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"Selling Automobiles"
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Women Behind the Wheel
\"Women are a growing part of the new car business--both as buyers and sellers.\" (TOMORROW'S MORNING) About 12,000 U.S. women sell cars, and many others work in other dealership positions. A survey showed that buyers appreciate car saleswomen and that \"women tied out or out-scored men in 13 of 15 categories-- especially when it came to appearance, dress, honesty and concern.\"
Magazine Article
Organization and Bargaining: Sales Process Choice at Auto Dealerships
This paper examines how firms' organizational form affects prices negotiated. Negotiated prices are one factor determining whether a vendor or customer captures the value from a transaction. Firms that systematically negotiate more effectively capture more value. Research has investigated individual- and market-level determinants of negotiation outcomes, but little has been done on the firm-level determinants of negotiated prices. I present a first look at one feature, sales process: whether salespeople handle the entire sale in parallel or customers begin with less experienced salespeople who can escalate difficult assignments. I model firms' choice of sales process as a biform game and test predictions of the model using a combination of transaction-level data on new car purchases in the United States and a unique survey of dealership management practices. I find that a serial process has implications consistent with improving firms' bargaining power and reducing customers' outside options.
This paper was accepted by Bruno Cassiman, business strategy.
Journal Article
Is Leasing Greener Than Selling?
Based on the proposition that leasing is environmentally superior to selling, some firms have adopted a leasing strategy and others promote their existing leasing programs as environmentally superior to \"green\" their image. The argument is that because a leasing firm retains ownership of the off-lease units, it has an incentive to remarket them or invest in designing a more durable product, resulting in a lower volume of new production and disposal. However, leasing might be environmentally inferior because of the direct control the firm has over the off-lease products, which may prompt the firm to remove them from the market to avoid cannibalizing the demand for new products. Motivated by these issues, we adopt a life-cycle environmental impact perspective and analytically investigate if leasing can be both more profitable and have a lower total environmental impact. We find that leasing can be environmentally worse despite remarketing all off-lease products and greener than selling despite the mid-life removal of off-lease products. Our analysis also provides insights for environmental groups and entities that use different approaches to improve the environmental performance of business practices. We show that imposing disposal fees or encouraging remanufacturing, under some conditions, can actually lead to higher environmental impact. We also identify when educating consumers to be more environmentally conscious can improve the relative environmental performance of leasing.
This paper was accepted by J. Miguel Villas-Boas, marketing.
Journal Article
Impacts of power structure and financing choice on manufacturer’s encroachment in a supply chain
This paper investigates the implication of three channel power structures (i.e., manufacturer-led, vertical Nash and retailer-led) on supply chain management in a setting where a manufacturer determines whether to introduce a direct sales channel and a retailer has two capital status (i.e., capital-constrained status or capital-sufficient status). The capital-constrained retailer faces the decision of financing by trade credit or bank credit. We find that compared to cooperating with a capital-sufficient retailer, cooperating with a capital-constrained retailer will make the manufacturer bear a higher encroachment cost. Surprisingly, the capital-constrained retailer choosing trade credit financing may deter the manufacturer’s encroachment behavior, which means that trade credit financing has a positive financing effect with manufacturer encroachment. However, bank credit financing always makes the retailer worse off after encroachment, and the positive trade credit financing effect achieves the most efficient performance under manufacturer-led structure, yet remarkably impoverished under retailer-led structure. In addition, although conventional wisdom suggests that the manufacturer will lower the wholesale price to boost retail channel’s demand with encroachment, we obtain a different conclusion by demonstrating that manufacturer encroachment has a negative wholesale price effect that the manufacturer will raise the wholesale price after encroachment to ensure that direct sales channel enjoys a price advantage in a Bertrand competition market. Interestingly, we find that retailer-led is the most conducive structure to manufacturer’s encroachment, and manufacturer-led is the most unfavorable structure for manufacturer’s entry except when the manufacturer cooperates the capital-sufficient retailer in a high-risk market. Furthermore, with the increase of channel competition/market risk/production cost, the manufacturer has less motivation to enter the market.
Journal Article
Invest in Information or Wing It? A Model of Dynamic Pricing with Seller Learning
Pricing products such as used cars, houses, and artwork is often challenging, because each item is unique, and the seller, ex ante, lacks information about the demand for individual items. This paper develops a dynamic pricing model for products with significant item-specific demand uncertainty, in which a forward-looking seller learns about the item-specific demand through an initial assessment, as well as during the selling process. The model demonstrates how seller learning, through several mechanisms, can lead to the commonly observed downward trend in the prices of individual items. These mechanisms include the seller’s optimal adjustment of prices over time to account for the dynamic adverse selection of unsold items and the diminishing option value in future learning. The model is estimated using novel panel data of a leading used-car dealership. Counterfactual experiments show that the value of learning in the selling process is $203 per car. Conditional on subsequent learning in the selling process, the initial assessment further improves profit per car by $139. With the dealer’s net profit per car being about $1,150, these estimates suggest a potentially high return to taking an information-based approach toward pricing products with item-specific demand uncertainty.
This paper was accepted by Juanjuan Zhang, marketing.
Journal Article
Advance selling of uncertain demand in low-carbon supply chain
PurposeThe development of low-carbon production is impeded by the investment costs of green technology research and development (R&D) and carbon emission reduction while facing the uncertain risk of emission reduction investment. With the government's carbon emission constraints, green manufacturers implement the advance selling strategy to increase both profit and reduction level. However, few studies consider the consumer's green preference and emission constraints in advance selling market and spot market independently. The authors' paper investigates the optimal strategies of advance selling pricing and reduction effort for green manufacturers to maximize profits.Design/methodology/approachThe authors' paper designs a stochastic model and investigates the manufacturer's optimal strategies of advance selling price and emission reduction efforts by categorizing different purchasing periods of low-carbon consumers. With the challenges of uncertain demand and government's emission constraints, the authors' develop the non-linear optimization model to investigate the manufacturer's profit-oriented decisions.FindingsThe results show the government's carbon constraints cannot influence the manufacturer's profit, but the consumer's low-carbon preference in the advance selling period can. Interestingly, the manufacturer will make fewer reduction efforts even when the consumers have stronger environmental awareness. In addition, the increasing consumer price sensitivity will exacerbate the profit loss from mandatory emissions reduction. Overall, for achieving a win–win situation between emission reduction and profit growth, green manufacturers should not only consider the sales strategies, market demand, and government constraints in a low-carbon market, but also pay attention to the uncertainty of green technology innovation.Originality/valueWith the consideration of the government's carbon emission constraints, uncertain demand, and low-carbon consumer's preferences, the authors' study innovatively incorporates the joint impacts of advance selling strategy and emission reduction effort strategy and then differentiates between two cases that pertain to the diverse carbon emission regulations.
Journal Article
The Role of ChatGPT in Elevating Customer Experience and Efficiency in Automotive After-Sales Business Processes
Purpose: The advancements in deep learning and AI technologies have led to the development of such language models, in 2022, as OpenAI’s ChatGPT. The primary objective of this paper is to thoroughly examine the capabilities of ChatGPT within the realm of business-process management (BPM). This exploration entails analyzing its practical application, particularly through process-mining techniques, within the context of automotive after-sales processes. Originality: this article highlights the issue of possible ChatGPT application in selected stages of after-sales processes in the automotive sector. Methods: to achieve the main aim of this paper, methods such as a literature review, participant observation, unstructured interviews, CRISP-DM methodology, and process mining were used. Findings: This study emphasizes the promising impact of implementing the ChatGPT OpenAI tool to enhance processes in the automotive after-sales sector. Conducted in 2023, shortly after the tool’s introduction, the research highlights its potential to contribute to heightened customer satisfaction within the after-sales domain. The investigation focuses on the process-execution time. A key premise is that waiting time represents an additional cost for customers seeking these services. Employing process-mining methodologies, the study identifies stages characterized by unnecessary delays. Collaborative efforts with domain experts are employed to establish benchmark durations for researched processes’ stages. The study proposes the integration of ChatGPT to improve and expedite stages, including service reception, reception check-out, repair and maintenance, and claim repair. This holistic approach aligns with the current imperatives of business-process improvement and optimalization, aiming to enhance operational efficiency and customer-centric service delivery in the automotive after-sales sector.
Journal Article
Research on Core Competency Indicators for Battery Electric Vehicle Sales Personnel: Aligning with SDG Goals for Sustainable Mobility and Workforce Development
This research investigates the core competency indicators required for battery electric vehicle (BEV) sales personnel to effectively contribute to the growth of the BEV industry and the transition toward sustainable mobility. As global efforts to reduce carbon emissions intensify, this study identifies the necessary competencies to equip BEV sales teams in navigating the complexities of BEV adoption. This study employs a structured Delphi methodology, gathering insights from a panel of 15 industry professionals, to define and validate key competency dimensions. These competencies are categorized into four main dimensions—professional knowledge, professional ability, professional attitude, and personal traits—and further subdivided into 20 sub-dimensions and 58 specific indicators. Essential competencies include technical expertise in BEV technology, communication skills, customer relationship management, sales techniques, and proficiency in after-sales services. The findings emphasize the significant role of continuous learning, work attitude, and the integration of digital tools in driving sales effectiveness and customer trust. Furthermore, the competency framework developed in this study aligns with the United Nations Sustainable Development Goals (SDGs), particularly SDG 9 (industry, innovation, and infrastructure), SDG 11 (sustainable cities and communities), and SDG 4 (quality education). The framework offers practical insights for recruitment, training, and performance evaluation, ensuring that BEV sales personnel are well-prepared to foster the widespread adoption of electric vehicles, thereby contributing to a sustainable and low-carbon future.
Journal Article