ABSTRACT

Purpose – This paper aims to analyze the distinct pattern of clustering of imported automobile distributors and provide evidence for the phenomenon using Korean data. Research design, data, and methodology – In this paper, we use data from Korea Automobile Importers & Distributors Association of 23 foreign automobile brands to evaluate the degree of concentration of showrooms using locational Gini index. We identify possible causes for the high level of clustering from two perspectives; 1) on the distributors’ side and 2) on the customers’ side. Results – We find a very strong locational concentration of imported automobile showrooms within close vicinity in the major cities and districts in Korea. Locational Gini coefficients are 0.1024 at the national level, 0.1836~0.3763 at city level, and 0.3941~0.4311 at district level on a [0,0.5] scale. Conclusions – Luxury foreign automobile customers tend to shop extensively around multiple brands prior to their ideal model selection. Accordingly, the imported automobile distributors cluster together close to their direct competitors in order to give a good comparison opportunity for the potential customers. This will maximize the probability of the visits of potential customers and lead to successful sales performance.

KEYWORD

Imported Automobile Distributors, Locational Gini Coefficient, Optimal Retail Location, Clustering, Conspicuous Consumption.

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