Dacko S.G. The Advanced Dictionary of Marketing Putting Theory to Use
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Pygmalion effect 430
APPLICATION AREAS AND FURTHER READINGS
Marketing Management
Tierney, Pamela, and Farmer, Steven M. (2004). ‘The Pygmalion Process and
Employee Creativity,’ Journal of Management, 30(3), 413–432.
Chowdhury, M. (2006). ‘Pygmalion in Sales: The Influence of Supervisor Expectan-
cies on Salespersons’ Self-Expectations and Work Evaluations,’ Journal of Business
and Public Affairs,1,1.
BIBLIOGRAPHY
Rosenthal, R., and Jacobson, L. (1968). Pygmalion in the Classroom: Teacher Expectations
and the Pupil’s Intellectual Development. New York: Holt, Rinehart & Winston.
Q
question mark see product portfolio analysis
queuing theory
(also called waiting line theory)
DESCRIPTION
Theory or theories of queuing involving a system or systems having multiple
inputs waiting to be processed.
KEY INSIGHTS
Queuing theory involves the use of mathematical modeling approaches
to obtain insights into the efficiency and effectiveness of various queu-
ing methods, processes, and systems. The theory enables types of queu-
ing systems such as first-in/first-served, last-in/first-served, random order
service, and service sharing systems to be examined in terms of their
performance in relation to characteristics including arrival rates, arrival
probabilities, server numbers, and system capacity.
KEY WORDS Queues, waiting lines, efficiency, effectiveness
IMPLICATIONS
Services marketing remains the major area of marketing where math-
ematical models based on queuing theory are able to provide insights
into various queuing system behaviors. Marketers seeking to establish
appropriate queuing systems in any area of services involving the queu-
ing of customers can therefore potentially benefit from applying queuing
theory principles and methods to both queuing system design and evalu-
ation. (See also Little’s Law.)
APPLICATION AREAS AND FURTHER READINGS
Services Marketing
Klassen, K. J., and Rohleder, T. R. (2001). ‘Combining Operations and Marketing to
Manage Capacity and Demand in Services,’ Service Industries Journal, 21(2), 1–30.
Haynes, Paul J. (1990). ‘Hating to Wait: Managing the Final Service Encounter,’
Journal of Services Marketing, 4, Fall, 20–26.
BIBLIOGRAPHY
Gross, Donald, and Harris, Carl M. (1998). Fundamentals of Queueing Theory. New York:
Wiley.
Kotler, Philip (1963). ‘The Use of Mathematical Models in Marketing,’ Journal of
Marketing, 27(4), October, 31–41.
R
radical marketing see unconventional marketing
random-walk theory
DESCRIPTION
A theory that share price movements in the financial markets over the short
term are random in that they do not follow any predictable pattern.
KEY INSIGHTS
Random-walk theory is based on the view that the market is efficient,
where any strategies that are found to work will be soon discovered and
rendered unprofitable. As such, movements of share prices in the short
term are considered to be unrelated to their previous movements.
KEY WORDS Firm share price, short-term performance
IMPLICATIONS
Random-walk theory provides a perspective on changes in short-term
financial indicators that suggests a limitation on being able to make
forecasts or predictions. Marketers seeking to relate marketing actions
to short-term financial indicators of a firm may therefore benefit
from understanding more fully the methods associated with short-
term performance analyses as well as the potential limitations in
such analyses which are suggested by the theory and its supporting
assumptions.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Wisner, Robert N., Blue, E. Neal, and Baldwin, E. Dean (1998). ‘Preharvest Mar-
keting Strategies Increase Net Returns for Corn and Soybean Growers,’ Review of
Agricultural Economics, 20(2), Autumn–Winter, 288–307.
New Product Development
Pauwels, K., Srinivasan, S., Silva-Risso, J., and Hanssens, D. M. (2004). ‘New Prod-
ucts, Sales Promotions and Firm Value: The Case of the Automobile Industry,’
Journal of Marketing, 68, 142–156.
Black, Fischer, and Scholes, Myron (1974). ‘From Theory to a New Financial Prod-
uct,’ Journal of Finance, 29(2), Papers and Proceedings of the Thirty-Second Annual
Meeting of the American Finance Association, New York (December 28–30,
1973), May, 399–412.
BIBLIOGRAPHY
Malkiel, Burton Gordon (1973). A Random Walk down Wall Street. New York: Norton.
Cohen, Jacob Willem (1992). Analysis of Random Walks. Amsterdam: IOS
Press.
433 ratchet effect
ratchet effect
DESCRIPTION
An outcome of an action that results in a change in state to some higher level
that is resistant to returning to a previous lower level.
KEY INSIGHTS
One of the most notable ratchet effects in marketing is that where
the use of a series of advertising campaigns in tandem with a series
of sales promotions is commonly observed to result in higher levels of
sustained sales in comparison to sales levels sustained by a series of sales
promotions alone. In the former case, the advertising may reach other
brand users or non-brand users, for example, whereas in the latter case,
sales promotions may merely bring forward the buying of current brand
users, leading to drops in sales to even lower levels than prior to the sales
promotion. Moran (1978) suggests that ratchet effects are observable in a
range of consumer and services markets.
Beyond the use of the term in marketing to describe the resulting
pattern of sales achieved through the combination of advertising and
sales promotions, the term is used in other contexts to describe ratchet-
like response functions. For example, in economics, the term is used to
describe the phenomenon where many households find it easier to adjust
to rising incomes than to falling incomes.
KEY WORDS Cause, effect, asymmetric response functions, advertising,
sales promotions
IMPLICATIONS
Given the enhancing effect on sales resulting from a combination of
advertising and sales promotions as a prime example, marketers should
seek to understand how marketing actions—and combinations of such
actions in particular—may predictably produce desirable ratchet-like
effects in the marketplace. Establishing the magnitude of such effects
as well as determining their strategic and tactical importance should also
be an important consideration in the development of marketing models
aimed at explaining and predicting the corresponding cause-and-effect
relationships.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Sanne, C. (2005). ‘The Consumption of our Discontent,’ Business Strategy and the
Environment, 14(5), 315–323.
Roland, Gerard, and Szafarz, Ariane (1990). ‘The Ratchet Effect and the Planner’s
Expectations,’ European Economic Review, 34(5), July, 1079–1098.
BIBLIOGRAPHY
Moran, William T. (1978). ‘Insights from Pricing Research,’ in E. B. Bailey (ed.),
Pricing Practices and Strategies. New York: The Conference Board.
ratio scale see scale
rational choice theory 434
rational choice theory
DESCRIPTION
A theoretical view of decision making that is based on the rational evaluation of
optionsor alternativestoarrive atthebestpossible choicefromthe perspective
of the decision maker.
KEY INSIGHTS
Rational choice theory assumes that decision makers are rational in
that their aims are to maximize the expected utilities that result
from their decision. Further assumptions about rationality typically
include time consistency in decision making over time, and a decision-
maker ability to consistently compare all alternatives. Other simpli-
fying assumptions may also be employed in the use of the the-
ory in decision-making models such as decision-maker awareness of
all possible choices and having reliable or precise information about
the consequences of any given choice. While such latter assumptions
may be considered unrealistic for many types of decisions, the the-
ory nevertheless provides a significant and influential basis for describ-
ing, explaining, and predicting a range of decision-making approaches,
outcomes, and behaviors from perspectives spanning economics to
psychology.
KEY WORDS Decision making, rationality, alternative evaluation
IMPLICATIONS
In explaining and predicting various consumer (or organizational)
behaviors, marketers must seek to understand better what assump-
tions of rationality are being made of the target market. To the
extent that the decision making of current and potential customers
demonstrates elements of rationality (e.g. in choosing where one will
obtain a university education), marketers may benefit from a greater
knowledge of rational choice theory-based perspectives for decision
making by being able to facilitate decision making toward desired
ends.
APPLICATION AREAS AND FURTHER READINGS
Consumer Behavior
Redmond, W. H. (2000). ‘Consumer Rationality and Consumer Sovereignty,’ Review
of Social Economy, 58(2), 177–196.
Tremblay, P., Cusson, M., and Morselli, C. (1998). ‘Market Offenses and Limits to
Growth,’ Crime Law and Social Change, 29(4), 311–330.
Jacoby, Jacob (2000). ‘Is it Rational to Assume Consumer Rationality? Some Con-
sumer Psychological Perspectives on Rational Choice Theory,’ Working Paper CLB-
00-009, NYU Pollack Center for Law & Business, August.
BIBLIOGRAPHY
Anand, Paul (1993). Foundations of Rational Choice under Risk. Oxford: Clarendon Press;
New York: Oxford University Press.
Coleman, James Samuel, and Fararo, Thomas J. (1992). Rational Choice Theory: Advo-
cacy and Critique. Newbury Park, Calif.: Sage Publications.
435 reasoned action, theory of
reader-response theory
DESCRIPTION
A theoretical view in the study of the reading of literature that emphasizes the
role of the reader in actively creating and completing the meaning of a literary
work through his or her interpretations.
KEY INSIGHTS
A reader-response theory-based view of literature and written work
including that of written advertising suggests that their involvement with
the reader is not unlike a ‘performing art’ in that a reader is able to create
his or her own unique performance. In the context of understanding
better consumer response to an ad, for example, the theory allows greater
attention to be drawn to possible rich and complex interplays between
elements of an ad and consumers’ responses.
KEY WORDS Literature, written advertisements, interpretation, meaning,
consumer response
IMPLICATIONS
Marketers may benefit from understanding the basis for and concepts
of reader response theory in developing more-effective marketing com-
munications. For example, the theory suggests that marketers may elicit
stronger consumer responses to written advertisements that are aimed
at drawing the consumer into the ad as opposed to ads that are relatively
easy for a consumer to understand.
APPLICATION AREAS AND FURTHER READINGS
Consumer Behavior
McQuarrie, Edward F., and Mick, David Glen (1999). ‘Visual Rhetoric in Advertis-
ing: Text-Interpretive, Experimental, and Reader-Response Analyses,’ Journal of
Consumer Research, 26(1), June, 37–54.
Scott, Linda M. (1994). ‘The Bridge from Text to Mind: Adapting Reader-Response
Theory to Consumer Research,’ Journal of Consumer Research, 21(3), December,
461–480.
BIBLIOGRAPHY
Mick, David Glen, and Buhl, Claus (1992). ‘A Meaning-Based Model of Advertising
Experiences,’ Journal of Consumer Research, 19, December, 317–338.
Mick, David Glen, and Politi, Laura G. (1989). ‘Consumers’ Interpretations of
Advertising Imagery: A Visit to the Hell of Connotation,’ in Elizabeth C.
Hirschmann (ed.), Interpretive Consumer Research. Provo, Ut.: Association for Con-
sumer Research, 85–96.
real options theory see options theory
reasoned action, theory of
DESCRIPTION
A theory relating attitudes to behavior where behaviors are viewed as being
determined by behavioral intentions which, in turn, are determined by atti-
tudes to the behaviors and subjective norms.
reasoned action, theory of 436
KEY INSIGHTS
Developed in pioneering research by Fishbein and Ajzen (1975) and Ajzen
and Fishbein (1977, 1980), the theory of reasoned action is based on the
assumption that the most important cause of a person’s behavior is his
or her behavioral intent. Intentions to perform a behavior are viewed
as being driven by both an individual’s attitudes toward the behavior
and subjective norms, or influences and motivations of the individual
to comply with normative beliefs. Models based on the theory provide a
basis for systematically describing, explaining, and predicting behaviors
or behavioral intentions given appropriately specific characterizations of
behavioral attitudes and subjective norms.
The theory is well supported in research and has considerable scope
in both implications and applications. At the same time, it is generally
recognized as being most applicable to completely voluntary behaviors
(e.g. where individuals perceive themselves as having complete control
over their choices). In an effort to address this latter limitation, the theory
of planned behavior was subsequently developed which builds upon the
theory of reasoned action and further includes the concept of perceived
behavioral control. (See planned behavior, theory of.)
KEY WORDS Behavior, behavioral intentions, attitudes, subjective norms
IMPLICATIONS
Marketers seeking to understand, explain, or predict voluntary consumer
behaviors may potentially obtain rich insights into behavioral intentions
through application of concepts, modeling, and research approaches
which are based upon the theory of reasoned action. For example, mar-
keters may gain insights into consumer attitudes and subjective norms
through consumer surveys where consumers respond to questions scaled
with terms such as good/bad, like/unlike, or agree/disagree. Given the
appropriate information, indications of positive intentions by consumers
to perform certain behaviors can be identified when measures of both
attitudes and subjective norms are positive.
APPLICATION AREAS AND FURTHER READINGS
Marketing Research
Sheppard, Blair H., Hartwick, Jon, and Warshaw, Paul R. (1988). ‘The Theory of
Reasoned Action: A Meta-analysis of Past Research with Recommendations for
Modifications and Future Research,’ Journal of Consumer Research, 15(3), December,
325–343.
Consumer Behavior
Shimp, Terence A., and Kavas, Alican (1984). ‘The Theory of Reasoned Action
Applied to Coupon Usage,’ Journal of Consumer Research, 11(3), December, 795–809.
Bagozzi, Richard P., Baumgartner, Hans, and Yi, Youjae (1992). ‘State versus Action
Orientation and the Theory of Reasoned Action: An Application to Coupon
Usage,’ Journal of Consumer Research, 18(4), March, 505–518.
Randall, Donna M. (1989). ‘Taking Stock: Can the Theory of Reasoned Action
Explain Unethical Conduct?’ Journal of Business Ethics, 8(11), November, 873–882.
Marketing Communications
Marin, Barbara Vanoss, Marin, Gerardo, Perez-Stable, Eliseo J., Otero-Sabogal,
Regina and Sabogal, Fabio (1990). ‘Cultural Differences in Attitudes toward
437 rebound effect
Smoking: Developing Messages Using the Theory of Reasoned Action,’ Journal
of Applied Social Psychology, 20(6), April, 478.
BIBLIOGRAPHY
Fishbein, Martin, and Ajzen, Icek (1975). Belief, Attitude, Intention, and Behavior: An
Introduction to Theory and Research. Reading, Mass.: Addison-Wesley.
Ajzen, Icek, and Fishbein, Martin (1977). ‘Attitude-Behavior Relations: A Theoretical
Analysis and Review of Empirical Research,’ Psychological Bulletin, 84, September,
888–918.
Fishbein, Martin (1980). ‘A Theory of Reasoned Action: Some Applications and
Implications,’ in H. Howe and M. Page (eds.), Nebraska Symposium on Motivation.
Lincoln, Neb.: University of Nebraska Press, 65–116.
Ajzen, I., and Fishbein, M. (1980). Understanding Attitudes and Predicting Social Behavior.
Englewood Cliffs, NJ: Prentice Hall.
rebound effect
DESCRIPTION
A less-than-desired outcome of an action intended to create a change in state
in a particular direction where the action also has the partial effect of creating
a change in state in the opposite direction as well.
KEY INSIGHTS
Some actions aimed at particular changes in state also include effects
opposite to the direction intended, as where laws to increase fuel effi-
ciency in cars are intended to reduce a country’s overall fuel consumption
but where the greater fuel efficiency also leads people to drive more than
they otherwise would. In this context, a rebound effect can be either
qualitatively acknowledged or quantitatively evaluated. A rebound effect
is typically quantified as the extent of deviation from the proportional
change in an outcome expected by an action. Rebound effects are most
often an issue in technology developments regulatory changes and their
influence on consumption behaviors.
KEY WORDS Consumption behavior, technology
IMPLICATIONS
Marketers involved in estimating the effects of particular technology
developments, regulations, or laws on the consumption behaviors of
individuals, households, or broader geographic regions should con-
sider how the rebound effect may be present as a result of changes
in consumer behavior, thereby reducing the gains sought or behav-
ioral changes desired. Whether for energy-intensive products such as
those for home cooling or transportation or for energy-saving prod-
ucts such as home insulation, the rebound effect can present itself in
ways that should be anticipated in the marketing of new products and
services.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Sanne, C. (2005). ‘The Consumption of our Discontent,’ Business Strategy and the
Environment, 14(5), 315–323.
recency effect 438
Technology
Birol, F., and Keppler, J. H. (2000). ‘Prices, Technology Development and the
Rebound Effect,’ Energy Policy, 28(6–7), 457–469.
Marketing Research
Hofstetter P., Madjar, M., and Ozawa, T. (2005). ‘The Fallacy of Ceteris Paribus and
Real Consumers: An Attempt to Quantify Rebound Effects,’ in E. Hertwich, T.
Briceno, P. Hofstetter, and A. Inaba (eds.). Sustainable Consumption: The Contribution
of Research. Proceedings of an International Workshop, 10–12 February 2005,
Gabels Hus, Oslo, NTNU, Program for Industriell Okologi, Report No. 1/2005.
BIBLIOGRAPHY
Greene, D. L., Kahn, J., and Gibson, R. (1999). ‘Fuel Economy Rebound Effect for
U.S. Household Vehicles,’ Energy Journal (Cambridge, Mass.; Cleveland, Oh.), 20(3),
1–31.
recency effect
DESCRIPTION
A cognitive bias in individual learning where, in a series of observations or other
stimuli, the last or final observations or stimuli become disproportionately
salient to the individual relative to those in the middle of the series.
KEY INSIGHTS
The recency effect is considered to be a common phenomenon in individ-
ual learning, where information presented last in a series is more easily
remembered than that in the middle of the series. One explanation for
the recency effect is that earlier information (e.g. that in the middle of a
series) encounters associative interference from subsequent, competing
information in individuals’ efforts to remember such information, some-
thing that is reduced in the process of individuals’ remembering the most
recent information.
While the recency effect as described above generally refers to a spe-
cific effect in individual learning given a series of information to learn
over a relatively short period of time, the phenomenon is sometimes
referred to more generally as the ‘recency rule’ in the context of learning
occurring over a relatively longer period of time or other less constrained
learning conditions. The use of the term ‘recency rule’ generally refers
to the view that information that is learned last is that which is best
remembered. Note also the recency effect term as described above should
not be viewed as having the same meaning or implications as that for the
related term recency principle. (See recency principle.)
KEY WORDS Information, stimuli, learning, memory, recency
IMPLICATIONS
Marketers can take advantage of the primacy effect in individual learning
by ensuring that the most important information or other stimuli is
at the end of any series of information or stimuli that marketers wish
consumers to remember. Alternatively, marketing researchers should
recognize the recency effect as a potential bias among consumers when
they are asked to recall serial information that they have previously
encountered or when they are evaluating service experiences. Finally,
439 recency principle
marketing managers should also be aware of the potential for recency
effects influencing and potentially biasing their evaluations of the perfor-
mance of others.
APPLICATION AREAS AND FURTHER READINGS
Marketing Research
Lynch, John G., Jr., and Srull, Thomas K. (1982). ‘Memory and Attentional Factors in
Consumer Choice: Concepts and Research Methods,’ Journal of Consumer Research,
9, June, 18–37.
Consumer Behavior
Pieters, Rik G. M., and Bijmolt, Tammo H. A. (1997). ‘Consumer Memory for Tele-
vision Advertising: A Field Study of Duration, Serial Position, and Competition
Effects,’ Journal of Consumer Research, 23(4), March, 362–372.
Marketing Management
Steiner, D. D., and Rain, J. S. (1989). ‘Immediate and Delayed Primacy and Recency
Effects in Performance Evaluation,’ Journal of Applied Psychology , 74, 136–142.
BIBLIOGRAPHY
Crano, William D. (1977). ‘Primacy and Recency in Retention of Information and
Opinion Change,’ Journal of Social Psychology, 101, February, 87–96.
recency principle
DESCRIPTION
The view that consumer exposure to advertising that is positioned close in
time to a purchase occasion will be more beneficial to purchase than exposure
to advertising positioned further away in time.
KEY INSIGHTS
Research on exposure to advertising among consumers suggests that
recency of advertising exposure relative to a purchase occasion may
be more beneficial in eliciting a desired consumer response than the
same advertising exposure occurring with less recency. Recognizing the
potential for recent ad exposure to be more effective than less recent
exposures, the recency principle has been used to argue that it is not
necessarily more beneficial to expose consumers to multiple (e.g. three)
advertisements over time in comparison to a single recent exposure.
Note: The recency principle as described above should not be confused
with the term of the same name established in research by psychol-
ogist John Broadus Watson (1930) which states that ‘the most recent
response is strengthened more by its frequent occurrence than is an
earlier response.’ While of interest to psychology researchers, the recency
principle as defined by Watson (1930) is found to be lacking in interest
among marketing researchers. Note also the recency principle term as
described above should not be viewed as having the same meaning or
implications as that for the related term recency effect. (See recency
effect.)
KEY WORDS Advertising, exposure, recency, effectiveness