Essays on Deceptive Marketing Strategies Open Access

Tipton, Martha Myslinski (2009)

Permanent URL: https://etd.library.emory.edu/concern/etds/gx41mj522?locale=en
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Abstract

Abstract Essays on Deceptive Marketing Strategies By Martha Myslinski Tipton This set of studies focuses on the antecedents and consequences of deceptive marketing. The first essay explores how marketing actions can destroy value by examining the stock market reaction to the exposure of deceptive marketing practices by pharmaceutical firms. Prior research has indicated that negative events vary greatly in their indirect costs to the firm. This study identifies a set of factors that explain a significant portion of the heterogeneity in the magnitude of indirect costs associated with negative marketing-related events. Specifically, the results indicate that event characteristics are generally more significant than firm and brand characteristics. When deception is highly egregious or directed at vulnerable populations, firm value is more negatively impacted than when the potential to mislead and harm is not readily verifiable. Furthermore, when the cited product has substantial brand market share, the levels of egregiousness and target audience explain substantially more of the variations in event impact than when brand market share is low. The second essay concentrates on the relationship between innovation and marketing strategy. The relationship between these concepts is relatively uncharted despite the criticality of innovation to firm health. Drawing mainly from the principals of prospect theory, I argue that current and potential innovation levels impact the likelihood of deceptive marketing. The analysis supports a relationship between use of deception and the strength of the innovation pipeline of a focal firm and its competitors. Together, these essays contribute to the literature on destructive marketing strategies and inform practitioners about the consequences and antecedents of unlawful marketing practices.

Table of Contents

TABLE OF CONTENTS ESSAY 1: THE REGULATORY EXPOSURE OF DECEPTIVE MARKETING AND ITS IMPACT ON FIRM VALUE 1 Introduction 1 Conceptual Background 4 Hypotheses 9 Methodology and Data 24 Results 31 Discussion 39 ESSAY 2: THE IMPACT OF INNOVATION POTENTIAL ON MARKETING STRATEGY 46 Introduction 46 Conceptual Background 49 Hypotheses 52 Research Methodology and Data 58 Results 63 Discussion 66 APPENDIX 72 REFERENCES 74

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