Consumer Search in the U.S. Auto Industry: The Value of Dealership Visits

Yavorsky, Dan; Honka, Elisabeth; Chen, M. Keith

doi:10.2139/ssrn.3499305

Cited by 6 publications

(9 citation statements)

References 31 publications

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“…In our study, we observe a dealer's service quality in the context of all active dealers in a market and account for the geographical. In keeping with the prior literature (Honka 2014, Palazzolo and Feinberg 2015, Yavorsky and Honka 2021, we assume that when dealerships are densely located, search and switching costs are lower, and competition is fiercer.…”

Section: Consumer Search Learning and Geographical Competitionmentioning

confidence: 99%

“…Studies show that consumers visit several dealers before purchasing a new car, favoring areas with a dense presence of sellers. While visits provide significant informational benefits, travel costs are substantial considerations (Yavorsky and Honka 2021). Honka (2014) concludes that search costs are the primary driver of customer retention.…”

Section: Consumer Search Learning and Geographical Competitionmentioning

confidence: 99%

“…Faced with unsatisfactory service, they can walk away and continue their search. While substantial, search costs are small compared to the product cost (Yavorsky and Honka 2021) and may be less salient in brand selection. Additionally, the improvement in the quality of cars over time has decreased the risk of a bad purchase (Autopolis 2000), hence lowering the stakes.…”

Section: Theorymentioning

confidence: 99%

See 2 more Smart Citations

Are Dealers Still Relevant? How Dealer Service Quality Impacts Manufacturer Success

Golara

Dooley

Mousavi

2021

Production and Operations Management

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M ost automobile manufacturers use franchised dealers to distribute their products and to perform sales-related and after-sales services. However, the link between dealers' service quality and manufacturer performance is not well understood. Some studies suggest that these services' quality affects product sales, repeat sales, and brand reputation. Others posit that dealer services are a commodity, and their quality may only affect sales in the extremes. We constructed data representing sales and service quality ratings of 1078 U.S. automobile dealerships over a year in five different car classes. We find that the quality of after-sales services positively influences sales of the brand in the dealer's region. Manufacturers whose dealers struggle with after-sales services take a hit in market share even in markets where they enjoy superior competitive status. We also find that sales-related services gain importance in highly competitive markets where the manufacturer has few dealers and competitors have many.

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Section: Consumer Search Learning and Geographical Competitionmentioning

confidence: 99%

Section: Consumer Search Learning and Geographical Competitionmentioning

confidence: 99%

Section: Theorymentioning

confidence: 99%

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Are Dealers Still Relevant? How Dealer Service Quality Impacts Manufacturer Success

Golara

Dooley

Mousavi

2021

Production and Operations Management

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“…Ailawadi and Harlam (2009), Besanko et al (2005), McShane et al (2016), Nijs et al (2010)), as well as the literature on store choice and consumer search (e.g. Mojir and Sudhir (forthcoming), Yavorsky et al (2020)).…”

Section: Introductionmentioning

confidence: 99%

“…This literature studies consumers’ reactions to marketing causal variables (price and advertising) and considers the implications for consumers, firms, and regulators. Our analysis is also related to the extensive marketing literature on retail pass-through (e.g., Ailawadi and Harlam 2009; Besanko, Dubé, and Gupta 2005; McShane et al 2016; Nijs et al 2010) as well as the literature on store choice and consumer search (e.g., Mojir and Sudhir 2020; Yavorsky, Honka, and Chen 2020). Finally, our research is related to the literature on various other sin taxes, such as taxes on alcohol (e.g., Conlon and Rao 2015, 2020; Miravete, Seim, and Thurk 2017, 2018), cigarettes (e.g., Harding, Leibtag, and Lovenheim 2012; Lovenheim 2008; Merriman 2010), and cannabis (e.g., Hollenbeck and Uetake 2018; Jacobi and Sovinsky 2016).…”

mentioning

confidence: 99%

The Impact of Soda Taxes: Pass-Through, Tax Avoidance, and Nutritional Effects

Seiler¹,

Tuchman²,

Yao³

2020

Journal of Marketing Research

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The authors analyze the impact of a tax on sweetened beverages using a unique dataset of prices, quantities sold, and nutritional information across several thousand taxed and untaxed beverages for a large set of stores in Philadelphia and its surrounding area. The tax is passed through at an average rate of 97%, leading to a 34% price increase. Demand in the taxed area decreases by 46% in response to the tax. Cross-shopping to stores outside of Philadelphia offsets more than half of the reduction in sales in the city and decreases the net reduction in sales of taxed beverages to only 22%. There is no significant substitution to bottled water and modest substitution to untaxed natural juices. The authors show that tax avoidance through cross-shopping severely constrains revenue generation and nutritional improvement, thus making geographic coverage an important policy decision.

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