Why Do Online Product Reviews Have a J-Shaped Distribution? Overcoming Biases in Online Word-of-Mouth Communication
Abstract
Online word-of-mouth communication in the form of product reviews is a major information source for consumers and marketers about product quality. The literature has used the mean of online reviews to predict product sales, assuming that the mean reflects product quality. However, using a combination of econometric, experimental, and analytical results, we show that the mean is a biased estimator of product quality due to two self-selection biases (purchasing and under-reporting bias). First, econometric results with secondary data from Amazon.com show that almost all products have an asymmetric bimodal (J-shaped) distribution with more positive than negative reviews. Second, experimental results where all respondents wrote reviews show that their reviews have an approximately normal distribution with roughly equal number of positive and negative reviews. This implies two biases: (1) purchasing bias - only consumers with favorable disposition towards a product purchase the product and have the opportunity to write a product review, and (2) under-reporting bias - consumers with polarized (either positive or negative) reviews are more likely to report their reviews than consumers with moderate reviews. This results in a J-shaped distribution of online product reviews that renders the mean a biased estimator of product quality. Third, we develop an analytical model to derive the conditions for the mean to become an unbiased estimator of product quality. Based on these conditions, we build a new model that integrates three distributional parameters - mean, standard deviation, and the two modes of the online product reviews (to overcome under-reporting bias) and product price (to overcome purchasing bias). This model is shown to be a superior predictive model of future product sales compared to competing models.
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- "In particular, online consumers tend to focus on negative reviews in order to reduce the risk of loss more than enhancing the gain (Kahneman & Tversky, 1979). This strongly supports the notion of negativity bias arguing that rational consumers recognize the purchasing bias, and they compensate for this bias by taking negative reviews more seriously and discounting the positive reviews (Hu, Pavlou & Zhang, 2007). From the enjoyment aspect, the concept of hedonic consumption with regard to information search process suggests that consumers are likely to consider the excitement and pleasure that accompany purchase (Vogt & Fesenmaier, 1998), which supports the higher influence of positive reviews on inducing perceived enjoyment than negative reviews. "
[Show abstract] [Hide abstract] ABSTRACT: Consumers tend to seek heuristic information cues to simplify the amount of information involved in tourist decisions. Accordingly, star ratings in online reviews are a critical heuristic element of the perceived evaluation of online consumer information. The objective of this article is to assess the effect of review ratings on usefulness and enjoyment. The empirical application is carried out on a sample of 5,090 reviews of 45 restaurants in London and New York. The results show that people perceive extreme ratings (positive or negative) as more useful and enjoyable than moderate ratings, giving rise to a U-shaped line, with asymmetric effects: the size of the effect of online reviews depends on whether they are positive or negative.- "Investment in promotion, sufficient that the target market is exposed multiple times to good quality materials and well-designed messages, is important if high levels of recruitment are to be achieved, and therefore good levels of WOM generated. While it is widely accepted that enjoyment is associated with exercise adherence, policy makers should consider that in order to activate output WOM, the most influential marketing tool, levels of enjoyment need to be very, not just moderately, high [42,44,45] . In addition, an intervention may require a certain longevity in order to fully capitalize on the sales impact of WOM. "
[Show abstract] [Hide abstract] ABSTRACT: Background: The beneficial effect of physical activity for the prevention of a range of chronic diseases is widely acknowledged. These conditions are most prevalent in low-income groups where physical activity levels are consistently lower. Social marketing is the government's recommended approach to promoting physical activity but evidence of its effectiveness is limited. The purpose of this study was to examine the effect of a social marketing campaign on the monthly recruitment, attendance and retention levels at a community-based physical activity programme in a low income area. Methods: A six-month social marketing campaign was designed and delivered in a highly-deprived suburban neighbourhood. Analysis of variance was used to assess effects on recruitment and attendance. χ2 tests of independence were used to compare dropouts and adherers and effectiveness of recruitment mechanisms. Percentages were used to compare adherence rates at intervention, pre-existing sessions in the intervention area and control area sessions. Results: Attendance data were collected weekly and presented and analysed monthly to provide a view of changing participation over the six month intervention period, as compared to attendance at pre-existing sessions in the intervention area and in a control area. Recruitment into intervention sessions was significantly greater than into pre-existing and control area sessions in Month 1 (18.13v1.04 p = .007, 18.13v.30 p=.005), Month 5 (3.45v.84 p=.007, 3.45v.30 p<.001) and Month 6 (5.60v.65 p<.001, 5.60v.25 p<.001). Attendance at intervention sessions was significantly greater in all six months than at pre-existing and control area sessions; Month 1 (38.83v7.17 p<.001, 38.83v4.67, p<.001), Month 2 (21.45v6.20 p<.001, 21.45v4.00, p<.001), Month 3 (9.57v6.15 p<.001, 9.57v3.77, p<.001), Month 4 (17.35v7.31 p<.001, 17.35v4.75, p<.001), Month 5 (20.33v8.81 p=.007, 20.33v4.54 p<.001) and Month 6 (28.72v8.28 p<.001, 28.72v.4.00 p<.001). Drop-out rates in the intervention area were similar to the control area (66.2%v69.9%), and considerably lower than in pre-existing sessions (83%). In months one and two, traditional marketing techniques (posters/outdoor banners/flyers) had the greatest influence on recruitment compared to word of mouth communication (84.5%v15.5%). In months five and six word of mouth influenced 57.5% of new recruits. Conclusions: Direct comparisons with other programmes were difficult due to a lack of standard definitions of recruitment and adherence and limited reporting of findings. However when compared to pre-existing sessions and sessions delivered in a control area, monthly attendance patterns indicated that a reasonably well funded social marketing campaign increased recruitment into exercise sessions, maintained good levels of attendance and reasonable levels of adherence. Good attendance levels support on-going campaign success by offering evidence of peer and social support for the activity and increasing opportunities for social interaction. They also increase the capacity and reach of the word of mouth communication channels, the most effective form of promotion. Further study into methods of improving exercise adherence is required.- "In addition and in contrast to the previous work, corrections, which are necessary due to the " Jshaped distribution " of online reviews, are applied . Reasons and implications of this " J-shaped distribution " are discussed in several publications (Hu et al., 2007; Hu et al., 2009). Online reviews are used for several other research projects, for an overview see (Tang et al., 2009). "
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