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Non-price determinants of automotive demand: Restyling matters most

  • Korenok, Oleg
  • Hoffer, George E.
  • Millner, Edward L.

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.

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Article provided by Elsevier in its journal Journal of Business Research.

Volume (Year): 63 (2010)
Issue (Month): 12 (December)
Pages: 1282-1289

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Handle: RePEc:eee:jbrese:v:63:y:2010:i:12:p:1282-1289
Contact details of provider: Web page: http://www.elsevier.com/locate/jbusres

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  7. Kim, Chung Koo, 1996. "The interaction between price and long-run variables in a multinational brand market," Journal of Business Research, Elsevier, vol. 37(1), pages 1-14, September.
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  9. Bresnahan, Timothy F., 1981. "Departures from marginal-cost pricing in the American automobile industry : Estimates for 1977-1978," Journal of Econometrics, Elsevier, vol. 17(2), pages 201-227, November.
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  11. Kwoka, John E, Jr, 1993. "The Sales and Competitive Effects of Styling and Advertising Practices in the U.S. Auto Industry," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 649-56, November.
  12. Delre, S.A. & Jager, W. & Bijmolt, T.H.A. & Janssen, M.A., 2007. "Targeting and timing promotional activities: An agent-based model for the takeoff of new products," Journal of Business Research, Elsevier, vol. 60(8), pages 826-835, August.
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  14. Boulding, William & Purohit, Devavrat, 1996. " The Price of Safety," Journal of Consumer Research, University of Chicago Press, vol. 23(1), pages 12-25, June.
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