Marketing Research Seminar Series

Doctoral Student Research Presentations

Welcome and Keynote Address

Doctoral Student Research Presentations

Welcome and Keynote Address

We examine whether and how visual design of products has economically meaningful effects on demand and competition, focusing on the automobile market. Visual design has been challenging to empirically characterize in a manner that is human-interpretable yet sufficiently rich. We leverage a recently developed method to help achieve low-dimensional disentangled representations of visual design, using data from the UK automobile market across 2008-2017. We obtain human-interpretable visual characteristics that are orthogonal and can reconstruct the original design of all the products (make-models), thus spanning the range of products in the market. We incorporate these visual characteristics into a structural model of demand and supply based on the classic BLP framework. We quantify how economically meaningful quantities like elasticity vary across models with visual characteristics compared with the standard baseline without visual characteristics, and find a substantial economic impact. We also evaluate a counterfactual in which we remove a focal product's closest neighbor in functional (or visual) characteristics, and then comparing how the equilibrium quantities (prices, market shares) vary. We find that removing the closest ''visual neighbor'' has an effect similar to removing the closest ''functional neighbor,'' highlighting the economically meaningful role of visual characteristics. Additionally, we quantify the value of a specific visual redesign by examining a vehicle facelift that altered front-end design while leaving functional characteristics unchanged, and find that the redesign generated meaningful gains in market share and profit.