This paper explores the impact of the direct sales model on customer perception within the automotive industry, particularly in the context of digital transformation accelerated by the COVID-19 pandemic. By comparing traditional dealership-based sales models with the direct-to-consumer approach, the research aims to understand how these models influence consumer behavior and decision-making processes. The study highlights the growing importance of digital channels, price transparency, and customer-centric strategies, providing insights into the potential for Original Equipment Manufacturers (OEMs) to enhance customer loyalty and brand perception through innovative sales models.
Table of Contents
1 Introduction
2 Literature Review
2.1 Customer Perception of the Traditional Sales Model
2.1.1 Key Concept and Characteristics
2.1.2 Customer Perception
2.2 Customer Perception in the Direct Sales Model
2.2.1 Key Concept and Characteristics
2.2.2 Customer Perception
2.3 Comparison of Customer Perceptions
3 Hypothesis Development
4 Discussion & Managerial Implications
Objectives and Topics
This thesis examines the ongoing transformation of distribution strategies in the automotive industry, specifically focusing on the shift from traditional dealership-based sales models to direct-to-consumer (or agency) models. The primary research goal is to understand how these different models influence customer perception, identify consumer pain points, and determine how Original Equipment Manufacturers (OEMs) can enhance customer satisfaction and loyalty in an era defined by digital innovation.
- The evolution of automotive distribution from Traditional Distribution Models (TDM) to Agency Sales Models (ASM).
- Comparative analysis of customer perception across different sales channels.
- The impact of price transparency on consumer purchase decisions and brand loyalty.
- Managerial implications for OEMs and dealers navigating the transition to direct-to-consumer strategies.
Excerpt from the Book
2.1 Customer Perception of the Traditional Sales Model
From the dawn of the automotive era to the present day, the TDM has become deeply embedded in how customers experience, engage and build relationships within the automotive industry. Matti Porho, group owner of dealerships of Volkswagen in Northern Finland, specifies the immense time span of this approach: "The [traditional sales model] has essentially been in place ever since General Motors first created it in 1915," (as cited in Lee, 2020).
This chapter will critically reflect on the key concept and enduring characteristics of the traditional sales model that have shaped the customer experiences over the years by first creating an industry-specific theoretical basis for the concept. Finally, the customer perception of the model is examined.
In general, the choice of a distribution approach is particularly relevant for profit-oriented companies, as related distributional activities incorporate direct proximity to sales transactions. Here, the personal interaction with the consumer has central importance (Homburg, 2020, p. 941). As compared to communicational activities, the role of the individual customer plays a much more significant role in sales (Homburg, 2020, p. 941).
Summary of Chapters
1 Introduction: This chapter highlights the automotive industry's traditional lag in digitalization and its subsequent pressure to transform business models due to the global pandemic and changing consumer expectations.
2 Literature Review: The chapter explores the theoretical foundations and characteristics of both the traditional dealership-based model and the emerging direct-to-consumer (agency) model, while analyzing how each influences consumer experience and perception.
3 Hypothesis Development: Building on the reviewed literature, this section proposes hypotheses regarding the impact of increased price transparency within direct sales models on customer loyalty and brand switching behavior.
4 Discussion & Managerial Implications: This chapter addresses the strategic challenges OEMs and dealers face during the transition, emphasizing the need for aligned stakeholder interests and a renewed focus on customer-centric service operations.
Keywords
Automotive Industry, Direct Sales Model, Agency Sales Model, Traditional Distribution Model, Customer Perception, Customer Journey, Price Transparency, Digital Transformation, OEM, Dealership, Customer Engagement, Purchase Intention, Brand Loyalty, Distribution Strategy, Consumer Expectations
Frequently Asked Questions
What is the core subject of this thesis?
The thesis investigates the shift in automotive sales distribution strategies, specifically exploring the transition from traditional franchised dealerships to direct-to-consumer or agency sales models.
What are the central thematic fields?
The core themes include automotive distribution models, customer journey management, the psychological impact of price dynamics, and the digitalization of manufacturing-to-consumer interactions.
What is the primary research objective?
The objective is to analyze how the choice of sales model influences customer perception, to identify consumer pain points, and to explore how OEMs can better meet customer expectations to foster long-term loyalty.
Which scientific methods were employed?
The research relies on a comprehensive literature review, critically analyzing existing consulting reports, case studies, academic theories on distribution, and consumer surveys provided by industry experts.
What does the main body cover?
It provides a comparative analysis of traditional vs. direct sales models, examines the specific pain points associated with dealership interactions, and theorizes on the benefits of centralized, transparent pricing structures.
What are the key descriptors for this work?
The work is characterized by terms such as Digital Transformation, Agency Sales Model (ASM), Customer Centricity, and Price Transparency.
How does the Agency Sales Model (ASM) alter the dealer's role?
In the ASM, dealers shift from being owners of inventory to acting as agents or "customer experience centers," receiving commissions for sales and services while the OEM retains greater control over pricing and customer data.
Why is price transparency critical in the direct sales model?
Price transparency is vital because it addresses a major consumer pain point in traditional models, directly influencing perceived product value, brand trust, and ultimately reducing brand switching rates.
What psychological phenomenon is linked to the trade-in process?
The thesis connects the trade-in process to the "endowment effect," where consumers seek higher values for items they currently possess, which can ironically increase their willingness to pay for a new vehicle when managed correctly through trade-in promotions.
- Quote paper
- Manu Hilgard (Author), 2024, Customers' Perception of the Direct Sales Model in the Automotive Industry, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/1502768
