Marketing Letters

, Volume 27, Issue 1, pp 77–87 | Cite as

Modeling price-related consequences of the brand origin cue: An empirical examination of the automobile market

Article

Abstract

Price-related consequences of the country-of-origin (COO) cue have been widely neglected in the literature. This paper applies hedonic price analysis to examine a brand’s COO effect on new car prices. The application of our models to an extensive dataset demonstrates that prices of new cars reflect not only implicit prices of performance and technological characteristics but also price distortions that arise out of COO heterogeneity. Moreover, by allowing model parameters to vary across car type segments, we are able to capture patterns of differential attribute and COO effects on prices, which are indicative of implicit price discrimination strategies. The paper provides new interesting insights into critical issues for pricing strategy and demonstrates the role of brand origin, segments, and observed product differences in the price structure of the automobile market. Our findings yield important implications for manufacturers and researchers.

Keywords

Country-of-origin Pricing Car market Price premiums Hedonic price analysis 

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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Leeds University Business SchoolUniversity of LeedsLeedsUK
  2. 2.Department of Marketing & CommunicationAthens University of Economics and BusinessAthensGreece

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