THE SALES AND COMPETITIVE EFFECTS OF STYLING AND ADVERTISING PRACTICES IN THE UNITED-STATES AUTO INDUSTRY

This paper utilizes a detailed data set on most U.S. car models over a 22-year period to determine the impact of advertising and product styling. It finds that, while advertising and style change each increases a model's sales, advertising is short-lived but styling has a much longer impact. Rivals' styling reduces own model sales to the point that the overall market effect is self-cancelling. Rivals' advertising, by contrast, does not greatly affect own sales. so that marketwide advertising does increase total sales. These results add several twists to previous analyses of this industry.