Apple

WILLIAM BOULDING, EUNKYU LEE. and RICHARD STAELIN^
The authors consider the effects of three marketing commtjnication activities on nonproduct based differentiation. Specifically, they examine whether advertising, sales force, and promotion activities increase a firm's ability to differentiate and thus shield itself from future price competition. They suggest that own-price elasticityrepresents a measure of differentiation and examine the effects of marketing communication activities on own-price elasticities for a large number of consumer (durable and nondurable) businesses. They make a series of predictions about future differentiation outcomes based on the likely uniqueness of the communication message. The obtained results are compatible with their basic premise that, by providingunique and positive messages, a firm can insulate itself from future price competition, as witnessed by less negative future price elasticities. Conversely, results indicate that nonunique messages can decrease future differentiation, for example, price promotions for firms that price above the industry average lead to more negative future price elasticities.

Mastering the Mix: DoAdvertising, Promotion, and Sales Force Activities Lead to Differentiation? i
The task of the marketing manager is to develop and execute a marketing plan that makes the firm's product offerings botb different from and superior to competitive offerings, thereby allowing the firm to shield itself from competition. One method of accomplisbing this task is to design products with unique and desiredattributes. However, once introduced to (he marketplace, product design changes can be costly in terms of both time and money. Consequently, marketing managers often attempt to alter customer perceptions regarding the uniqueness and desirability of their existing product offerings via other elements of the marketing mix (e.g., advertising, promotions, personal selling). We focus on how and when thesenonproduci activities lead to differentiation and therefore reduced price competition. Marketing texts and the writings of practitioners often take the position that marketing actions such as advertising,
•William Boultling is an Associate Professor and Richard Staeliii is Edward and Rose Donnell Professor at lhe Fuqua School of Business. Duke University. Eunkyu I^ee is an Assistant Professor alSeattle University. Tlie authors graiefully acknowledge helpful commenls by the editor handling llie article (Raj Srivastava), Mike Moore, and participants of seminars al llie LIniversity of Arizona. Emory. Florida. Penn Slale. Vanderbilt, and the London Marketing Science Conference. Support for Ihis projeci came in part from the Business Associates and Isle Maligne Funds at the Fuqua Sch(X)l ofBu.siness. lhe Stralegic Planning Institute, and the Marketing Science Institute. A preliminary version of this article appeared as MSI Working Paper 92-133 with the litte "The Long-Ttrm Differentiation Value of Marketing Communication Actions." Conclusions are our own.

promotions, and personal selling lead to increased differentiation. However, the empirical evidence for the efficacy of sucbbeliefs is weak. Specifically, evidence on tbe effectiveness of sales force activities as a source of differentiation is almost nonexistent, and the results for advertising and promotion are equivocal. As discussed in more detail sut)sequently, some empirical studies suggest that increases in advertising expenditures increase differentiation {i.e., reduce price competition), whereas others report theoppo.site finding. For promotions, some studies suggest this marketing action has no effect on differentiation, whereas others suggest negative effects. No studies suggest that promotional spending yields positive differentiation benefits. Not only is tbere equivocal empirical evidence, there also exist two conflicting economic theories on the relationship between marketing communications and...