I have a paper just published in Customer Needs and Solutions on stereotyping and market entry strategy. This paper has quite a history, with early versions arising from my dissertation (13 years ago). It was quite a journey. The final paper looks nothing like where it started. (For example, it contains a minor nod to supporting experiments. These experiments were really hard work to do but they only made the footnote in the final paper.)
Bias Can Persist In Markets
We shouldn’t necessarily expect bad marketing approaches, in this case stereotyping of customers, to be removed from competitive markets. You will not be able to find anything in market theory guaranteeing that marketers using stereotypical conceptions of consumers will be driven from the market. The idea that markets will take care of bias relies on some strong underlying assumptions. Market pressure might rid marketers of bias. This can be through those who experience bias learning their mistakes. Alternatively, experiencing bias might cause the marketer to fail and be forced from the market. Market forces can correct bias but, still, we can show circumstances where bias won’t be rooted out by market forces.
Outgroup Homogeneity Bias: A Steretype But Not Necesarily About Hate
To examine the persistence of bias in competitive markets we looked at market entry. Specially where some marketers experienced out-group homogeneity bias. This bias is “the tendency to perceive out-groups as less varied simply because we are unable to identify with them” (Bendle and Perkins, 2019, page 1). Note although the marketers in our model are using stereotypes these are not ‘negative’ stereotypes. The example I use is non-UK marketers thinking all English people love tea. No one thinks it is wrong to love tea. This is not a hate-filled stereotype. What is more it has some basis in fact. A lot of English people do like tea. Still, it is a bias because it doesn’t capture the diversity of English consumer tastes. A marketer using this model of English people will behave differently to one who has an accurate view of taste diversity.
Stereotyping And Market Entry Strategy
Using a simple market entry game we note that stereotyping, in addition to its effects on consumers, “can have negative consequences for the competitor of those experiencing the bias” (Bendle and Perkins, 2019, page 1). (We do examine where this holds and doesn’t hold). The lesson is that my bias can hurt you. This means despite me using the stereotypes and causing the problem I won’t be the one motivated to learn or drop out of the market.
The message from a public policy viewpoint is clear. Markets can be effective but they aren’t magical. Sometimes markets need help to reduce stereotyping. This can come from a variety of sources, e.g., government, trade association programs, even competitors educating their rivals about diversity.
I would like to see more academic work on stereotyping in marketing. Perhaps I’ll publish something else in 13 more years (2032).
For more on bias see here.
Read: Neil Bendle and Andrew Perkins (2020) Stereotyping and Marketing: Out-Group Homogeneity Bias and Entry to Competitive Markets Customer Needs and Solutions, 7, 1-11