Essays on Deceptive Marketing Strategies Open Access

Tipton, Martha Myslinski (2009)

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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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