Non-price determinants of automotive demand: Restyling matters most

This paper analyzes market share changes in automobile and light truck submarkets. We find that new product, as measured by restyling, represents the most consistent, dominant determinant of demand. On average a 10% reduction in relative price would yield only one-tenth the market share impact of a...

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Bibliographic Details
Published in:Journal of business research 2010-12, Vol.63 (12), p.1282-1289
Main Authors: Korenok, Oleg, Hoffer, George E., Millner, Edward L.
Format: Article
Language:English
Subjects:
Advertising
Automobile industry
Automobile pricing
Automobile pricing Warranty Safety appliances Rebranding Reliability
Brands
Demand
Demand analysis
Impact analysis
Manufacturing
Market analysis
Market share
Market shares
New products
Product design
Rebranding
Reliability
Repositioning
Safety appliances
Studies
Vehicles
Warranty
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Summary:This paper analyzes market share changes in automobile and light truck submarkets. We find that new product, as measured by restyling, represents the most consistent, dominant determinant of demand. On average a 10% reduction in relative price would yield only one-tenth the market share impact of a restyling. Alternatively, one would have to double one's relative advertising expenditures to match the impact of a restyling. Several demand determinants not previously modeled, including rebranding and warranty curtailments, were detrimental to domestic manufacturer market shares. Safety appliance adoptions and changes in vehicle reliability had minimal impact on demand.
ISSN:0148-2963
1873-7978
DOI:10.1016/j.jbusres.2009.09.008