University of Technology, Sydney. Faculty of Business. / 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.