of Thumb,’ Journal of Advertising
Research, 37(6), 51–56.
Marketing Modeling
Rungie, C. M., Laurent, G., and Habel, C. A. (2002). ‘A New Model for the Pareto
Effect (80:20) at Brand Level,’ in Proceedings of the ANZMAC. Melbourne: ANZMAC.
Marketing Strategy
Chen, J. C.-H., Chong, P. P., and Chen, Y.-S. (2001). ‘Decision Criteria Consolidation:
A Theoretical Foundation of Pareto Principle to Porter’s Competitive Forces,’
Journal of Organizational Computing and Electronic Commerce, 11(1), 1–14.
Services Marketing
Sanders, R. (1987). ‘The Pareto Principle: Its Use and Abuse,’ Journal of Services
Marketing, 1(2), 37–40.
BIBLIOGRAPHY
Schmittlein, David C., Cooper, Lee G., and Morrison, Donald G. (1993). ‘Truth in
Concentration in the Land of (80/20) Laws,’ Marketing Science, 12(2), Spring, 167–
183.
Pareto’s law see Pareto principle
parity marketing see me-too marketing
Parkinson’s law
DESCRIPTION
Most commonly, the proposition that, in the context of office organization,
work expands so as to fill the time available for its completion, along with
other propositions of Parkinson including the proposition that the number
of subordinates increase at a fixed rate regardless of the amount of work
produced.
KEY INSIGHTS
Put forth and developed by C. Northcote Parkinson (1957) in his book
Parkinson’s Law, the laws of Parkinson are viewed by many to be facetious-
but-true aphorisms that are most applicable to office organization and
to that of large organizations in particular. The view that work expands
to fill the time available is also referred to more generally as the ‘excess
time effect’ in the field of social psychology (Aronson and Gerard 1966;
Aronson and Landy 1967).
KEY WORDS Organization, management, time, work, staffing
IMPLICATIONS
Marketers involved in the management of marketing, particularly in
large organizations, must strive to take steps to ensure that organiza-
tional tendencies raised in the laws of Parkinson are minimized if the aim
is an effective and efficient organization. In particular, issues related to
service quality within large organizations, as with public administration,
may be particularly prone to the tendencies suggested by Parkinson’s
laws.
parsimony, law of 384
APPLICATION AREAS AND FURTHER READINGS
Marketing Management
Taylor, Ronald N. (1975). ‘Perception of Problem Constraints,’ Management Science,
22(1), September, 22–29.
Services Marketing
O’Toole, L. J., and Meier, K. J. (2004). ‘Parkinson’s Law and the New Public Manage-
ment? Contracting Determinants and Service-Quality Consequences in Public
Education,’ Public Administration Review, 64(3), 342–352.
BIBLIOGRAPHY
Aronson, E., and Gerard, E. (1966). ‘Beyond Parkinson’s Law: The Effect of Excess
Time on Subsequent Performance,’ Journal of Personality and Social Psychology,3,
366–399.
Aronson, E., and Landy, D. (1967). ‘Further Steps beyond Parkinson’s Law: A
Replication and Extension of the Excess Time Effect,’ Journal of Experimental Social
Psychology, 4, 274–285.
Parkinson, C. Northcote (1957). Parkinson’s Law. Boston: Houghton Mifflin.
parsimony, law of
(also called the principle of parsimony, Occam’s razor, or Ockham’s razor)
DESCRIPTION
The view that the simplest explanation for a phenomenon is preferable, unless
it is known to be wrong.
KEY INSIGHTS
The law of parsimony, in its earliest form referred to as Occam’s razor,
based on the fourteenth century philosophical tenet of logician William
of Ockham that advocates the ‘shaving off’ of assumptions that make
no difference to a theoretical explanation, is mainly viewed today as
a heuristic maxim that advises simplicity in explanation. The law of
parsimony is often cited to further prescribe that, given two equally valid
competing explanations, the simplest one should be embraced.
While the law of parsimony is considered to be of significant value in
the development of theories, in arriving at explanations, and in advocat-
ing empirical generalizations (where precision and scope are also valued),
it is also recognized that there may be a fine line between parsimony
and oversimplification. In addition, in achieving parsimony, there may
also be a tradeoff with richness of explanation. As such, any judgments
about parsimony in explanation should depend on the explicit goals of a
researcher.
KEY WORDS Explanation, simplicity, theories
IMPLICATIONS
The law of parsimony provides guidance to marketing researchers to
strive for explanations in research that are not overly complicated. As
a result, many marketing models in use today are parsimonious. At the
same time, however, marketers must be wary of explanations that are
overly simplistic and neglect the value of richness. Marketers should
385 parsimony, law of
strive to resolve such issues by making the implications of their research
goals explicit in terms of the value placed on parsimony.
APPLICATION AREAS AND FURTHER READINGS
Marketing Research
Rieck, D. (1997). ‘Occam’s Razor and Cutting your Own Throat,’ Direct Marketing
(Garden City), 60(7), 52–53.
Starr, Martin Kenneth (1964). ‘Management Science and Marketing Science,’ Man-
agement Science, 10(3), April, 557–573.
Deshpande, Rohit (1983). ‘ “Paradigms Lost”: On Theory and Method in Research
in Marketing,’ Journal of Marketing, 47(4), Autumn, 101–110.
Cohen, Joel B., and Reed II, Americus (2006). ‘Perspectives on Parsimony: How
Long Is the Coast of England? A Reply to Park and MacInnis; Schwarz; Petty;
and Lynch,’ Journal of Consumer Research, 33, 28–30.
Chaiken, S., Duckworth, K. L., and Darke, P. T. (1999). ‘When Parsimony Fails . . . ,’
Psychological Inquiry, 10(2), 118–123.
Epstein, R. (1984). ‘The Principle of Parsimony and Some Applications in Psychol-
ogy,’ Journal of Mind & Behavior, 5(2), 119–130.
Marketing Modeling
Plouffe, C. R., Hulland, J. S., and Vandenbosch, M. (2001). ‘Research Report: Rich-
ness Versus Parsimony in Modeling Technology Adoption Decisions: Understand-
ing Merchant Adoption of a Smart Card-Based Payment System,’ Information
Systems Research, 12(2), 208–222.
Cheung, Gordon W., and Rensvold, Roger B. (2001). ‘The Effects of Model Parsi-
mony and Sampling Error on the Fit of Structural Equation Models,’ Organiza-
tional Research Methods, 4(3), 236–264.
BIBLIOGRAPHY
Ariew, Roger (1976). Ockham’s Razor: A Historical and Philosophical Analysis of Ockham’s
Principle of Parsimony. Champaign-Urbana, Ill: University of Illinois Press.
partner marketing see affiliate marketing
partnership marketing see cooperative marketing
passing stranger effect see ancient mariner effect
patent see intellectual property
pay-for-performance marketing see affiliate marketing
pay-per-click marketing see affiliate marketing
peak-load pricing see pricing strategies
peer-to-peer marketing see word-of-mouth marketing
penetration pricing see pricing strategies
percent-of-sales method see promotion budget setting methods
perfect competition see competition
performance-based marketing see affiliate marketing
perishability see service characteristics
permission marketing 386
permission marketing
DESCRIPTION
Marketing where there is an emphasis on securing customers’ consent or
approval prior to engaging in further marketing activity with, or involving, the
customer and/or customer information.
KEY INSIGHTS
Permission marketing essentially involves one of two approaches. Opt-
in marketing is where the firm will only engage in further marketing
activity with a customer, or use customer information, if the customer
has given clear permission to do so by signing up to the arrangement.
Opt-out marketing is where the firm will automatically engage in such
activity unless the customer has given a clear indication that they do
not wish to participate. As either approach involves a voluntary choice
on the part of the customer to participate or not, much of permission
marketing is concerned with marketing approaches aimed at increasing
the likelihood that a customer will decide to participate initially and will
want to continue doing so.
KEY WORDS Customer consent, customer approval
IMPLICATIONS
A greater knowledge of permission marketing approaches can be ben-
eficial to marketers in industries or markets facing legal or regulatory
constraints regarding the marketing use of customer information, as
when there are restrictions in giving customer information to third party
firms. In other instances, a greater knowledge and use of permission
marketing approaches may provide the marketer with means to increase
the effectiveness of the firm’s marketing, as when the firm is able to
avoid focusing its efforts on those customers who are clearly unreceptive
to the firm’s offer. Finally, permission marketing has potential benefits in
terms of increasing consumer receptivity to subsequent marketing offers
as a result of the marketer having the ‘courtesy’ to ask for the customer’s
permission to begin with.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Bellman, S., Johnson, E. J., and Lohse, G. L. (2001). ‘To Opt-in or Opt-out? It Depends
on the Question,’ Communications of the ACM, 44, February, 25–27.
Marketing Research
Krishnamurthy, S. (2001). ‘A Comprehensive Analysis of Permission Marketing,’
Journal of Computer Mediated Communication, 6(2): http://jcmc.indiana.edu/vol6/
issue2/krishnamurthy.html. Date accessed: 19 July 2007.
Tezinde, T., Smith, B., and Murphy, J. (2002). ‘Getting Permission: Exploring Factors
Affecting Permission Marketing,’ Journal of Interactive Marketing, 16(4), 28–36.
Mobile Marketing
Kavassalis, P., Spyropoulou, N., Drossos, D., Mitrokostas, E., Gikas, G., and Hatzis-
tamatiou, A. (2003). ‘Mobile Permission Marketing: Framing the Market Inquiry,’
International Journal of Electronic Commerce, 8(1), 55–79.
387 personal construct theory
Online Marketing
Marinova, A., Murphy, J., and Massey, B. (2002). ‘Permission E-mail Marketing as a
Means of Targeted Promotion,’ Cornell Hotel and Restaurant Administration Quarterly,
43(1), 61–69.
BIBLIOGRAPHY
Godin, Seth (1999). Permission Marketing: Turning Strangers into Friends and Friends into
Customers. New York: Simon & Schuster.
person marketing see celebrity marketing
person-to-person marketing see word-of-mouth marketing
personal construct theory
DESCRIPTION
A social psychological theory of personality concerned with the way that
individuals construct meanings and more specifically positing that an indi-
vidual’s personal constructs, or categories used by an individual in ordering
relationships and roles, stem from the individual’s anticipation of events.
KEY INSIGHTS
Put forth in pioneering research by Kelly (1955), personal construct
theory was initially concerned with mental disorder detection but has
since been expanded in scope to examine a range of marketing phe-
nomena. A particular approach advocated in personal construct theory is
that of repertory grid analysis, which involves evaluating an individual’s
responses given a researcher’s task concerning the ordering of individual
relationships and roles. A topic in marketing for which the theoretical
approach has been put to considerable use is in the evaluation of con-
sumer perceptions of travel destinations.
KEY WORDS Personality, interpersonal relationships
IMPLICATIONS
Greater knowledge of personal construct theory can potentially provide
the marketer with both a theoretical lens and research methodology to
understand better the nature of individuals’ meanings and perceptions
of a marketer’s offerings, including that of travel destinations. Beyond
additional consumer insight, the theory potentially enables marketers to
obtain insights into how an individual’s personal constructs are related to
the effectiveness of marketing processes managed within the marketer’s
organization.
APPLICATION AREAS AND FURTHER READINGS
Marketing Management
Plank, R. E., and Greene, J. N. (1996). ‘Personal Construct Psychology and Personal
Selling Performance,’ European Journal of Marketing, 30(7), 25–48.
Thomas, R. E. (1969). ‘Marketing Processes and Personal Construct Theory,’ Adver-
tising Quarterly, 20, 9–21.
Peter principle 388
Marketing Research
Hankinson, G. (2004). ‘Repertory Grid Analysis: An Application to the Measure-
ment for Destination Images,’ Journal of Nonprofit & Voluntary Sector Marketing, 9(2),
145–153.
Destination Marketing
Embacher, J., and Buttle, F. (1989). ‘A Repertory Grid Analysis of Austria’s Image as
a Summer Vacation Destination,’ Journal of Travel Research, 28, 3–7.
Pike, Steven (2003). ‘The Use of Repertory Grid Analysis to Elicit Salient Short-
Break Holiday Destination Attributes in New Zealand,’ Journal of Travel Research,
41(3), 315–319.
Consumer Behavior
Preston, Valerie, and Taylor, S. Martin (1981). ‘Personal Construct Theory and Resi-
dential Choice,’ Annals of the Association of American Geographers, 71(3), September,
437–451.
BIBLIOGRAPHY
Kelly, G. A. (1955). The Psychology of Personal Constructs. New York: Norton.
Kelly, G. A. (1970). ‘A Brief Introduction to Personal Construct Theory,’ in
D. Bannister (ed.), Perspectives in Personal Construct Theory. London: Academic Press,
1–8.
Adams-Webber, J. R. (1979). Personal Construct Theory: Concepts and Applications .
Chichester: John Wiley & Sons, Inc.
personal exploitation, law of see least interest, principle of
personal marketing see one-to-one marketing
personalized marketing see one-to-one marketing
PEST analysis see macroenvironment
PESTLE analysis see macroenvironment
Peter principle
DESCRIPTION
A colloquial principle of competence of human resources in a hierarchical
organization that states that, in a hierarchy, every employee tends to rise to
his or her level of incompetence.
KEY INSIGHTS
The Peter principle, as developed by Laurence J. Peter (Peter and Hull
1969), suggests that individuals in organizational hierarchies tend to
advance based on competence to a point where they achieve positions
where they lack competence for such positions, and in such positions
they tend to remain, lacking the necessary competencies or skills as a
result of the positions being either more difficult or simply different than
previous positions. To the extent that the principle reflects promotion
practices in an organization, those responsible for promotion decisions
should strive to assess the extent that a promotion candidate already
possesses the needed competencies and skills for a higher-level position.
KEY WORDS Organization, hierarchies, promotion, competence
389 place marketing
IMPLICATIONS
Marketing managers involved in staffing and promotion decisions should
take heed of the competence issue identified in the Peter principle to
ensure the marketing organization remains viable. By seeking to ensure
in promotion decisions that individuals filling higher-level roles possess
the needed skills, the Peter principle may be potentially mitigated.
APPLICATION AREAS AND FURTHER READINGS
Marketing Management
Anderson, R. E., Dubinsky, A. J., and Mehta, R.(1999). ‘Sales Managers: Marketing’s
Best Example of the Peter Principle?’ Business Horizons (Bloomington), 42(1), 19–
26.
Choy, R. M., and Savery, L. K. (1998). ‘Employee Plateauing: Some Workplace
Attitudes,’ Journal of Management Development, 17(5–6), 392–401.
BIBLIOGRAPHY
Peter, Laurence J., and Hull, Raymond (1969). The Peter Principle: Why Things Always
Go Wrong. New York: William Morrow & Company, Inc.
pioneer see market entry timing
pioneering, market see market entry timing
place-based marketing see out-of-home marketing
place marketing
(also called destination marketing or location marketing)
DESCRIPTION
Marketing activity directed at creating a favorable attitude or impression of a
particular area, region, or location and attracting individuals or organizations
to such places.
KEY INSIGHTS
Whether a ‘place’ in question is for purposes of tourism, travel, invest-
ment, eating, working, learning, recreating, socializing, or living, either
permanently or temporarily, place marketing emphasizes marketing
approaches where the dominant element of the marketer’s offering is
a definable place, topographically, geographically, or otherwise. As such,
places may be countries, regions, cities, towns, private properties, attrac-
tions, shopping malls, shopping mall food courts, shopping centers, office
complexes, recreational complexes, parks, or any other area, region, or
location. Places may be viewed as destinations that a marketer wishes to
market to individuals or organizations located elsewhere, or they may be
places that a marketer wishes to market to individuals or organizations
already in residence.
KEY WORDS Areas, regions, physical locations
IMPLICATIONS
Marketers involved in place marketing may or may not have control
over the actual physical elements or other features that are an integral