Marketing as a Risk Management Mechanism with Applications in Agriculture, Resources, and Food Management

Abstract

Marketing tools, in addition to their role in persuasion and serving as a bridge between production and consumers, reduce prepurchase risks. This role has received less attention in the literature. This review highlights marketing's role in reducing consumers’ purchasing risk. We present our approach, backed up with extensive literature review, beginning with a description of advertising, branding, and pricing that may serve as a signal of a product's quality. We then describe and analyze the role of product demonstrations, free product samples, and money-back guarantees (MBGs), which enable consumers to acquire direct experience before a final decision is made, in reducing risks. We briefly discuss product warranties and their relationship to MBGs. We demonstrate how marketing tools can help reduce the risk associated with the consumption of food products that contain genetically modified organisms, as well as help in marketing of agricultural products that vary in their levels of risk to buyers.

Marketing and Technology Adoption and Diffusion

“…Manufacturers are aware of heterogeneities among agents, and therefore introduce new technologies gradually (Heiman and Hildebrandt ). Their behavior is consistent with an expanded interpretation of the induced innovation hypothesis.…”

“…The marketing literature emphasizes that sellers of technology develop tools to address other types of risk, including the products' fit risk, performance risk, and reliability risk (Heiman and Hildebrandt 2018). This literature implicitly operates within the threshold model of diffusion.…”

“…The web is becoming a major medium for demonstration. Digital demonstrations, while an imperfect substitute for face-to-face demonstrations, can significantly lower the costs of providing and attending demonstrations (Heiman and Hildebrandt 2018). With e-commerce, fit uncertainty may be significant, and return policies have become ubiquitous as a result.…”

“…With the proliferation of e-commerce, the number of returns has significantly increased (Heiman and Hildebrandt 2018). Two mechanisms developed in order to reduce the economic costs created by increasing product returns are reverse logistics (all operations related to the reuse of products and materials (Fleischmann et al 1997)) and the development of secondhand markets.…”

“…However, the literature has tended to underplay the role of marketers and marketing efforts in enhancing adoption. Heiman and Hildebrandt (2018) suggest that in addition to market and production risk, buyers also face risks regarding the fit of the product, its performance, and reliability. This paper aims to introduce some marketing activities targeting pre-and postadoption purchasing risk, as well as the ways in which advancement in communication and information technologies are affecting marketing tools and technology adoption.…”