An examination of marketing effort and differential advantage as two models of market share determination in the Australian new passenger car market, 1983 to 1993
- Publication Type:
- Thesis
- Issue Date:
- 1996
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This thesis examines the concept of differential advantage and its relevance to the
formulation of marketing strategy. It compares the model of market share determination,
based on the possession of differential advantages in marketing mix variables, with one
based on the concept of marketing effort. The two models are examined using data on
new passenger car registrations collected from Idaps and Paxus1 respectively, media
spend from Bruce Tart and Associates, and later AIM Data2, car dealerships from the
Telecom Yellow Pages, and car models and new passenger car prices from Wheels
Magazine, for the period 1983 to 1993. The above data was corroborated, where
possible, by means of authoritative sources in the motor car industry in Australia.
The theory of market share determination, based on share of marketing effort is an
attractive one. This thesis finds that the relationship between market share3 and share of
marketing effort is positive, consistent and statistically significant. It confirms the place
of marketing effort as a model of market share determination in the marketing literature.
Differential advantage is an index of competitive activity that is calculated by
subtracting concurrent market share from share of marketing effort. The proposition,
advanced by Cook and Rothberg (1990), is that increasing amounts of differential
advantage are positively related to increasing levels of market share. This thesis does not
support this proposition. At an overall level of analysis, the relationship between market
share and differential advantage is a negative one. Only when a subset analysis is done,
for small car makers, is there a weak but statistically significant and positive
relationship between market share and differential advantage.
The overall negative relationship between market share and differential advantage may
be explained in part by the economic uncertainty of a boom and economic recession
during the period under consideration in this thesis. A further possible explanation is
that the data may not have captured fully the relationship between market share and
differential advantage. The data examined the relationship between market share and
differential advantage with only four independent variables. A larger number of
independent variables, or different ones, may have described the relationship more
effectively. Such data was not available. A more fundamental conclusion that is
supported by this thesis is that successful competitive strategy simply does not require
share of marketing investments to be greater than concurrent market share. The place of
differential advantage in the formulation of marketing strategy is questioned.
This thesis supports the value of competitive marketing effort in the formulation of
marketing strategy.
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