Dacko S.G. The Advanced Dictionary of Marketing Putting Theory to Use
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adaptation 10
a scheduled airline flight because he is thirty seconds late in checking
in relative to the airline’s policy of requiring check-ins a minimum
of thirty minutes before departure may attribute the refusal in being
allowed to check in to the ticketing agent’s insensitive, stubborn, and
unsympathetic personality, whereas the ticketing agent may attribute the
service encounter outcome to that of being told to enforce his company’s
policy. While such an example illustrates the actor–observer difference
on a relatively small scale, such difference may certainly be amplified on
larger scales as when actions are strategic in nature (e.g. in interpreting
motivations of an entire salesforce or in crucial negotiations with a poten-
tial business partner). Marketers should therefore seek to understand and
perhaps even anticipate possible interpretations of marketing actions
from stakeholding observer perspectives and reconcile them with their
own perspectives in efforts to reduce misunderstandings that may lead to
undesirable marketing outcomes (e.g. customer dissatisfaction, marketer
mistrust).
APPLICATION AREAS AND FURTHER READINGS
Consumer Behavior
Folkes, Valerie S. (1988). ‘Recent Attribution Research in Consumer Behavior: A
Review and New Directions,’ Journal of Consumer Research, 14(4), March, 548–565.
Marketing Management
Balakrishnan, P. V. (Sundar), Patton, Charles, and Lewis, Philip A. (1993). ‘Toward
a Theory of Agenda Setting in Negotiations,’ Journal of Consumer Research, 19(4),
March, 637–654.
Teas, R. Kenneth, and McElroy, James C. (1986). ‘Causal Attributions and
Expectancy Estimates: A Framework for Understanding the Dynamics of Sales-
force Motivation,’ Journal of Marketing, 50(1), January, 75–86.
Services Marketing
Van Raaij, Fred, and Pruyn, Ad Th. H. (1998). ‘Customer Control and Evaluation of
Service Validity and Reliability,’ Psychology and Marketing, 15(8), 811–832.
BIBLIOGRAPHY
Jones, Edward E., and Nisbett, Richard E. (1972). ‘The Actor and the Observer:
Divergent Perceptions of the Causes of Behavior,’ in Edward E. Jones et al.
(eds.), Attribution: Perceiving the Causes of Behavior, Morristown, NJ: General Learning
Press, 79–84.
Wagner, J. A., III, and Gooding, R. Z. (1997). ‘Equivocal Information and Attribution:
An Investigation of Patterns of Managerial Sensemaking,’ Strategic Management
Journal, 18(4), 275–286.
actual product see product levels
adaptation
DESCRIPTION
The process or strategy of adapting or tailoring an otherwise standardized
product or service offering to meet the needs and preferences of a particular
market or set of consumers, where such markets and consumers are typically
examined and managed within an international marketing context.
11 adaptation
KEY INSIGHTS
The subject of marketing strategy and marketing mix element adap-
tation versus standardization has been the subject of much marketing
research and debate. Since there are many potential factors influencing
the appropriateness of such a strategy, it is difficult to say when it is
best relative to a standardization approach. In international marketing,
adaptation is an essential consideration when marketing to multiple
countries or cultures where there are likely to be significant differ-
ences in consumer wants and needs relative to a particular product
or service offering. While adapting marketing strategies and market-
ing mix elements often takes more time and effort to develop and
implement and is often costlier than standardized approaches which
benefit from larger economies of scale, the potentially greater market
receptivity to adapted offerings may make such a costlier approach
worthwhile over the longer term. Ultimately, however, the desirabil-
ity, extent, and type of adaptation, whether in marketing communi-
cations, product packaging, or positioning, will invariably be highly
dependent on characteristics of the company, product, industry, and
market.
KEY WORDS Marketing mix adaptation
IMPLICATIONS
Marketing managers involved in international or regional marketing
should consider the potential for adapted marketing strategies or mar-
keting mix elements. As the decision to adapt such offerings is highly
context dependent, research assessing the market, industry, and com-
petition will be essential. Company resources and skills will also be
an important consideration to determine whether the assets and com-
petencies of the firm can accommodate and support an adaptation
approach for possible competitive advantage. Even highly standardized
firms such as McDonald’s still find it is strategically desirable to engage
in limited adaptations to local tastes for their sandwich offerings, for
example.
APPLICATION AREAS AND FURTHER READINGS
International Marketing
Theodosiou, M., and Leonidou, L. C. (2002). ‘Standardization vs. Adaptation of
International Marketing Strategy: An Integrative Assessment of the Empirical
Research,’ International Business Review, 12(2), April, 141–171.
Solberg, Carl R. (2002). ‘The Perennial Issue of Adaptation or Standardization
of International Marketing Communication: Organizational Contingencies and
Performance,’ Journal of International Marketing, 10(3), Fall, 1–21.
Johnson, Jean L., and Arunthanes, Wiboone (1995). ‘Ideal and Actual Product
Adaptation in US Exporting Firms: Market-Related Determinants and Impact on
Performance,’ International Marketing Review, 12(3), June, 31–46.
BIBLIOGRAPHY
Cavusgil, S. Tamer, Zou, Shaoming, and Naidu, G. M. (1993). ‘Product and Pro-
motion Adapatation in Export Ventures: An Empirical Investigation,’ Journal of
International Business Studies, 24(3), 476–506.
adaptation-level theory 12
Szymanski, David M., Bharadwaj, Sundhar G., and Varadarajan, P. Rajan (1993).
‘Standardization vs. Adaptation of International Marketing Strategy: An Empiri-
cal Investigation,’ Journal of Marketing, 57(4), October, 1–17.
adaptation-level theory
(also called AL theory or the theory of adaptation level)
DESCRIPTION
A theory positing that an individual’s reference point for subjective judgments
regarding particular classes of stimuli is determined by the individual’s prior
exposure to such stimuli as well as recollections of past judgments of similar
stimuli.
KEY INSIGHTS
Put forth in pioneering research by Helson (1947), adaptation-level theory
posits that one’s judgment or evaluation of an outcome is a function of all
the previously experienced outcomes. In particular, the theory expresses
the relationship mathematically by proposing that one’s adaptation level,
or reference point for subjective judgments, is the logarithm of the mean
of relevant stimuli, where individuals weight such stimuli based on their
recency and salience among other criteria. In this sense, adaptation-level
theory is a psychological theory of relativity based on the general prin-
ciple of perceptual contrast where any subjective judgment is influenced
by the prevailing norm or adaptation level. The theory also suggests that
individuals continually adapt to label the existing level of any stimulus as
the norm.
KEY WORDS Adaptation, perception, stimuli
IMPLICATIONS
While adaptation-level theory has been formulated in precise mathemat-
ical terms, it also provides a basis for non-mathematical application. For
example, the theory can be used to explain why an individual may see a
new car model of a particular size and consider it to be ‘big,’ as it would
be judged in relation to the individual’s perception of the prevailing
norm for new car model size, yet, given a case where most new car
models become bigger over time, the individual’s reference point for
car size judgments will shift to that of a bigger size. Marketers should
therefore seek to understand how a consumer’s judgment is influenced
by his or her prior exposures to related stimuli in order to explain and
predict better such judgments. Such knowledge can therefore provide
the marketer with insights into appropriate marketing communications
or persuasive messages that may be aimed at altering or influencing such
consumer judgments.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Bearden, William O., and Teel, Jesse E. (1983). ‘Selected Determinants of Consumer
Satisfaction and Complaint Reports,’ Journal of Marketing Research, 20(1), February,
21–28.
13 adaptive strategy
Anderson, Eugene W., and Sullivan, Mary W. (1993). ‘The Antecedents and Con-
sequences of Customer Satisfaction for Firms,’ Marketing Science, 12(2), Spring,
125–143.
Marketing Research
Oliver, Richard L. (1980). ‘A Cognitive Model of the Antecedents and Consequences
of Satisfaction Decisions,’ Journal of Marketing Research, 17(4), November, 460–469.
Consumer Behavior
Brickman P., Coates D., and Janoff-Bulman, R. (1978). ‘Lottery Winners and Acci-
dent Victims: Is Happiness Relative?’ Journal of Personality and Social Psychology,
36(8), August, 917–927.
Marketing Education
Goldman, Roy D., and Hewitt, Barbara Newlin (1975). ‘Adaptation-Level as an
Explanation for Differential Standards in College Grading,’ Journal of Educational
Measurement, 12(3), Autumn, 149–161.
BIBLIOGRAPHY
Helson, Harry (1947). ‘Adaptation-Level as Frame of Reference for Prediction of
Psychophysical Data,’ American Journal of Psychology, 60(1), January, 1–29.
Helson, Harry (1964). Adaptation-Level Theory: An Experimental and Systematic Approach
to Behavior. New York: Harper Row.
Sarris, Viktor (1967). ‘Adaptation-Level Theory: Two Critical Experiments on
Helson’s Weighted-Average Model,’ American Journal of Psychology, 80(3), Septem-
ber, 331–344.
Brickman, Philip, and Campbell, Donald T. (1971). ‘Hedonic Relativism and the
Good Society,’ in Appley, M. H. (ed.), Adaptation-Level Theory: A Symposium. New
York: Academic Press.
adaptive strategy
DESCRIPTION
Strategy or strategies that involve making adjustments based on new environ-
mental conditions.
KEY INSIGHTS
While business and marketing strategies are often characterized by con-
sistency in direction and approach over the longer term, the notion of
an adaptive strategy incorporates the view that the strategic approach
is to some significant extent dependent on environmental conditions
encountered by a firm.
KEY WORDS Organization, adaptability
IMPLICATIONS
As strategy development and implementation is an essential part of
marketing over the long term, marketers must critically examine the
essential characteristics of business and marketing strategies pursued
to assess how and to what extent such strategies should be adaptive in
nature.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Achrol, Ravi S. (1991). ‘Evolution of the Marketing Organization: New Forms for
Turbulent Environments,’ Journal of Marketing, 55(4), October, 77–93.
adopter categories 14
McKee, Daryl O., Varadarajan, P. Rajan, and Pride, William M. (1989). ‘Strategic
Adaptability and Firm Performance: A Market-Contingent Perspective,’ Journal of
Marketing, 53(3), July, 21–35.
BIBLIOGRAPHY
Miles, Raymond E., and Snow, Charles C. (1978). Organizational Strategy, Structure,
and Process. Stanford, Calif.: Stanford University Press.
Chaffee, Ellen Earle (1985). ‘Three Models of Strategy,’ Academy of Management
Review, 10(1), January, 89–98.
administered VMS see channel arrangement
adopter categories
DESCRIPTION
Categorical classifications of individuals or organizations according to when
they adopt new product(s) in comparison to others.
KEY INSIGHTS
One of the most commonly used approaches for categorizing adopters is
that of Rogers (1995) where he proposes five categories and percentages
for each and where the non-cumulative adopter distribution of such indi-
viduals forms a bell-shaped curve: (1) innovators (2.5%), (2) early adopters
(13.5%), (3) early majority (34%), (4) late majority (34%), and (5) laggards
(16%). While the number of categories, the percentages of each, and
the method of categorical determination are in many ways somewhat
arbitrary, the adopter categories nevertheless provide a means to evaluate
new product adoption behavior among individuals (or organizations in
the case of business-to-business marketing).
KEY WORDS Innovators, early adopters, early majority, late majority,
laggards
IMPLICATIONS
Marketers must be sensitive to differences in adoption timing tenden-
cies among potential customers for products and services and strive to
strategically manage marketing efforts to ensure appropriate receptiv-
ity among targeted categories. Marketers of really new products, for
example, tend to target innovators early on in marketing efforts because
receptivity among innovators can lead to favorable follow-on influences
in subsequent adopter categories.
APPLICATION AREAS AND FURTHER READINGS
Marketing Modeling
Mahajan, V., Muller, E., and Srivastava, R. K. (1990). ‘Determination of Adopter
Categories by Using Innovation Diffusion Models,’ Journal of Marketing Research,
27(1), February, 37–50.
Marketing Strategy
Mahajan, V., and Muller, E. (1998). ‘When is it Worthwhile Targeting the Majority
Instead of the Innovators in a New Product Launch?’ Journal of Marketing Research,
35(4), November, 488–495.
15 adoption process
BIBLIOGRAPHY
Rogers, E. M. (1995). Diffusion of Innovations, 4th edn. New York: Free Press.
Peterson, Robert A. (1973). ‘A Note on Optimal Adopter Category Determination,’
Journal of Marketing Research, 10(3), August, 325–329.
adoption see adoption process
adoption process
DESCRIPTION
The process by which a consumer adopts a new product or service.
KEY INSIGHTS
Before adopting, or purchasing, a new product or service, it is generally
recognized that a consumer typically moves through different stages of a
process of adoption. Commonly recognized stages before adoption (actu-
ally regularly purchasing the offering) include that of awareness (being
cognizant of the offering), interest and information search (having some
receptivity in the offering and seeking information about it), evaluation
(assessing the offering in relation to adoption aims), and trial (using
the offering on a temporary basis). While the adoption process is often
described as a series of stages that are followed in a non-repeating
sequence, it can also be far from such as some consumers may skip
certain stages of the process, while others may revisit certain stages in
one or more iterations. The process may end with rejection, rather than
adoption, and in other versions of the modeled process there is a stage
of symbolic adoption, where the product is embraced as a notion, following
the initial evaluation stage.
KEY WORDS Adoption stages, purchase
IMPLICATIONS
A key task of marketers is to understand what is involved in the psycho-
logical adoption process of consumers for particular product and service
offerings in order to be able to positively influence such consumers at
appropriate stages, thereby encouraging them to successfully complete
the adoption process and purchase the offering. For example, product
trial may be an important stage to be completed before adopting some
new products such as newly flavored soft drinks, prompting marketers
to offer free samples of the products in supermarkets. Similarly, mar-
keters may give away to consumers small trial-sized packages of products
such as shampoos or laundry detergents to encourage adoption. Yet, in
adopting other products such as mobile phones, awareness, interest, and
evaluation become more essential, leading marketers to emphasize mar-
keting communications and other means to move consumers successfully
through these stages of the adoption process. Finally, it is important
for marketers to understand the time and effort consumers take within
each stage of the adoption process and the nature of actual succession
of adoption stages through consumer research. For example, the fact
that evaluation and symbolic adoption may, in reality, not take place early
adoption theory 16
in a consumer’s adoption process, but later after trial, can change the
dynamics of the marketing communication plans marketers set in rela-
tion to commonly held assumptions about the typical consumer adoption
process. (See also buyer influence/readiness.)
APPLICATION AREAS AND FURTHER READINGS
Consumer Behavior
Manning, Kenneth C., Bearden, William O., and Madden, Thomas J. (1995). ‘Con-
sumer Innovativeness and the Adoption Process,’ Journal of Consumer Psychology,
4(4), 329–345.
Klonglan, Gerald E., and Coward, E. Walter (1970), ‘The Concept of Symbolic
Adoption: A Suggested Interpretation,’ Rural Sociology, 35(1), 77–83.
Labay, Duncan G., and Kinnear, Thomas C. (1981). ‘Exploring the Consumer
Decision Process in the Adoption of Solar Energy Systems,’ Journal of Consumer
Research, 8(3), December, 271–278.
Marketing Modeling
Norton, John A., and Bass, Frank M. (1987). ‘A Diffusion Theory Model of Adop-
tion and Substitution for Successive Generations of High-Technology Products,’
Management Science, 33(9), September, 1069–1086.
BIBLIOGRAPHY
Ozanne, Urban B., and Churchill, Jr., Gilbert A. (1971). ‘Five Dimensions of the
Industrial Adoption Process,’ Journal of Marketing Research, 8(3), August, 322–328.
Huff, Sid L., and Munro, Malcolm C. (1985). ‘Information Technology Assessment
and Adoption: A Field Study,’ MIS Quarterly, 9(4), December, 327–340.
adoption theory
DESCRIPTION
Theory or theories aimed at understanding, explaining, or predicting how,
why, and to what extent individuals or organizations will adopt or purchase
new offerings.
KEY INSIGHTS
Theories of adoption recognize the role of multiple factors in influencing
product or service adoption by an individual or organization. The extent
that a potential adopter values innovativeness, the degree of innovation
that is communicated by a new product or service offering, and the
knowledge and experience of the prospective adopter are just some
examples of potentially influential factors in determining the rate and
extent of adoption.
KEY WORDS Adoption, readiness
IMPLICATIONS
While understanding, explaining, and predicting individual or organi-
zational adoption of a new offering is often complex, it behooves mar-
keters to research the drivers and impediments of adoption in an effort
to facilitate new product adoption and make appropriate plans for the
expected rate of adoption by individuals or organizations in a given
market. Knowledge of the adoption process (see adoption process)as
well as buyer influences and readiness (see buyer influence/readiness)
can be highly beneficial in this regard.
17 adverse selection
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Foxall, Gordon R., and Bhate, Seema (1993). ‘Cognitive Styles and Personal Involve-
ment of Market Initiators for “Healthy” Food Brands: Implications for Adoption
Theory,’ Journal of Economic Psychology, 14(1), March, 33–56.
Kimberly, John R., and Evanisko, Michael J. (1981). ‘Organizational Innovation:
The Influence of Individual, Organizational, and Contextual Factors on Hospital
Adoption of Technological and Administrative Innovations,’ Academy of Manage-
ment Journal, 24(4), December, 689–713.
Jensen, R. (1982). ‘Adoption and Diffusion of an Innovation of Uncertain Profitabil-
ity,’ Journal of Economic Theory, 27(1), 182–193.
O’Callaghan, Ramon, Kaufmann, Patrick J., and Konsynski, Benn R. (1992). ‘Adop-
tion Correlates and Share Effects of Electronic Data Interchange Systems in
Marketing Channels,’ Journal of Marketing, 56(2), April, 45–56.
Consumer Behavior
Fisher, Robert J., and Price, Linda L. (1992). ‘An Investigation into the Social Context
of Early Adoption Behavior,’ Journal of Consumer Research, 19(3), December, 477–
486.
BIBLIOGRAPHY
Alavi, M., and Henderson, J. C. (1981). ‘An Evolutionary Strategy for Implementing
a Decision Support System,’ Management Science, 27(11), 1309–1323.
Venkatraman, M. P. (1991). ‘The Impact of Innovativeness and Innovation Type on
Adoption,’ Journal of Retailing, 67, 51–67.
adverse selection
DESCRIPTION
The tendency for any offering to a market to be most attractive to those most
likely to benefit from it.
KEY INSIGHTS
The concept of adverse selection suggests that, when a firm’s offering is
non-selective, as when health insurance can be obtained by any individ-
ual without a medical examination, one should expect that those most
likely to benefit from it will accept it (e.g. those in poor health), whereas
others that will benefit from it less will be more likely to seek alternative
offerings (e.g. those in better health accepting a more selective insurer).
KEY WORDS Offering attractiveness, customer benefit
IMPLICATIONS
Marketers should recognize how, in trying to be non-selective with an
offering, adverse selection leads customers posing the greatest risk to
the firm to select themselves. To the extent such self-selected high-risk
customers lead to higher costs for the firm, marketers should seek to
understand such risks and develop strategies and policies for their more
effective management. Marketers may also benefit from learning from
competitors’ introduction of new product and service offerings to under-
stand better the nature and extent of adverse selection relative to the
competitor’s offerings and customers.
advertising theory 18
APPLICATION AREAS AND FURTHER READINGS
Services Marketing
Browne, Mark J. (1992). ‘Evidence of Adverse Selection in the Individual Health
Insurance Market,’ Journal of Risk and Insurance, 59(1), March, 13–33.
Puelz, Robert, and Snow, Arthur (1994). ‘Evidence on Adverse Selection: Equi-
librium Signaling and Cross-Subsidization in the Insurance Market,’ Journal of
Political Economy, 102(2), April, 236–257.
Ausubel, Lawrence M. (1999). ‘Adverse Selection in the Credit Card Market.’ Work-
ing Paper, Department of Economics, University of Maryland, June.
Online Marketing
Fabel, Oliver, and Lehmann, Erik E. (2002). ‘Adverse Selection and Market Substi-
tution by Electronic Trade,’ International Journal of the Economics of Business, 9(2),
175–194.
Steckbeck, Mark, and Boettke, Peter (2001). ‘Turning Lemons into Lemonade:
Entrepreneurial Solutions to Selection Problems in E-Commerce,’ Third Annual
Conference of the Association of Historians of the Austrian Tradition in Eco-
nomic Thought, Pisa—Lucca, 24–26 May 2001.
Marketing Strategy
Ong, S.-E. (1999). ‘Caveat Emptor, Adverse Selection in Buying Properties under
Construction,’ Property Management, 17(1), 49–64.
Cao, Y., and Gruca, T. S. (2005). ‘Reducing Adverse Selection through Customer
Relationship Management,’ Journal of Marketing, 69(4), 219–229.
Guasch, J. Luis, and Weiss, Andrew (1980). ‘Adverse Selection by Markets and the
Advantage of Being Late,’ Quarterly Journal of Economics, 94(3), May, 453–466.
BIBLIOGRAPHY
Eckbo, B., and Masulis, R. (1992). ‘Adverse Selection and the Rights Offer Paradox,’
Journal of Financial Economics, 32, 293–332.
Garella, Paolo G. (1987). Adverse Selection and Intermediation. Florence: European
University Institute, Department of Economics.
advertising theory
DESCRIPTION
Theory or theories attempting to explain how and why advertising is effective
in influencing behaviors and accomplishing its objectives which may include
communicating with potential customers and persuading them to adopt a
particular attitude or preference toward products or brands and ultimately
purchase them.
KEY INSIGHTS
While there are numerous individual theories of advertising and con-
siderable scope and complexity in the large body of knowledge which
comprises advertising theory, most theories of advertising implicitly or
explicitly adopt a view that advertising’s effectiveness is dependent on
principles and practices including mere exposure and/or repetition. That
is, simply exposing a consumer to a product or brand’s advertising can
result in increased liking of the product or brand, while repeatedly expos-
ing the consumer to the product or brand’s advertising over time can lead
to the consumer being, in a sense, conditioned to a potentially greater
extent to like a product or brand or to associate particular thoughts
or feelings with the product or brand. At the same time, advertising’s
19 advertising wearout effect
effectiveness can be highly context specific and dependent on numerous
other principles and theory associated with message and media char-
acteristics, consumer characteristics, product/service characteristics, and
competitive actions.
KEY WORDS Advertising effectiveness, advertising effects
IMPLICATIONS
As it is often said that ‘half of all advertising doesn’t work,’ aiming to
understand and apply the many general and specific principles forming
advertising theory may potentially do much to increase the likelihood
that any particular advertising campaign or advertising strategy will be
effective and accomplish its intended objectives. Marketers must there-
fore seek to understand the factors that influence advertising’s effective-
ness and ineffectiveness relative to intended objectives and particular
contexts to be able to judiciously apply such knowledge. Even experi-
enced firms can make advertising missteps, such as allowing the firm’s ad
agency to create an advertisement that is memorable and consistent with
some elements of advertising theory (e.g. persuading with emotion for a
low-involvement purchase) but not fully realizing until after it has aired
that the ad runs counter to other principles associated with advertising
theory (e.g. emphasizing those emotions that are desired to be positively
associated with the brand).
APPLICATION AREAS AND FURTHER READINGS
Advertising
Tellis, Gerard J., Chandy, Rajesh K., and Thaivanich, Pattana (2000). ‘Which Ad
Works, When, Where, and How Often? Modeling the Effects of Direct Television
Advertising,’ Journal of Marketing Research, 37(1), February, 32–46.
Consumer Behaviour
Mick, David Glen (1992). ‘Levels of Subjective Comprehension in Advertising
Processing and their Relations to Ad Perceptions, Attitudes, and Memory,’ Journal
of Consumer Research, 18(4), March, 411–424.
BIBLIOGRAPHY
Tellis, Gerard J. (2005). Advertising and Sales Promotions. New York: Addison-Wesley.
Vakratsas, Demetrios, and Ambler, Tim (1999). ‘How Advertising Works: What Do
We Really Know?’ Journal of Marketing, 63(1), January, 26–43.
advertising wearout effect
DESCRIPTION
The resulting effect when a particular ad is presented to consumers with such
frequency and/or duration that the consumers begin to ignore it to a large
extent or become tired of it and no longer react favorably to it.
KEY INSIGHTS
The advertising wearout effect is in many ways an acknowledgment
that there will be diminishing returns to any form of advertising that
is presented to consumers on an ongoing basis. While marketers must
consider the possibility of such an effect in determining the exposure