Marketing Signals in Service Industries: Implications for Strategic Decision Making and Profitability Available to Purchase

Describes market signals and market signaling, provides examples of their use in service‐oriented industries and, through a market simulation, examines their implications for profitability and competitive behavior. Marketing signals by firms within an industry are positively related to the profitability of the industry and the profits of the individual firms within the industry. However, there is a negative incentive for a firm to be the only signaler within an industry. This “lone man out” phenomenon puts a firm at a competitive disadvantage to the other firms within its industry. A “temporal pattern‐recognition deficiency” also seems to exist which tends to inhibit managers in finding patterns of behavior over time.