Impact of Online Consumer Reviews on Sales: The Moderating Role of Product and Consumer Characteristics


Considering the ever increasing popularity of online consumer generated reviews, companies realize they can benefit a lot from this trend. One very relevant belief is that online consumer reviews can significantly influence a consumer’s purchasing decision via an online form of word-of-mouth promotion (WOM).

Review

Several researchers have studied the average effect of reviews on a product’s sales, but the article by Zhu & Zhang (2010) adopts the view that product- and consumer-specific characterisics can moderate this relationship. In their developed conceptual model (Figure 1), this governing effect is examined. Via an emperical analysis in the gaming industry based on an extensive data set, the researchers came up with some interesting results. One suggestion that arose, is that the role of reviews is crucial if other information sources are relatively scarce. Therefore, an absolute ‘nail’ for an online marketing strategy of less popular products that reside in the “long tail”, is to intensively manage review possibilities. Mainly because superior WOM via online reviews strongly influences its sales. Furthermore, since people are nowadays relatively experienced with the internet, companies should be aware about the notion that online reviews are more influential when a consumer has greater internet experience.

concept

Strengths

Although prior studies focused on the effects of online reviews on purchase decisions, they did not consider any other external factors. Therefore, this study was the first to empirically examine the contextual factors that can moderate this relationship. In order to do so the researchers were able to collect a lot of reliable sales-data via a leading market research firm and review-data from established and well-known reviewing websites. This enabled the researchers to carefully analyze the obtained set containing five years of data! This amount of data definitely improved the validity of the results. Besides, the researchers were able to account for certain biases due to promotion actions or popular purchasing periods. Moreover, the researchers resolved a bias that occurred in the study by Chevalier & Mayzlin (2006) since they calculated for potential differences in the amount of sales caused by a higher level of competition per game.

Weaknesses

A major weakness of the article is that some questionable assumptions are made. The most relevant one is that ‘online game players’ have greater internet experience than offline game players. Although these games make use of the internet, this is unrelated to reviewing and surfing on the internet via a computer. This requires completely different skills, and although these people may be more likely to have this experience, it does not say anything about relative levels of experience. Furthermore, players of offline games could simply prefer these games over online games, while these players also have great internet experience.

Discussion Points

The researchers claim a correlation between increased online reviews that result in higher incremental sales for products that currently have relatively high sales. Since this claim rests on a correlated effect, this does not mean there is a causal relationship. Therefore, the effect could also be the other way around, so the increase in online reviews could be a result of higher incremental sales.

To increase the generalizability of the results, other product categories need to be studied. As the researchers discuss inconsistent prior findings that resulted from other product categories, this could be a reason for the different outcomes (Jiang & Guo, 2015). As they propose themselves, products that are closer related to internet sales and online communities could have significant different reactions.

References

Chevalier, J. A., & Mayzlin, D. (2006). The effect of word of mouth on sales: Online Book Reviews. Journal of Marketing Research, August(43), 345-354.

Jiang, Y., & Guo, H. (2015). Design of consumer review systems and product pricing. Information Systems Research, 26(4), 714-730.

Zhu, F., & Zhang, X. (. (2010, March). Impact of online consumer reviews on sales: The moderating role of product and consumer characteristics. Journal of Marketing, 74(2), 133-148.

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