July 3, 2017

Darla Moore School of Business marketing professors Rafael Becerril-Arreola and Chen Zhou recently published research in the Journal of Marketing. They looked at the monthly sales of almost all cars on the market from 2009 to 2015 to determine who benefits — the car dealers or the car manufacturers — from improvements in facilities and interactions with service staff.

The water cooler story

Contrary to what they expected, the researchers found that “improving,” or “emphasizing,” relational service at a dealership is likely to benefit the dealer but hurt the manufacturer.

“We found that improving the dealership environment — basically the facility, the managers —is in fact not good for dealers’ performance,” Zhou said.

The dinner party story

These findings aren’t uniform across car models, so dealerships should base their marketing strategies on the type of cars they’re selling. The professors believe these results could be driven by consumer income.

“Consumers with higher income tend to be more time sensitive,” Becerril-Arreola said. “Therefore, they care more about the efficiency of service than the friendliness of the staff.”

He goes on to explain that certain types of service could benefit both parties.

“The goal was to find out who was winning and who was losing,” Becceril-Arreola said. “We found that there are ways for dealers and manufacturers to solve this conflict.”

Zhou agreed, saying, “Improving overall service in general leads to better performance outcome.”

The full story

If you’re interested in learning more about their findings, read the whole research article here.

Becerril-Arreola is conducting other income research as well, looking at the effect of income inequality on products available in supermarkets.

Zhou has other service industry research underway, looking into airline service performance.

By Madeleine Vath