Understanding Brand and Dealer Retention in the New Car Market: The Moderating Role of Brand Type

51 Pages Posted: 28 Sep 2004

See all articles by Peter C. Verhoef

Peter C. Verhoef

University of Groningen - Department of Marketing & Marketing Research

Bas Donkers

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus Research Institute of Management (ERIM); Tinbergen Institute

Fred Langerak

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM); Erasmus Research Institute of Management (ERIM)

Date Written: 17 2004 9,

Abstract

Dealers are assumed to contribute positively to brand retention. We argue that the type of brand moderates the effect of dealer performance on brand retention. Moreover, dealer retention is determined by different drivers for dealers selling different types of brands. To analyze our claims empirically, we collected data on brand retention and dealer retention among consumers who recently purchased a new car. Our findings show that dealers of prestige and economy brands do not contribute to brand retention. Only dealers selling volume brands are in a position to improve brand retention rates. A simulation reveals however that the contribution of volume dealers to brand retention is rather small in comparison to the impact of brand-related variables on brand retention. In line with the notion of brand-dealer fit we also find that the impact of dealer extrinsic quality (e.g., dealer showrooms) and dealer payment equity on dealer retention differs between prestige, volume, and economy brands. Extrinsic dealer quality affects dealer retention most for dealers selling prestige brands and dealer payment equity is the most important determinant of retention for dealers selling economy brands.

Keywords: customer loyalty, distribution channels, customer value

JEL Classification: M, C44, M31

Suggested Citation

Verhoef, Peter C. and Donkers, Bas and Langerak, Fred, Understanding Brand and Dealer Retention in the New Car Market: The Moderating Role of Brand Type (17 2004 9,). ERIM Report Series Reference No. ERS-2004-084-MKT. Available at SSRN: https://ssrn.com/abstract=595014

Peter C. Verhoef (Contact Author)

University of Groningen - Department of Marketing & Marketing Research ( email )

Netherlands

Bas Donkers

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
Rotterdam, NL 3000 DR
Netherlands
+31 10 408 2411 (Phone)
+31 10 408 9169 (Fax)

HOME PAGE: http://people.few.eur.nl/donkers/

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 408 2411 (Phone)
+31 10 408 9169 (Fax)

HOME PAGE: http://people.few.eur.nl/donkers/

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Fred Langerak

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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