Price advertising by manufacturers and dealers

Linli Xu, Kenneth C. Wilbur, Siddarth S, Jorge M. Silva-Risso

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

The central prediction of the current paper is that manufacturer price advertising may be a less effective tool for influencing demand than retailer price advertising. We manipulate the source of a price advertisement in an experiment run on a sample of pickup truck owners. Manufacturer price advertising leads to lower indicators of potential demand than dealer price advertising, even among consumers who are experienced with the brand. An econometric analysis of pickup truck sales, price, and advertising data shows that this effect is large enough to detect in market data. Manufacturer and dealer price advertising both increase the demand intercept and the responsiveness of demand to price, but the effects of dealer price advertising are larger. Although dealer price advertising is more effective than manufacturer price advertising, manufacturer price advertising may still be useful to reduce channel conflict.

Original languageEnglish (US)
Pages (from-to)2816-2834
Number of pages19
JournalManagement Science
Volume60
Issue number11
DOIs
StatePublished - Nov 1 2014

Fingerprint

Dealers
Trucks
Experiment
Responsiveness
Channel conflict
Prediction
Econometric analysis
Retailers
Market data
Owners

Keywords

  • Advertising
  • Automobiles
  • Channels
  • Choice modeling
  • Demand estimation

Cite this

Xu, L., Wilbur, K. C., S, S., & Silva-Risso, J. M. (2014). Price advertising by manufacturers and dealers. Management Science, 60(11), 2816-2834. https://doi.org/10.1287/mnsc.2014.1969

Price advertising by manufacturers and dealers. / Xu, Linli; Wilbur, Kenneth C.; S, Siddarth; Silva-Risso, Jorge M.

In: Management Science, Vol. 60, No. 11, 01.11.2014, p. 2816-2834.

Research output: Contribution to journalArticle

Xu, L, Wilbur, KC, S, S & Silva-Risso, JM 2014, 'Price advertising by manufacturers and dealers', Management Science, vol. 60, no. 11, pp. 2816-2834. https://doi.org/10.1287/mnsc.2014.1969
Xu, Linli ; Wilbur, Kenneth C. ; S, Siddarth ; Silva-Risso, Jorge M. / Price advertising by manufacturers and dealers. In: Management Science. 2014 ; Vol. 60, No. 11. pp. 2816-2834.
@article{567338ff67c846f2b0f4265551133a6f,
title = "Price advertising by manufacturers and dealers",
abstract = "The central prediction of the current paper is that manufacturer price advertising may be a less effective tool for influencing demand than retailer price advertising. We manipulate the source of a price advertisement in an experiment run on a sample of pickup truck owners. Manufacturer price advertising leads to lower indicators of potential demand than dealer price advertising, even among consumers who are experienced with the brand. An econometric analysis of pickup truck sales, price, and advertising data shows that this effect is large enough to detect in market data. Manufacturer and dealer price advertising both increase the demand intercept and the responsiveness of demand to price, but the effects of dealer price advertising are larger. Although dealer price advertising is more effective than manufacturer price advertising, manufacturer price advertising may still be useful to reduce channel conflict.",
keywords = "Advertising, Automobiles, Channels, Choice modeling, Demand estimation",
author = "Linli Xu and Wilbur, {Kenneth C.} and Siddarth S and Silva-Risso, {Jorge M.}",
year = "2014",
month = "11",
day = "1",
doi = "10.1287/mnsc.2014.1969",
language = "English (US)",
volume = "60",
pages = "2816--2834",
journal = "Management Science",
issn = "0025-1909",
publisher = "INFORMS Inst.for Operations Res.and the Management Sciences",
number = "11",

}

TY - JOUR

T1 - Price advertising by manufacturers and dealers

AU - Xu, Linli

AU - Wilbur, Kenneth C.

AU - S, Siddarth

AU - Silva-Risso, Jorge M.

PY - 2014/11/1

Y1 - 2014/11/1

N2 - The central prediction of the current paper is that manufacturer price advertising may be a less effective tool for influencing demand than retailer price advertising. We manipulate the source of a price advertisement in an experiment run on a sample of pickup truck owners. Manufacturer price advertising leads to lower indicators of potential demand than dealer price advertising, even among consumers who are experienced with the brand. An econometric analysis of pickup truck sales, price, and advertising data shows that this effect is large enough to detect in market data. Manufacturer and dealer price advertising both increase the demand intercept and the responsiveness of demand to price, but the effects of dealer price advertising are larger. Although dealer price advertising is more effective than manufacturer price advertising, manufacturer price advertising may still be useful to reduce channel conflict.

AB - The central prediction of the current paper is that manufacturer price advertising may be a less effective tool for influencing demand than retailer price advertising. We manipulate the source of a price advertisement in an experiment run on a sample of pickup truck owners. Manufacturer price advertising leads to lower indicators of potential demand than dealer price advertising, even among consumers who are experienced with the brand. An econometric analysis of pickup truck sales, price, and advertising data shows that this effect is large enough to detect in market data. Manufacturer and dealer price advertising both increase the demand intercept and the responsiveness of demand to price, but the effects of dealer price advertising are larger. Although dealer price advertising is more effective than manufacturer price advertising, manufacturer price advertising may still be useful to reduce channel conflict.

KW - Advertising

KW - Automobiles

KW - Channels

KW - Choice modeling

KW - Demand estimation

UR - http://www.scopus.com/inward/record.url?scp=84908567786&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84908567786&partnerID=8YFLogxK

U2 - 10.1287/mnsc.2014.1969

DO - 10.1287/mnsc.2014.1969

M3 - Article

AN - SCOPUS:84908567786

VL - 60

SP - 2816

EP - 2834

JO - Management Science

JF - Management Science

SN - 0025-1909

IS - 11

ER -