How Important is Design for the Automobile Value Chain?

30 Pages Posted: 30 Oct 2015

See all articles by Hallie Cho

Hallie Cho

INSEAD

Sameer Hasija

INSEAD - Technology and Operations Management

Manuel Sosa

INSEAD

Date Written: October 30, 2015

Abstract

By using user generated content (UGC), specifically customer ratings, this paper disentangles the role of different dimensions of product quality in influencing consumer choice. We use a structural estimation model with endogenous prices and heterogeneous customer preferences to show that aesthetical design is the most salient factor of product quality in determining an automobile’s market share. Our results have important implications on an automobile manufacturer’s internal resource allocation strategy. We also highlight the changing role of on-line product review forums in the automobile industry’s value chain.

Keywords: Product Design, Product Quality Management, User Reviews, Structural Estimation, Automobile Industry

Suggested Citation

Cho, Hallie and Hasija, Sameer and Sosa, Manuel, How Important is Design for the Automobile Value Chain? (October 30, 2015). INSEAD Working Paper No. 2015/86/TOM. Available at SSRN: https://ssrn.com/abstract=2683913 or http://dx.doi.org/10.2139/ssrn.2683913

Hallie Cho

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Sameer Hasija

INSEAD - Technology and Operations Management ( email )

Boulevard de Constance
77 305 Fontainebleau Cedex
France

Manuel Sosa (Contact Author)

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

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