Journal of
Sales Management Analysis and Decision Making
Sale~ Management
Eighth Edition Thomas N. lngram; Raymond W. LaForge; Rarnon A. Avila;
Analysts and Decision Mahlng
Charles H. Schwepker, Jr.; Michael R. Williams
"The eighth edition ofSALES MANAGEMENT continues the tradition of providing outstanding topical coverage and an appropriate Ievel ofrigor for university students. This text does a terrific job ofcapturing student interest. The outstanding variety oflearning methods provided in this text helps make the course even more relevant, engaging, and useful in the development ofsales profissionals. " - Jon M. Hawes, lndiana State University
FALL
2013,
VoLUME
33,
NuMBER
4
The Role of Sales and Marketing in Market-Oriented Companies Thoroughly updated, this dassie text blends the most recent sales management research with real-life "best practices" of leading sales organizations. The text focuses on the importance of employing different sales strategies for different consumer groups, and on integrating corporate, business, marketing, and sales strategies. lt equips students with a strong foundation in current trends and issues, and equips them with the skills needed for the 21st century.
Oliver Goetz, Ann-Kristin Hoelter, and Manfred Krafft
The Efft~ct of Psychological Climate for Innovation on Salespeople's Creativity and Turnover Intention Guangping Wang and Xiaoqin Ma
Improving Sales Performance Through Commitment to Superior Customer Value: The Role of Psychological Ethical Climate
New in the 8th Edition: o
New Opening Vignettes provide recent examples of leading sales organizations.
o
New "Sales Management in the 21st Century" boxes include new sales executives and personal comrnents.
Charles H. Schwepker, Jr.
o
New "Ethical Dilemma" boxes give students the opportunity to address important ethical issues, many as role-play exercises.
o
New and revised chapter cases with related sales managerneilt role-playing activities.
The Impact of Negative Compensation Changes on Individual Sales Performance
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New and revised techniques in the "Developing Sales Management Knowledge" and "Developing Sales Management Skills" activities.
o
New or expanded coverage to social networking in recruiting and selecting; virtual sales training; promoting ethical behavior in sales organizations; compensation of sales managers; and how to optimize the use of sales contests.
Susan L. Dustin and Ariel R. Belasen
INDSALES Model: A Facet-Leveljob Satisfaction Model Among Salespeople Scott B. Friend, Jeff S. Johnson, Brian N. Rutherford, and G. Alexander Hamwi
Personal Selling and Sales Management Abstracts
An insrructor's manual with learning objectives, a test bank, PowerPoint presentation materials, and more is available online to adopters. CONTENTS: Preface; Changing World ofSales Management; I. Describing rhe Personal Selling Function; Overview ofPersonal Selling; II. Defining the Strategie Role of ehe Sales Function; Organizational Strategics and the Sales Funcrion; Sales Organi7.ation Structure and Solesforce Dcployment; III. Developing the Salesforce; Acquiring Sales Talent: Recruirment and Sdecrion; Conrinual Development of the Salesforce: Sales Training; IV Direcring ehe Salesforce; Sales Leadership, Management, and Supervision; Motivation and Rewatd System Management; V. Determining Solesforce Effecriveness and Performance; Evaluaring ehe Effecriveness of the Organizarion; Evaluating ehe Performance of Salespeople; Cases; Glossary; Notes; Index.
Index to Valurne 33
2012 • 424 pages • Tables, figures, cases, bibliographic references, index, online instructor's materials. Paperback: ISBN 978-0·7656-2640-0 $134.95 Sharpe E-textbook: 978·0-7656-3358-3 $79.95
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Editorial Review Board Sönke Albcrs Kühne Logislies University, Germany Artur Baldauf University of ßern, Switzerland Willy Bolandet· Florida State University Fabio Caldieraro University of Washington Joseph P. Cannon Colorado State Universily
Mark C. .Johlke ßradley University
Ellen Bolman Pullins University ofToledo
ßabu J ohn-Mariadoss Washington State Universily
Adam Rapp University of Alahama
Eli .Tones University of Arkansas
Gregory A. Rieb Bowling Green State University
Kissan Joscph University of Kansas
Dominique Rouzies HEC, Paris, France
Karen Norman Kennedy University ofAlabama
Lynette Ryals Cranfield Universit~! Uniled 1 Kingdom
Gotham Challagalla Georgia Institute ofTechnology
Florian Kraus University of Mannheim, Germany
Pradeep K. Chintagunta University of Chicago
SonK.Lam University of Georgia
Anne Coughlan Norlhwestem University
Timothy D. Laudry University of Alabama at Hunts ville
.Tagdip Singh Case Western Reserve Universily
Felicia G. Lassk Northeas/em University
Ravipreet S. Sohi University of Nehraska, Lincoln
Joel Le Bon University of Houston
Thomas J. Steenburgh University of Virginia
Dawn R. Decter-Schmeltz Kan.ws State University
Nick Lee Aslon Business School, United Kingdom
Kaj Storbacka Hanken School of t:conomics, Finland
Bart Dietz Erasmus University, N etherlands
NoahLim University of WisconsinMadison
Ha rish Sujan Tulane University
Andrea L. Dixon ß aylor University
Murali Mantrala University of Missouri
Karen Flaherty Oklahoma State University Shankar Ganesan University of A rizona
Richard G. McFarland West Virginia University
Sl'inath Gopalakrishna University ofMissouri
William C. Moncrief Texas Christian University
Paolo Guenzi Universita Bocconi, Jtaly
Jay Mulki Northeastern University
Donglas E. Hughes Michigan State University
Ryan Mullins Clemson Universily
Gary K. Hunter Case Western Reserve University
Das Narayandas Harvard Business School
Fermmdo Jaramillo University ofTexas at Arlington
Nikolaus Panagopoulos Athens University of Economics & Business, Greece
William L. Cron Texas Chrislian University Rene Y. Darmon t:SSEC, France Thomas DeCarlo University ofAlabama
OveJcnsen WHU-Otto Bei.~heim School of Management, Germany
Bulent Menguc King 'sCollege, United Kingdom
THE ROLE OF SALES AND MARKETING IN MARKET-ORIENTED COMPANIES Oüver Goetz, Ann-Kristin Hoelter, and Manfred Krafft Sincc lirde is known about whether both markering and sales functions pay offin market-oriented companics, this research analyzcs tbe interaction berween market orientation and the departrnenral power of markering and sales wirhin the firm. Data collccted across five industries on the marginal eHect of rnarkering's departmental power on business pcrformance show that market-oriented companies bendir from a strong markering function, but a powerful markering department cannot compcnsate for low Ievels of markct orienration. Surprisingly, thc power of sales impedes successful market orientation implememation. This has important implications for furure sales managcmenr research. We highlight the significance of these find ings für both theory and practice.
Charles Schwepker, Jr. Centrat Missouri State University Arun Shat·ma University ofMiami
.lohn F. Tannet·, .h·. Baylor University Wolfgang maga HEC, Paris, France Willern Vcrbeke Erasmus University, Netherlands Kenneth H. Wathne BI Norwegian School of Management, Norway .Jan Wieseke Ruhr University at Bochum, Germany AndyWood University ofWest Virginia
Marketing scholars have lang shown a strong interest in the role of markering wirhin the firm (e.g., Day 1992; Homburg, Workman, and Krohmer 1999; Moorman and Rust 1999; Varadarajan 1992; Webster, Malter, and Ganesan 2005). T he discussion emerged in the early 1990s wirh the movement toward thinking of markering less as a function and more as a set of values and processes in terms of an organization-wide market orientation (Kohli and Jaworski 1990; Moorman and Rust 1999; Narver and Slater 1990) .a nd has reappeared on rhe agenda with the recent economic crises. Since organizationwide market orientation is imperative in today's difficu!t economic environment and is considered a shared responsibility throughout the organization, the prominence of the markering department has been challenged in various ways. Marketing practitioners are more than ever under pressure to demonstrate their value for the firm. Marketing's perceived Iack of accountability has especially undermined its existence as a diseinet capability wirhin the firm (Rust et al. 2004). In light of this, previous studies provide support for justif:Ying markering expenditures (e.g., Homburg, Anz, and Wieseke 20 12; Rust et al. 2004); however, the specific role and influence of the markering subunit in market-oriented companies has not yet been clarified. In fact, research on this topic has found mixed resu!ts, which we aim to shed new light on with this study. Furthermore, it is surprising that the role of sales in market-oriented companies has received limited attention
Alex Zablah George Mason University Andris A. Zoltners Northwestem University
Chl'is R. Plouffe University of Akrvn
Strategie Partners and Sponsors
Oliver Goetz (Ph .D., Otto Beisheim School of Management), Assisranr Professor ofMarketing, University ofMuenster, o.goerz@ uni-rnuenster.de. Ann-Kristin Hoelter (Ph.D., University of Muenster), Research Assistant, University of Muenster and NORDAKADEMTE, University of Applied Scienccs,
[email protected]. Manfred Krafft (Ph.D., University of Kiel), Professor and Chair of Marketing, Univcrsity of Muenster,
[email protected].
in research. While there is growing interest in the interface between markering and sales (e.g., Hornburg and Jensen 2007; Homburg, Jensen, and Krohmer 2008; Hughes, Le Bon, and Malshe 2012; Rouzies et al. 2005), tothebest of our knowledge, no research has to date examined the promi nence of sales versus that of markering within the firm. Given that sales and markering in isolation or tagether can be powerful or weak, we aim to gain new insights on the role of markering and sales. Since little is known about whether both markering as weil as sales functions pay off in market-oriented companies, we analyze the interaction between market orientation and the departmental power of markering and sales wirhin the firm. We draw on prior conceptualizations of power (e.g., Gaslci 1984; Nath and Mahajan 2011) and regard departmental power as the subunit's ability or capacity to influence rather than actually alter their peers' behavior in the organization (Gaski and Nevin 1985). In particular, we address the following research questions: (1) How does the power of markering and sales interact with market orientation and affect business perforrnance? (2) How is power distribured between markering and sales units? (3) W hat are the effects of competitive srrategy, market orientation, and innovativeness on departmental power? Our investigation extends previous research in two major ways. First, we explicit!y distinguish between markering and sales when investigating the relationship between departmental power and market orientation. Second, we examine the interaction between the power of markering and sales and market orientation to test whether powerful functions have reinforcing or weakening effects on market orientation's impact on performance. The results of our study demonstrate that high Ievels of market orientation require a strong markering T hc authors thankA-Ram Jo for imellectual discussions and valuable research assistance. T he authors gratefully acknowledge financial support from TNS Infratest. Journal ofi'momrl Selliug&Snles Mant~gement, vol. XXXII!, no. 1 (fall 2013) , pp. 353- 37 1. © 2013 PSE Na tional Educational l'oundation. All riglns rcscrvcd. Pc rmissions: www.copyright. com
Academy of Marketing Science
!SSN 0885- 3 134 (prim )IISSN 1557- 7813 (online) DOI: 10.2753/PSS0885-3134330101
354 Journal ofPersonal Selling & Safes Management Fafl20 13
function, whereas- surprisingly-the power of sales units affects business performance negatively in market-oriented companies. T his effect indicates an inadequate adoption and implementation of the market orientation concept by sales dcpartmcnts, wh ich has important implications regarding the implementation of the markering concepr for markering as weil as sales academia and practice. O ur paper is organ ized as follows. In the next section, we present and discuss rhe theoretical background of our study. Thereafter, we present our conceptual framework and derive hypothescs, discuss important aspects of th e methodology, and present rhe key resulrs of our empirical study. T he paper concludes wit h a discussion of the results and their im plications. CONCEPTUAL FOUNDATION Departmental Power T he phenomenon of power is a central element in understanding organizations (Pfeffer and Cialdini 1998) and is widely discussed in the scientific literature. It has been shown that different organizational entities differ in their power, expressed in the subuni t's ability or capacity to influence other peers' behaviorwithin the organization (Homburg, Workman, and Krohmer 1999). T hese power differences can be cxplained by drawing on Strategie contingency theory (Hickson et al. 197 1; Hi nings et al. 1974). This theory suggests that departmental power in organizations depends on the ability to deal with environmentally derived uncertain ties, the organiza.tion's ability to replace departmental activities with alternatives, and the degree to which a department is connected to the system via its activities. High Ievels of these attributes characterize a stratcgic contingency. Hence, a department possesses power if the control of Strategie contingencies Ieads to other departments' dependency and if one speciflc department has the ability to control these contingencies better than another. Thus, the Strategie contingency theory focuses on structural sources of power and is not concerned with o rganization members' psychological attributes as explanations of power. Similarly, Pfeffer (1981) and Salancikand Pfeffer (1974) argue that the source of departmental power can be derived from the control of resources critical to the organization as a whole. D cpartments managing valued resources fo r which there are no substitutes, and on which othcrs depend, are thus more powerful. In other words, subunits in charge of critical, scarce resources are more powerful. The Role of Marketing and Sales Several conceptual and empirical articles have focused on selected factors affecting marketing's role wirhi n the market-
o ri ented company (Homburg, Workman, and Krohm er 1999; Moorman and Rust 1999; Verh oef and Leeflang 2009) as well as on the markering subunit's impact on strategic decisions (Anderson I 982; Nath and Mahajan 2008; O'Sull ivan and Abela 2007; Rust et al. 2004; Varadarajan 1992). Kohli and Jaworski (1 990) argue that a functional ma rkeri ng subuni t impedes the implementatio n of market orientation. They therefore question marketing's relevance in the boardroom. ln comrast, Moorman and Rust (1999) claim that establishing a markering function results in specialized markering knowledge, which irr turn contributes to a company's performance beyond rhdt explained by its market orientation . They argue that marketing's value is based on the degree to which it develops the knowledge and ski lls required to connect ehe customer to the product, thus contributing to finan cial accountability. T hey also find empiri cal support for this line of arguments. H omburg, Workman, and Krohmer ( 1999) investigated rnarketing's inA.uence with in the company and tested hypotheses that systematically relate marketing's inßucnce to specific determinants. T hcir results indicated that ehe markering function has a substantial influence wirhin the organization and that marketing's influence is related to external, internal, and institutional determinants. Verhoef and LeeHang (2009) studied the influence of the markering department and its relationship to market orientation and performancc in the Netherlands. While they found that market orientation mediates the performance impact of marketing's influence, they did not find a direct link between marketing's influence and business performance. H owever, when qualifying the findings of Verhoef and LeeA.ang (2009) in a subsequent study of seven industrialized countries, Verhoef et al. (2011) fou nd evidence of a significant relationship. N ath and Mahajan (2011) explored marketing's influence at the board Ievel. They did not find a direct relationship between marketing's inA.uence and business performance; instead, they found that marketing's inA.uence at ehe corporatc Ievel can be positive or negative, depending on the degree of top m anagem ent team divisionalizatio n and firm diversification. These results indicate that there are circurnstances in which markering has more or less influence at different firm Ievels. In order to shed new light on thc mixed reSLLlts of previous research, we investigate the intcraction effect between marketing's departmental power and market orien tation. As Slater and N arvcr ( 1994) pointed out, three major componcnts of market orientation can be identified-customer orientation, competitor focus, and cross-functional coordination. Since the sales function is involved with at least the first two components, it is remarkable that the sales department has often been neglected in research on the interplay of departmental power and market orientation. More precisely, there is a !arge overlap in ehe resources that markering and sales
control (Guenzi and Troilo 2007). T herefore, we also analyze the role of sales in market-oricnted companies. Moreover, several studies have emphasized the importance of shared market knowledge as the crux of market orientation (e.g., Day and Nedu ngadi 1994; Oe Luca and Atuahene-G ima 2007; Jaworski and Kohli 1993; Kohli and Jaworski 1990). Since sales employees have knowledge, skills, and relationships that are specific to the market segment they cover, ehe information provided by the sales functio n is crucial for the organizationwide adoption of market-oriented behavior (Cespedes 1996; Nach and Mahajan 20 11 ). In particular, salespeople play an essential role in identif}ring and defining market opportunities for their company (Evans et al. 2012) . This study thus analyzes the effects of the power of both markering and sales on performance as weil as their powers' interaction with market orientation. This perspective is very important since market orientation emails the integration of markering as wel! as sales (Narver, Slater, and MacLachlan 2004). Furthermore, we aim to explain different power Ievels of marketi ng and salc:;s through d iffe ren t strategic orientations. In the following section, we elaborate on ehe conceptual framework. HYPOTHESES DEVELOPMENT Marketing's and Sales' Interaction with Market Orientation Researchcrs have long stressed the importance of an organization-wide orientation toward market and customer needs (Kohli and Jaworski 1990; Verhoef and Leeflang 2009) . This is in line with previous empirical studies and meta-analyses that show a positive and di rect effect of market orientation on firm performance (e.g. , Cano, Carrillat, and Ja ramillo 2004; Deshpande, Farley, and Webster 1993; Jaworski and Kohli 1993; Kirca, Jayachandran, and Bearden 2005; Narver and Slater 1990). Moreover, it is evident that organizations will be in a stronger position to succeed in the marketplace if they leverage their market-based resources and capabilities efficiently (e.g., Dutta, Zbaracki, and Bergen 2003; Morgan, Vorhies, and Mason 2009; Srivastava, Shervani, and Fahey 1998; Vo rhies and Morgan 2005). Capahiliries relating to market-based resources are usually associated wich the markering and the sales function and include capabilities such as product management, pricing, selling and customer-linking, communication, and channelmanagement capabilities (e.g., Vorhies and Morgan 2005). Since sales and markering play a coordinating role in the implicit and explicit connections between customers and the company, the relationship of markering and sales to other parts of the organization might be crucial to the effective functioning of the market-orien ted company (Hughes, Le Bon, and Malshe 201 2) .
355
To improve firms' strategies and decisions, marketers must provide timely and relevant information regarding opportuniti es for growth (Marketing Science Institute [MSl] 2012) . While the integration and management of market knowledge was highlighted as one of MSI's research priorities for 201 012, research by Homburg, Jensen, and Krohmer (2008) also demonstrates the relevance of market inforrnation for business performance. By dassifying the existing markering and sales configurations in 337 European companies, Homburg, Jensen, and Krohmer show that the more successful clusters are characterized by intensive market knowledge. Furthermore, they identif}r five empirical archetypes of the interface between markering and sales. Interestingly, the markering department has a moderately strong position in ehe most successfuJ duster relative to its position in other clusters, indicating ehe importance of a powernd markering uni t in addition to its generation of in-depth market knowledge. Consequently, marketing's power is highly relevant for firmsthat emphasize the generation of specialized market knowledge, which highly market-oriented companies do. The rationale behind this is that effective organization-wide market orientation involves the coordination and integration ofspecialized market knowledge as weil as capabilities to transform this knowledge into customer value, which is usually ehe responsibility of ehe markering department. Thus, we believe that simultaneously emphasizing a firm's market orientation and its markering depanment's power will increase busiiless performance. This reasoning is in line with Pfeffer (1992), who claims that a diseinet organization-wide behavior- in this context, market orientation- is encouraged if powerful functional groups promote it wirhin ehe organization. Accordingly, Verhoef and LeeRang (2009) argue that highly market-oriented companies tend to have stronger markering departments and vice versa, thus emphasizing the importance of a dual culture. In line with this reasoning, we assume that the positive effect of market orientation on business performance (as evidenced by numerous empirical studies, e.g., Cano, Carrillat, andJaramillo 2004; Deshpande, Farley, and Webster 1993; Jaworski and Kohli 1993; Kirca, Jayachandran, and Bearden 2005; Narver and Slater 1990) will be reinforced by the increased, simultaneous prominence of the markering function as reßected in its power. We therefore hypothesize a positive interaction effect between rnarket orientation and marketing's power on busincss performan ce: Hypothesis 1: The interaction between the departmental power of marketing and market orientation is positively associated with business performance.
Since customer orientation constitutes an important facet of market orientation (Narver and Slater I 990), the sales function represents an importam subunit- in addition to the markering ftmction-within the market-oriented firm by performing the
356 Journal ofPersonal Sefling & Safes Management boundary-spanning role of linking ehe company to irs customers (Barnes et al. 2006; Futrell and Sager 1982; H o mburg and Jensen 2007). Therefore, we believe that sirnultaneously emphasizing market o rientation and rhe power of sales wi ll increase business performance through the timely anticipation of shifts in consurner preferences, behavior, and values, and organization-wide responsiveness to changing conditions. By assuming positive interaction effects for borh markering and sales with market orientation, we fo llow research resulrs on the interface betwecn markering and sales. W hile marketing has been characterized as rnore long-term and product oriented than sales, sales has been described as rnore short-term arienred and more arienred toward custorner relarionships (Cespedes 1995; Homburg and Jensen 2007; Rouzies et al. 2005) . Conrrary ro the common view that markering an d sales unirs' diffe rent o rientations are disadvantageous, H o mburg and Jensen (2007) show empirically that it is precisely these differences that enhance rnarket performance. Furthermore, alrhough the best-performing duster identified by Homburg, Jensen, and Kroh mer (2008) is characterized by a moderately strong markering department in comparison to ehe other clusters, the second- best-perforrning duster is characterized by a moderately powerful sales function, combined with a high Ievel of m arkering's marker knowledge. These resulrs also indicate that markering and sales units can complemenr one another. Drawing on these findings, we believe that market orientation's successful implementation is likewise enhanced by ernphasizing complementary perspectives. H ence, we argue that the effective implementation of market-oriented behavior involves not only the organizatio n of all markering instruments buc also themanagerneilt of customer conneccions and knowledge, and, cherefo re, in additio n to a product advocate, a powerful custo rner advocate is also essential (Merlo andAuh 2009; Verhoef and Leeflang 2009). This position has been confirmed by a set of field interviews we conducted with markering and sales experts that indicate the benefit of considering both perspectives. Thus, we propose the following:
Hypothesis 2: The interaction between the departmental power ojsales and market orientation is positiveLy associated with business pe~formance.
Effect of Competitive Strategy, Innovaciveness, and Market Orientation on D epartmental Power Several researchers confirrn that there is a !arge degree of variation in ehe power offirms' subunits (e.g., H inings et al. 1974; H o mburg, Workman, and Krohmer 1999; Perrow 1970; Piercy 1986). Consequently, although we expect the power of both markering and sales departments and market orientation to showpositive interaction effects o n business performance, the power might be spread between the markering and sales
Fall2013
units. This can be explained by contingency theory, which gives emphasis to rhe conrext of organizational departmenrs and suggests a differentiated response to diverging contexrual demands (Ambos and Schlegelmilch 2007). In our context, this indicates that ehe power of markering and sales becomes more meaningful, depending o n rhe context in which ehe . subuni es operate. In particular, we tesr for conringenr effects by incorporacing three dcterminants of ehe power of rnarkering and sales that previous studies have tested in a related context: competiti ve strategy, innovativeness, and marker o rientation. 1 Walker and Ruekert (1987) find rhat firms rhat foll ow different generic business strategies ado pt different structural designs. Similarly, Vorhies and Morgan (2003) study ehe relationships among markering organization srructure, business strategy, and pcrformance and demoostrate rhat different business strategies often require different m arkering organization structures. Both of these studies suggest that for each strategic oricntation, an ideal markering organization exists in which the configuration of structural and task characteristics enables the implementatio n of th e business' strategy in a way that Ieads to superior perform ance. Thus, Vorhies and Morgan (2003) adopt the perspective that a fit between the o rganizational suucture of a business and its strategic type Ieads to superior performance. Since departmental power is also usually considered a structural phenomenon (e.g., Nath and Mahajan 20 11 ), wc believe that rhis perspective is also useful for understanding the relationship between competitive strategy and departmental power. H owever, unlike Walker and Ruekert (1987) and Vorhies and Morgan (2003), we d o no t assume that there are conringent relationships between departmental power and competitive strategy. Rather, we framc business strategies as antecedents of funccional power. This is because we expect that different strategic orientations Iead to the varying importance of different functional capabilities (Homburg, Workman, and Krohmer 1999) . In o ur conceptual framework, we concentrate on Porter's (1980) distinction between a differen tiation and a low-cost strategy, as Homburg, Work rnan, and Krohmer (1999) found that these two strategies best reflect the way managers think about competitive strategy. Differentiation strategy refers to the extent to which firms compete by adapting rheir products and services to complex custom er requi rements (Po rter 1980). For firms fo llowing this Strategie approach, complex marketing capabilicies such as market research, competitor benchmarking, and customer relationship rnanagement are critical (Homburg, Artz, and Wieseke 20 12). Since th e exploratio n of market insights is typically a markering department core competency, ehe analyses of m arket players, customers, and competitors that the m arkering department provides could be considered highly important if the business unit pursues a differentiation strategy. Howeve r, to bc able to providc
relevant analyses, ehe markering department is highly dependent o n rhe sales function since usually rhe sales function is the owner of in-depth knowled ge on the market, customers, and competitors as a consequence of its activiries in the field. Since salespeople are in a uniqu e position to identify market intelligence and other critical data (Ingram et al. 2005), sales may also play a pivotal role in firms following a differentiation strategy. Moreover, firms are increasingly realizing the importan ce of sales-service differentiation strategies, indicating chat the quality of rhe sales organization's contacts with the customer m ay be an essential source of competitive advanrage, and, thus, help to differentiate from rivals in ehe future (e.g., ßradford et al. 2010; Hunterand Perreault 2007; Ulaga and Eggert 2006; Ulaga and Reinartz 20 11) . This Ieads us to hypothesize positive relationships between a differentiation strategy and the power of markering as weil as salcs:
Hypothesis 3: A dijferentiation strategy is positiveLy related to the departmental power ofmarketing. Hypothesis 4: A dijferentiation strategy is positiveLy related to the departmentalpower ofsales. A low-cost strategy requires the aggressive construction of efficient scale facilities, tight cost controls, and cost minimizarion in all areas (Porter 1980). Consequent!y, expensive markering activities tal
