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The Effect of Word of Mouth on Sales: Online Book Reviews
Abstract
The creation of online consumer communities to provide product reviews and advice has been touted as an important, albeit somewhat expensive component of Internet retail strategies. In this paper, we characterize reviewer behavior at two popular Internet sites and examine the effect of consumer reviews on firms' sales. We use publicly available data from the two leading online booksellers, Amazon.com and BarnesandNoble.com, to construct measures of each firm's sales of individual books. We also gather extensive consumer review data at the two sites. First, we characterize the reviewer behavior on the two sites such as the distribution of the number of ratings and the valence and length of ratings, as well as ratings across different subject categories. Second, we measure the effect of individual reviews on the relative shares of books across the two sites. We argue that our methodology of comparing the sales and reviews of a given book across Internet retailers allows us to improve on the existing literature by better capturing a causal relationship between word of mouth (reviews) and sales since we are able to difference out factors that affect the sales and word of mouth of both retailers, such as the book's quality. We examine the incremental sales effects of having reviews for a particular book versus not having reviews and also the differential sales effects of positive and negative reviews. Our large database of books also allows us to control for other important confounding factors such as differences across the sites in prices and shipping times.
... via Keepa, which comprises over 3 million products, a ground coffee product with a sales rank of 60,000 has higher sales than a tea product with a sales rank of 120,000. This inverse relationship between sales and rankings has been widely used in empirical research to study various product and seller attributes (Reimers and Waldfogel 2021;Sun 2012;Chevalier and Mayzlin 2006). Our analysis uses 90-day average sales rankings to smooth short-term fluctuations. ...
... Table 2 also presents important control variables that prior research has shown to influence online purchasing behavior: BuyBox price, average rating, and number of ratings. The BuyBox price represents the default price displayed to customers when multiple sellers offer the same item (Reimers and Waldfogel 2021;Chevalier and Mayzlin 2006). It is the price associated with the "Add to Cart" button and typically belongs to the seller Amazon's algorithm selects based on factors including price, seller rating, and fulfillment method. ...
... The first is the natural logarithm of BuyBox prices. Economic theory suggests that price is a significant driver of sales, and previous studies on Amazon's sales rankings have included product prices, finding a negative relationship between price and sales (Chevalier and Mayzlin 2006;Reimers and Waldfogel 2021). Within our fixed effects specification, the coefficient on BuyBox price captures how price changes for the same product over time correlate with changes in sales rank, controlling for all time-invariant product characteristics such as package size, product type, and quality tier. ...
This study examines the relationship between grocery stockouts and sales performance on Amazon's marketplaces in five countries—Canada, France, Germany, the United Kingdom, and the United States. Using a dataset that comprises more than 290,000 distinct grocery products, we find that Amazon has higher sales and lower stockout rates than its third-party sellers. Our analysis also reveals strong negative correlations between stockout rates and sales performance across all countries. Specifically, when products are unavailable for a 90-day period, average sales rankings across all seller types are 14%–67% higher, indicating lower sales performance. The correlation between stockouts and sales rankings appears stronger for Amazon's own products compared to those sold by third-party sellers. These results highlight how grocery inventory availability relates to sales performance across different seller types in Amazon's e-commerce ecosystem, with implications for both platform operators and third-party sellers.
... For businesses, harnessing online reviews to influence consumer decisions has become a cornerstone of marketing strategies (Burtch et al., 2018). Chevalier and Mayzlin (2006) demonstrated that online reviews significantly affected book sales on Amazon.com, for example. ...
... This study offers several key contributions to the understanding of online review dynamics and consumer behavior. Previous research has largely focused on the direct impact of review valence on purchase intentions and product attitudes (Chevalier & Mayzlin, 2006;Cheung et al., 2008). In contrast, this study shifted the emphasis to the underlying process of information adoption. ...
... Much of the existing literature on online reviews is based on Western consumer behavior (Chevalier & Mayzlin, 2006;Burtch et al., 2018). By situating the research within a Chinese cultural context, this study not only tested the generalizability of the S-O-R framework and RFT, but also offered valuable empirical evidence for localized digital marketing strategies. ...
Using the Stimulus-Organism-Response (S-O-R) framework, this paper examines how review valence influences information adoption in e-commerce, highlighting the mediating role of the perceived usefulness of online reviews and the moderating effects of two distinct regulatory focuses. Empirical results from a survey of Chinese consumers reveal that the perceived usefulness of online review mediates the relationship between review valence and information adoption. Consumers with a promotion focus are more likely to adopt positive reviews, while those with a prevention focus are more inclined to adopt negative reviews. Furthermore, situational regulatory focus further also moderates this relationship, with consumers browsing promotion-focused products more likely to adopt positive reviews and those evaluating prevention-focused products more likely to adopt negative reviews. These findings provide valuable insights into online review adoption and offer practical implications for optimizing review strategies on e-commerce platforms.
... The influence of peer reviews and ratings is a prominent factor in online purchasing decisions. Research indicates that consumers are more likely to trust recommendations from others, especially if they perceive those individuals as similar to themselves (Chevalier & Mayzlin, 2006). In the fast food industry, customers often consult online reviews and ratings before making a purchase, as these social signals can provide insights into the quality and reliability of a restaurant. ...
... Participants also displayed a tendency to gravitate towards menu items with higher ratings highlighted alongside them. The presence of peer reviews increased the likelihood of selecting an item by 35%, reinforcing the significance of social influences in decision-making (Chevalier & Mayzlin, 2006). ...
... The strong influence of pricing strategies corroborates the concept of loss aversion, as illustrated by Ariely (2008), suggesting that promotional tactics can effectively drive purchasing behavior. Furthermore, the significant role of social influences aligns with the findings of Chevalier and Mayzlin (2006), emphasizing the importance of peer reviews in shaping consumer choices. ...
This research discusses the dynamics of behavioral economics as they pertain to online fast food purchasing decisions. With the rapid growth of digital platforms for food delivery, understanding consumer behavior in this context is essential. This study investigates key concepts such as heuristics, biases, and the role of social influence in shaping purchasing patterns. By employing a mixed-methods approach, including surveys and behavioral experiments, we analyze how factors like pricing strategies, promotional cues, and user interface design impact decision-making processes. Our findings reveal that consumers often rely on mental shortcuts, leading to irrational choices that deviate from traditional economic theory. Furthermore, the influence of peer reviews and social media presence significantly affects consumer trust and brand loyalty. This research contributes to the field by providing actionable insights for fast food businesses seeking to optimize their online strategies, ultimately enhancing customer satisfaction and increasing sales.
... Some studies found a significant impact of eWOM valence and movie sales (Chintagunta et al., 2010;Robertson et al., 2023), conversely, others have shown no meaningful relationship (Fan et al., 2021;Rocklage and Fazio, 2020). Moreover, while many have noted that negative eWOM decreases sales (Chevalier and Mayzlin, 2016;Tsao, 2014), others argue that negative eWOM increases product evaluations and can enhance sales (e.g., Hiura et al., 2010;Kikumori and Ono, 2013;Meeker, 2022). These varying results hinder marketers from making informed decisions about eWOM management. ...
... While studies across various domains, including retailing and consumer service, have increasingly used EASI theory to understand how consumers use emotional expressions as a powerful source of social information and how this might influence their behavior (Ismagilova et al., 2021;Urbonavicius, 2023;Zhang et al., 2024), this lens has not been used to predict movie sales. Second, we investigate the moderating role of eWOM volume in the above relationship because prior studies suggest that increasing eWOM volume can play an important role in persuading others (Chevalier and Mayzlin, 2016;Babić Rosario et al., 2016;Duan et al., 2008;Hu et al., 2019;Lee et al., 2017). This is particularly pertinent to movie reviews, which usually have a wide range of positive and negative emotional content (Ullah et al., 2016). ...
... This notion is based on the following reasons. Firstly, when consumers observe a rising number of positive reviews, they are more likely to be swayed by the bandwagon effect (Chevalier and Mayzlin, 2016;Babić Rosario et al., 2016), which reinforces their confidence in watching the movie (Carrillat et al., 2018). Secondly, drawing from EASI theory, when consumers encounter popular positive emotional content, they tend to rely less on information processing that increases the predictive power of affective reactions (Van Kleef, 2009, 2017)-high volume and positive emotional reviews act as favorable heuristic cues, indicating popularity and quality. ...
Movies evoke strong human emotions that resonate in the content of online reviews, known as electronic word of mouth (eWOM). Existing literature suggests that positive content enhances, and negative content reduces movie sales, with negative content having a stronger effect. We demonstrate that there is a limit to the negative
emotional content’s impact on sales, beyond which it boosts sales. We extract positive and negative emotional content from 80 Hollywood movie reviews (N = 23,046) and empirically examine their influence on movie sales. Results indicate that for high eWOM volume, the effect of positive content increases progressively, while negative content has diminishing returns. Grounded in ‘Emotions as Social Information’ (EASI) theory, this study provides marketers and researchers with a new understanding of how emotional content in eWOM influences moviegoers’ choice of movie and sales. Our typology—Flop, Hype, Star, and Hit—helps predict movie sales and design targeted strategies.
... On e-commerce platforms, customer reviews have become one of the critical purchase decision-driven factors. A large body of research suggests that the review will influence customers' judgment of products and the merchant's sales performance [1]. Customers often rely on review text to access specific product information. ...
... The short reviews, characterized by low word count, demonstrated an overall sentiment without specific information. Chevalier and Mayzlin demonstrated that detailed reviews can positively influence product sales by offering consumers richer insights [1]. Mudambi and Schuff measured the depth of reviews by word count and associated longer reviews with more details [5]. ...
E-commerce has become a vital part of peoples lives. Moreover, Online customer reviews have become a crucial reference for customers decision-making process. A large number of studies have emphasized the role of review helpfulness and sentiment. However, little attention has been given to the actual relationship between review length and its informative value. This study primarily examines whether review length can be a reasonable indicator of the reviews informativeness. This study uses the Amazon Product Review dataset from Kaggle, which contains more than 568000 reviews from different categories. Using Python as the primary tool, this study conducts quantitative data analysis, data modeling, and visualization skills to explore the correlation between the two variables. The Term Frequency-Inverse Document Frequency (TF-IDF) represents the lexical richness of the review, indicating informativeness in this study. The results reveal a statistically significant positive correlation, with diminishing returns as length increases. The findings suggest that while longer reviews are generally more informative, length alone cannot fully determine review quality. This study provides exploratory insights for consumers and merchants regarding the interpretation and evaluation of online reviews.
... Users typically believe that online negative reviews are more reliable and truthful than positive reviews [9] and the negative information they convey can be considered more helpful for users in avoiding potential risks than that conveyed by online positive reviews [26]. Therefore, online negative reviews are more likely to attract users' attention and carry more weight in their purchase decisions [27]. ...
Past studies have suggested that online reviews positively impact app innovation. However, extant research has not yet explored the distinct impacts of online negative and positive reviews on app innovation. Based on signaling theory and negative bias, this study empirically examines the effects of online negative reviews versus online positive reviews on app innovation by using panel data from the iOS App Store in China. The findings demonstrate that online negative reviews have a more positive influence on app innovation than online positive reviews. Additionally, compared with online positive reviews, app performance more effectively weakens the promoting effect of online negative reviews on app innovation. Moreover, both app history and platform owner’s entry play a positive moderating role in the impact of online negative reviews on app innovation, while no positive moderating effect is observed in the impact of online positive reviews on app innovation. These results demonstrate the different effects of online negative reviews and online positive reviews on app innovation, expand the contingent value of online reviews and app innovation.
... The rapid expansion of e-commerce platforms has transformed consumer behaviour, influencing how individuals purchase and review products and services. Customer reviews serve as a vital source of information for both businesses and potential buyers, shaping purchasing decisions and brand perceptions (Chevalier & Mayzlin, 2006;Zhu & Zhang, 2010). Prior research has extensively examined the role of online reviews in driving sales, enhancing consumer trust, and predicting purchase behaviour (Filieri, 2015;Floyd et al., 2014;Mudambi & Schuff, 2010). ...
This study investigates the emotional and sentiment differences in customer reviews of products and services on e-commerce platforms. Unlike prior research that treats customer reviews as a single entity, this study distinguishes between products, which fulfil fundamental needs, and services, which cater to higher-level experiential desires. The analysis reveals that customer sentiment and emotional expressions vary significantly between these two categories, reflecting their distinct roles in consumer decision-making. One of the key findings is that products tend to receive reviews centred around functionality, reliability, and value for money, often characterized by a more neutral or pragmatic tone. In contrast, services evoke stronger emotional responses, as they involve direct interactions, subjective experiences, and personal satisfaction. Customers express a wider range of emotions, including joy, frustration, and disappointment, when reviewing services compared to products as detected by recently developed machine learning techniques. Cultural differences further amplify these distinctions. Consumers from collectivist cultures, as identified by Hofstede's cultural dimensions, tend to emphasize group consensus and social harmony in their reviews, often using more moderated language. Meanwhile, those from individualist cultures are more likely to provide direct and emotionally intense feedback. Interestingly, gender does not significantly influence sentiment differences, suggesting that product and service categorization and cultural background are the primary drivers of variation in reviews. Theoretically, this study extends Maslow's hierarchy of needs and Hofstede's cultural framework by applying them to consumer reviews, offering a conceptual model of how these factors shape customer experiences. From a practical perspective, businesses can leverage these insights to refine their marketing and customer engagement strategies, tailoring their communication and service approaches to align with customer expectations based on product and service offerings and cultural context.
... Empirical studies consistently demonstrate review ratings' direct sales impact across platforms. For instance, ratings significantly affect book sales at Amazon and Barnes & Noble (Chevalier and Mayzlin, 2006). In the hospitability industry, a one-star increase in restaurant ratings leads to a 5% to 9% revenue boost (Luca, 2016). ...
Recent advancements in Large Language Models (LLMs) have enabled their adoption across a wide range of business applicationshave facilitated their widespread adoption in diverse business applications. ChatGPT, in particular, exemplifies these advancements with its exceptional capabilities in interpreting contextual and complex information and generating natural language response. Using Booking.com review datasets and government tax revenue data, this study compares ChatGPT's predictive performance with traditional methods (review ratings and machine learning approaches) for sales revenue sentiment analysis. Moreover, this study also examines ChatGPT's summarization efficacy in extracting sales-predictive information while reducing redundancy and noise. The objective is to address the gap in the application of LLMs in information processing and summarization in emotional and heuristic contexts. This addresses LLM application gaps in emotional/heuristic contexts for information processing and summarization. We first benchmark review ratings, RoBERTa, and ChatGPT for sentiment index extraction in sales prediction. Furthermore, we reconstruct a ChatGPT-summarized review dataset, introducing novel prompt engineering methods for sentiment analysis and user-content summarization. We additionally examine the effectiveness of ChatGPT-based summaries by highlighting the difference between raw and summarized reviews, fine-tune the RoBERTa model with review ratings, and employ a few-shot approach to fine-tune ChatGPT, aiming to evaluate the importance of reduced redundancy and information noise in using user-generated content for sales prediction.
... By utilizing Amazon's sales rank data, we can infer the impact of Subscribe and Save on product sales performance. Our confidence in using sales ranks instead of actual sales figures is supported by existing literature that has successfully employed this variable (Reimers and Waldfogel 2021;Chevalier and Mayzlin 2006;Sun 2012;Etumnu et al. 2020). Second, our strategy involves comparing the sales ranks of products that are eligible for the Subscribe and Save program with those that are ineligible in both Canada and the United States. ...
This study evaluates the effectiveness of Amazon's Subscribe and Save program using panel grocery data from Canada and the United States and fixed effects regressions. Our findings indicate a strong negative correlation between Subscribe and Save eligibility and sales ranks, suggesting that the program significantly enhances grocery sales performance. Specifically, in Canada, grocery products eligible for the subscription program show an average decrease in sales ranks by 2561, which is a reduction of 18%. In the United States, eligible grocery products experience an average decrease of 5021 in sales ranks, corresponding to a 19% reduction. When we analyze these correlations by seller type, it becomes evident that third-party merchants benefit more from the subscription program than Amazon itself. Therefore, we conclude that the Subscribe and Save program is crucial for the success of third-party agribusinesses operating on Amazon's marketplaces.
... Responding to these negative reviews can potentially increase the cost of writing them, and thus reduce their volume (Proserpio and Zervas 2017). It signals to consumers that management is listening (Chevalier and Mayzlin 2006). These fake reviews inevitably harm businesses. ...
Business owners responding to fake retaliatory reviews—negative reviews posted with the intent to harm—sometimes use negative emotional appeals, such as evoking shame or guilt. While these strategies are used to address deviant behavior, they also carry the risk of alienating the broader consumer base. Our research examines how prospective customers respond to the use of negative emotional appeals in this context and highlights the importance of directly addressing fake reviews to protect the firm's reputation. We show that even a highly aversive emotional appeal, such as a shame appeal, can reduce the harm caused by fake retaliatory reviews when appropriately framed. Moreover, our findings suggest that the use of emotional appeals holds greater significance for businesses with lower average star ratings and shorter tenure.
... The rapid expansion of e-commerce platforms has transformed consumer behaviour, influencing how individuals purchase and review products and services. Customer reviews serve as a vital source of information for both businesses and potential buyers, shaping purchasing decisions and brand perceptions (Chevalier & Mayzlin, 2006;Zhu & Zhang, 2010). Prior research has extensively examined the role of online reviews in driving sales, enhancing consumer trust, and predicting purchase behaviour (Filieri, 2015;Floyd et al., there is limited research examining how they moderate the emotional expression of product versus service reviews. ...
This study investigates the emotional and sentiment differences in customer reviews of products and services on e-commerce platforms. Unlike prior research that treats customer reviews as a single entity, this study distinguishes between products, which fulfil fundamental needs, and services, which cater to higher-level experiential desires. The analysis reveals that customer sentiment and emotional expressions vary significantly between these two categories, reflecting their distinct roles in consumer decision-making. One of the key findings is that products tend to receive reviews centred around functionality, reliability, and value for money, often characterized by a more neutral or pragmatic tone. In contrast, services evoke stronger emotional responses, as they involve direct interactions, subjective experiences, and personal satisfaction. Customers express a wider range of emotions, including joy, frustration, and disappointment, when reviewing services compared to products as detected by recently developed machine learning techniques. Cultural differences further amplify these distinctions. Consumers from collectivist cultures, as identified by Hofstede’s cultural dimensions, tend to emphasize group consensus and social harmony in their reviews, often using more moderated language. Meanwhile, those from individualist cultures are more likely to provide direct and emotionally intense feedback. Interestingly, gender does not significantly influence sentiment differences, suggesting that product and service categorization and cultural background are the primary drivers of variation in reviews. Theoretically, this study extends Maslow’s hierarchy of needs and Hofstede’s cultural framework by applying them to consumer reviews, offering a conceptual model of how these factors shape customer experiences. From a practical perspective, businesses can leverage these insights to refine their marketing and customer engagement strategies, tailoring their communication and service approaches to align with customer expectations based on product and service offerings and cultural context.
... Past studies have pointed out that consumers usually perceived risk for experience goods is higher than search goods in a purchase decision process. Because the information used to judge the quality evaluation standard is not definite enough for the experience goods, which increases the perceived risk of purchasing for consumers (Chevalier & Mayzlin, 2006;Mitra, Reiss, & Capella, 1999;Zhou, Dai, & Zhang, 2007). In this situation, readers less likely to believe that two-sided reviews are reliable information. ...
... Reviews and recommendations from other users on social media can influence consumer perceptions and purchasing decisions. According to Chevalier and Mayzlin (2006), positive reviews from other users can increase consumer confidence in a product, while negative reviews can reduce purchase interest. Social media allows consumers to share their experiences, thereby creating a significant network effect in influencing purchasing behavior. ...
TikTok is an application that provides entertainment content that is in great demand. Over time, the use of TikTok has changed; it was originally only used as an entertainment venue, and now TikTok is also used as a business medium. Therefore, various business activities are increasingly found on this social media platform. This research aims to determine the factors that drive decisions to purchase fashion products on TikTok social media, as well as to identify the most dominant factors in driving decisions to purchase fashion products on this platform. The research methods used are descriptive analysis and exploratory factor analysis. The data collection technique was carried out through distributing questionnaires. The sampling used in this research was nonprobability sampling with a total of 100 respondents. The analysis technique used is factor analysis with the help of the SPSS analysis tool. Based on the research results, it was found that the factors that drive decisions to purchase fashion products on TikTok social media include interest, need, price, product, and trust. Apart from that, the most dominant factor in driving decisions to purchase fashion products on TikTok social media is interest, which has the highest eigenvalue compared to other factors.
... In terms of the length characteristics of online comments, Chevalier et al. found that the length of online comment text positively affects the usefulness of comments [40]. Li Ang et al. found through research that the more words online comments have, the higher their usefulness [41]. ...
The promotion of green product consumption and its transformation towards low-carbon alternatives is essential for implementing new developmental paradigms and achieving carbon neutrality objectives. This study employs text mining techniques to analyze user online comments from e-commerce platforms, focusing on consumer satisfaction regarding green products. Utilizing the KeyBert model, relevant keywords were extracted from user feedback, followed by the training of keyword vectors using Word2Vec. K-means clustering was then employed to develop a comprehensive system of consumer satisfaction evaluation index system for energy-saving air conditioning products on the JD platform. The findings reveal that consumers prioritize functionality, service quality, aesthetic appeal, pricing, logistics, and installation in their evaluations. It is recommended that manufacturers enhance installation procedures, refine aesthetic designs, and emphasize functional advantages to elevate consumer satisfaction. However, this study is limited by its focus on a singular product category and necessitates further research incorporating a broader dataset to validate these findings. Future investigations should consider a wider range of green products and leverage diverse data sources to enrich the analysis.
... WOM can occur in person or through digital channels, like social media and online reviews. According to research (Chevalier & Mayzlin, 2006) WOM has a significant influence on consumer purchasing decisions because it is considered more credible than traditional advertising. Word of Mouth (WOM) plays an important function in hospital marketing strategies. ...
This study examines the direct impact of customer satisfaction on repurchase intention and the indirect effects mediated through customer engagement and word of mouth (WOM) at Graha Husada Jepara Hospital. Involving 227 respondents with a simple random sampling method, The findings show that both WOM and customer engagement fully mediate the relationship between customer satisfaction and repurchase intention, while customer satisfaction itself exhibits an insignificant direct correlation with repurchase intention. These findings suggest that enhancing customer engagement and utilizing WOM are critical for improving repurchase intentions, as they substantially mediate the influence of customer satisfaction. Therefore, the hospital should focus on strategies that strengthen customer relationships and communication to enhance patient retention and satisfaction.
... Furthermore, electronic WoM has a much higher influence on purchasers as compared to different types of advertising (Day, 1971). Electronic WoM is a key measure by which consumers can acquire data about product quality (Chevalier, 2006). ...
This study analyzed impact of influential factors (perceived value, service quality, consumer trust and product quality) on electronic word-of-mouth and referral intention in the background of fast-food industry. The research investigated the impact of electronic word-of-mouth as mediator between influential factors and referral intention. Data was retrieved from 400 students (Fast Food Consumers) from Punjab College, BEST College and NCBA&E in Bahawalpur through convenience sampling. Hypothesis is tested by analyzing regression. The outcomes demonstrated that perceived value, service quality, consumer trust and product quality have positive and substantial influence on electronic word-of-mouth and referral intention. The finding of the study revealed the impact of electronic word-of-mouth as mediator between influential factors and referral intention. This research contributed in literature & practically by examining the product quality as an influential factor of electronic word-of-mouth.
... Ulasan positif dan rating tinggi cenderung meningkatkan kepercayaan konsumen terhadap suatu produk atau layanan. Ketika konsumen melihat bahwa produk atau layanan telah mendapatkan apresiasi tinggi dari sesama pengguna, mereka cenderung merasa lebih yakin dan termotivasi untuk melakukan pembelian (Chevalier & Mayzlin, 2006). Ini menciptakan efek domino, di mana ulasan positif dan rating tinggi menciptakan persepsi positif yang dapat mempengaruhi sikap konsumen dan akhirnya membentuk niat pembelian. ...
This research aims to assess the impact of continued promotions on purchasing interest at three bistros operating in Jember, namely Rangkum Espresso, At maison, and Mr. Rokar Bistro. This exploration strategy includes investigating information from advanced promotional connections, for example, use of virtual entertainment, online missions, and customer reactions. Measurable test results show that computerized promotions have an impact on purchasing interest in the three bistros, with an importance level of 0.001. Overall, computerized promotions play a big role in shaping buyers' buying interest in these bistros. This exploration adds additional understanding of how the use of computerized media can strengthen advertising techniques and influence purchasing choices in the local bistro industry. The functional consequence of this discovery is that restaurateurs and exhibition specialists can most likely use computerized stages to increase customer purchasing interest and create areas of strength for attendance. Keywords: Buying Interest, Cafe, Digital Marketing, Social Media
... The impact of social proof on public perception is evident in various domains, including consumer behaviour and health communication. For instance, online reviews and ratings on platforms like Amazon and Yelp significantly influence consumer decisions, with higher ratings often correlating with increased sales (Chevalier & Mayzlin, 2006). Similarly, in the context of health information, social media endorsements by peers and influencers can shape public attitudes toward health behaviours and interventions. ...
This study provides an in-depth examination of the influence of social media on Benin City residents' perception of the 2024 Okuama bloodbath in Delta State, Nigeria. The objectives of this study were to establish the extent of awareness of Benin residents about the Okuama bloodbath. To ascertain the channels through which they were exposed to information about the event, and evaluate how social media influenced their perception of the incident. The researchers employed a survey research design, using a questionnaire as the data collection instrument. A total of 384 respondents were sampled from Benin City, with a response rate of 96.6% (n=371). The respondents comprised individuals aged 18-65, residing in Benin City, and who had access to social media platforms. Data analysis revealed that a substantial majority of respondents (65%) reported a high or very high level of awareness about the Okuama bloodbath. This finding suggests that the event received significant attention from the public, and that Benin City residents were well-informed about the incident. Social media was found to be the primary source of information for over half of the respondents (55%), with WhatsApp (30%) and Facebook (25%) being the most frequently used social media platforms for exposure to information about the Okuama bloodbath. The researchers found that social media played a significant role in shaping public perception, with a majority of respondents (75%) believing that social media effectively raised awareness about the Okuama bloodbath. Social media was seen as instrumental in mobilizing support and aid for the affected community, with 85% of respondents agreeing to its positive impact. However, the spread of misinformation on social media was also identified as a major concern, with 80% of respondents acknowledging its exacerbating effect on the conflict. The study's findings have significant implications for crisis communication, highlighting the importance of social media in shaping public 21 perception during crises. The researchers recommend enhancing the use of official and verified social media channels, implementing media literacy campaigns, and collaborating with social media platforms to flag and remove harmful content. Through adopting these strategies, stakeholders can harness the power of social media to promote constructive engagement, mitigate the spread of misinformation, and facilitate effective crisis communication. Furthermore, it was recommended that social media platforms can play a critical role in promoting peace and stability during crises through providing a platform for dialogue and information dissemination on social media, which can help to reduce tensions, promote understanding, and facilitate conflict resolution. However, this requires responsible use of social media, and stakeholders must be aware of the potential risks and challenges associated with social media use during crises.
... Another axis to consider is research in the field of social media. These studies focus on the impact of user-generated content (UGC) on market outcomes in various situations, such as book sales [24] and movie box office revenues [25], and music album sales [26]. For example, some studies examine people's motivations for deciding to contribute content on social media [27] while other studies focus on how UGC interacts with traditional media marketing [28]. ...
This study analyzes the customer experience in digital social networks within the restaurant sector in Ibagué, Colombia, assessing how engagement and implicit attitudes shape consumer perceptions. Using a mixed-methods approach, the research selected top-rated restaurants on TripAdvisor and collected engagement metrics from their Instagram and Facebook accounts. Additionally, an Implicit Association Test (IAT) was applied to measure unconscious consumer attitudes toward visual content. Findings indicate that engagement does not always correlate with follower count; restaurants with fewer but highly interactive followers demonstrated stronger engagement. The IAT results showed mild but significant associations between implicit attitudes and engagement, suggesting that consumer perceptions are influenced by subconscious responses to digital content. The study highlights the role of digital engagement in shaping customer experiences and emphasizes the need for strategic content creation to foster meaningful interactions. These insights can help restaurant owners and marketers optimize their social media strategies by prioritizing visually compelling content and encouraging active consumer participation to enhance digital engagement and strengthen brand perception.
... Zhenhua [3], provided a more thorough overview of this theory and formally introduced it to China. Secondly, several researchers have carried out interdisciplinary studies between appraisal theory and other linguistic theories. ...
... Online reviews are accessible to Internet users and have value for both companies and customers. By responding to those reviews, businesses can improve existing customer relationships, regain lost customers, and attract new ones (Chevalier and Mayzlin, 2006;Ye et al., 2009). Customers benefit from directly contacting the company to provide feedback and address issues. ...
Online customer feedback management (CFM) is becoming increasingly important for businesses. Providing timely and effective responses to guest reviews can be challenging, especially as the volume of reviews grows. This paper explores the response process and the potential for artificial intelligence (AI) augmentation in response formulation. We propose an orchestration concept for human–AI collaboration in co-writing within the hospitality industry, supported by a novel NLP-based solution that combines the strengths of both human and AI. Although complete automation of the response process remains out of reach, our findings offer practical implications for improving response speed and quality through human–AI collaboration. Additionally, we formulate policy recommendations for businesses and regulators in CFM. Our study provides transferable design knowledge for developing future CFM products.
... The occurrence of cognitive dissonance, which is characterized by opposing beliefs or attitudes, has been shown to have an impact on consumer behavior and the cognitive processes involved in decision-making. This is necessary in order to illustrate the relationship between them [38][39][40]. It has been proposed that cognitive dissonance is a key factor in the association route that shapes consumer ethnocentric attitudes and behaviors. ...
This essay seeks to address the research question: “How do consumer perceived risk and consumer ethnocentrism relate to one another?” Prior to providing a solution, the study conducted a literature review (LR) on pertinent empirical investigations. When it comes to external and internal factors that affect a consumer's decision to buy, such as perceived value, quality, and loyalty, our brains frequently create expectations based on trustworthy information that cause us to label or make an early judgment. These risks are also known as financial, functional, social, and psychological risks. The study conducted a literature review (LR) by employing transparent, well-organized, and replicable procedures to choose, extract, analyze, and critically appraise pertinent literature that satisfied criteria. In addition to outlining the elements impacting consumer ethnocentrism and perceived risk, this research offers an integrative review of both. It examines the relationship between the two ideas and provides a comprehensive analysis and framework of the most recent studies on consumer ethnocentrism and perceived risk. Because of its origins, importance, consequences, and ramifications, people might look for goods from sources that share their cultural background. Boycotts are a common way for people to voice their disapproval during times of turmoil, like the one we are currently experiencing globally. On the other hand, evaluating the impact of a nation of origin on product evaluations is a complex process that involves many variables and leaves many important concerns unanswered. By integrating a wide range of studies on a crucial international marketing issue and offering general directions for future research, this research article enhances the field of marketing. We can better understand consumer behavior with regard to perceived risk and ethnocentrism thanks to research on CPR and CE. The notion of perceived danger has been well investigated and comprehended by academic experts. We now have a foundation for understanding how perceived risk influences consumer decision-making thanks to this work. Comparably, research on consumer ethnocentrism—which has been further defined and explored by other studies—has assisted us in comprehending the variables influencing consumer biases toward imports and preferences for homegrown goods. Our knowledge of the cultural, economic, and ethnic influences on consumer ethnocentrism has expanded as a result of recent studies.
This study aims to evaluate and assess the impact of online customer reviews and electronic word-of-mouth on consumer trust and how these factors influence consumers’ decisions to purchase household electronic products on A marketplace. The study employs a quantitative path analysis methodology. The study population consists of A marketplace users in East Java who have made household electronic purchases on the platform and are at least 17 years old. Purposive sampling was used to obtain the sample, which was collected via questionnaires. Two hundred fifty people responded to the online survey using Google Forms. To test the hypothesis in the research model, respondent data were processed using Structural Equation Modelling Partial Least Squares (SEM-PLS) with SmartPLS software. The findings indicate that consumer trust is greatly influenced by electronic word-of-mouth and online customer reviews, and purchase decisions have a significant impact on consumer trust. The following factors significantly influence purchase decisions: electronic word-of-mouth, online customer reviews, electronic word-of-mouth through consumer trust, and online customer reviews.
This study examines the effects of incentive plans on the quantity and quality of creative production. We examine a serial publishing platform that switched from a uniform commission (UC) plan to a quantity-based commission (QBC) plan offering a bonus commission rate when writers’ production meets a preset threshold. Our analysis reveals that, for a given book, chapters published in the months when writers reached the preset threshold quantity, and thus earned bonus commission rates, exhibited higher quality, as measured by the chapter-to-chapter customer retention rate. Such a positive correlation was nonsignificant for books published under the UC plan. We interpret that the implementation of a QBC plan enhanced the complementarity between quantity and quality in the writers’ payoff function. Further empirical analysis shows that this effect persisted over time. Moreover, the degree of enhanced complementarity was lower for writers who earned commissions from multiple books. Our key result remains robust when measuring quality by reader comments sentiment. Overall, the findings underscore the critical role of well-designed incentives in enhancing the platform’s effectiveness in managing mass creativity.
This paper was accepted by Raphael Thomadsen, marketing.
Funding: This work was supported by the London School of Economics and Political Science [Internal Research Fund, Department of Management], the Hong Kong University of Science and Technology [Yuk-Shee Chan Professorship Fund], the Rotman School of Management, University of Toronto [China Research Initiative Grant], and McGill University [Desautels Faculty of Management Research Support F]. X. Li thanks LSE Department of Management for internal research fund support. M. Shi thanks HKUST Yuk-Shee Chan Professorship Fund and China Research Initiative Grant by Rotman School of Management, University of Toronto. C. Zhao thanks Desautels Faculty of Management Research Support Fund, McGill University.
Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.01566 .
Purpose
Online reviews shape consumer decisions, even in healthcare, a credence service where expertise is difficult to evaluate. Like unethical retailers, some healthcare providers post fake reviews. However, the impact of fake reviews on potential patients remains unclear. Using a dataset of fake reviews, this study examines how patients perceive the helpfulness and trustworthiness of fraudulent vs genuine physician reviews.
Design/methodology/approach
We used an archival dataset containing a representative sample of 5,000 online physician reviews, both fake and genuine, and performed empirical analysis. In addition to the helpful votes obtained from the data, we used large language models to derive the perceived trustworthiness score.
Findings
Fake physician reviews are paradoxically perceived as more helpful and trustworthy than genuine reviews. To unravel the underlying mechanism, we investigated the extent of personalized and specific health information. We found that fake reviews often contain more personalized and specific health information, making them appear more credible.
Research limitations/implications
Results may not generalize beyond online physician reviews. Future research could extend this investigation to other contexts.
Practical implications
Online platforms may need to reconsider their approach to managing online reviews, address ethical concerns, and strengthen regulatory oversight in sensitive areas, particularly in healthcare.
Originality/value
This study highlights an ethical paradox: while patients seek detailed health information, privacy concerns limit real patients from sharing such details, creating an information gap that fake reviews exploit. This is the first study to make use of unique data that contains real fake online physician reviews.
El Electronic Word-of-Mouth se refiere a la capacidad que tienen los consumi-
dores para realizar declaraciones sobre productos y servicios en un contexto digital.
La literatura académica en el campo del marketing ha comprobado que el eWOM
puede conducir a múltiples actitudes de consumo deseadas, lo que ha propiciado el
desarrollo de investigaciones que indagan sobre los factores que impulsan la aparición
de este comportamiento. Este libro explora en la literatura las características de las
publicaciones en redes sociales que podrían ejercer influencia sobre el eWOM.
En concreto, se realiza una revisión bibliográfica acerca de los posibles efectos de
la intensidad, la interactividad, el tipo de contenido, la uniformidad de marca y el uso
de emojis sobre el eWOM. La revisión de la literatura sugiere que niveles altos de
intensidad e interactividad podrían disminuir la participación de los usuarios en redes
sociales, mientras que el uso de emojis y señales alusivas a la marca podrían aumentar
la interacción de los internautas.
Este libro es resultado del proyecto de investigación 745 de 2019 titulado:
“Características de las publicaciones en redes sociales que impulsan la generación
y/o difusión de eWOM en la industria del fitness” de la Facultad de Ciencias de
la Administración de la Universidad del Valle para la Maestría en Ciencias de la
Organización.
This paper empirically examines how cheaper access to review platforms affects consumer behavior and firms’ incentives to improve product quality in markets where information is traditionally limited.
The role of electronic word-of-mouth (EWOM) in enhancing the image of tourism destinations and influencing tourists’ revisit intentions has been widely examined in the tourism literature. However, few studies have explored the moderating effect of EWOM on the relationship between destination image and tourists’ revisit intentions. Furthermore, few studies have investigated these relationships in the context of Tra Vinh Province, Vietnam, an emerging and strategically significant tourism destination known for its unique cultural and natural attractions. To address this research gap, the present study aims to assess the impact of EWOM on destination image and tourists’ intention to revisit, with a particular focus on its moderating role in the relationship between these two variables. A quantitative research approach was applied to achieve the research objectives. A total of 500 questionnaires were distributed to tourists visiting ten major tourism attractions in Tra Vinh Province, which were randomly selected from a total of 71 attractions. Each site received 50 questionnaires to ensure diverse representation. After data collection, 347 completed questionnaires were deemed valid and usable for analysis, yielding a response rate of approximately 69.4%. To examine the moderating effect of EWOM, hierarchical multiple regression analysis was employed as the primary statistical technique. The empirical results provide compelling evidence supporting the significant role of EWOM in shaping tourists’ perceptions and behavioural intentions. First, the findings indicate that EWOM positively influences the image of a tourism destination at the 1% significance level, with a coefficient of 2.881. Similarly, EWOM significantly enhances tourists’ intention to revisit a destination, as demonstrated by a coefficient of 4.502 at the 1% significance level. Second, EWOM is found to moderate the impact of destination image on tourists’ revisit intentions, with an interaction effect of 0.101 at the 5% significance level. These results highlight the critical function of EWOM in reinforcing positive destination perceptions and encouraging repeat visits. From a theoretical perspective, this study extends the existing body of tourism literature by providing empirical evidence on the moderating role of EWOM in the relationship between destination image and tourists’ revisit intentions. This contribution adds a new dimension to tourism marketing research, emphasizing the interactive effects between digital consumer communication and destination branding. From a managerial standpoint, the findings offer valuable insights for tourism policy-makers and destination managers in Tra Vinh Province. By leveraging EWOM strategies, such as encouraging positive online reviews and engaging with tourists through digital platforms, tourism stakeholders can enhance a destination’s image and foster greater revisit intentions among visitors. Consequently, implementing targeted eWOM initiatives can serve as a key strategy for sustainable tourism development and increased competitiveness in the Vietnamese tourism industry.
The advent of social media platforms has brought about a revolution in marketing strategies in this era of digital transformation. These platforms have enabled firms to cultivate interactive relationships with their customers. The purpose of this study is to analyze the interrelationship between customer involvement, customer gratification, and consumer empowerment in the context of social media marketing. The research makes use of primary data acquired from five hundred active social media users who come from a variety of demographics and platforms. The research is conducted using a mixed-method approach. The results of structural equation modeling (SEM) indicate that there is a substantial positive connection between the three variables. This suggests that gratification has a considerable influence on engagement, and engagement, in turn, generates empowerment. The findings have strategic significance for marketers who are looking to increase customer-driven innovation, user advocacy, and brand loyalty through the usage of social networks.
The global cosmetics industry is witnessing a paradigm shift toward sustainability, driven by heightened consumer awareness and regulatory imperatives. In India, the demand for eco-conscious cosmetics is growing exponentially, with user-generated reviews (UGR) playing a pivotal role in shaping consumer perceptions. This study employs a mixed-methods approach to investigate the impact of UGR on consumer trust and purchase intentions for eco-conscious cosmetics in India. The findings indicate that perceived authenticity and transparency significantly enhance trust in UGR, while scepticism acts as a moderating variable. Trust in UGR positively influences consumer attitudes and purchase intentions, highlighting the importance of digital word-of-mouth in consumer decision-making. The study provides insights into how marketers can leverage UGR effectively by fostering authenticity, addressing scepticism, and optimizing digital strategies to promote sustainable beauty products in India.
The global cosmetics industry is witnessing a paradigm shift toward sustainability, driven by heightened consumer awareness and regulatory imperatives. In India, the demand for eco-conscious cosmetics is growing exponentially, with user-generated reviews (UGR) playing a pivotal role in shaping consumer perceptions. This study employs a mixed-methods approach to investigate the impact of UGR on consumer trust and purchase intentions for eco-conscious cosmetics in India. The findings indicate that perceived authenticity and transparency significantly enhance trust in UGR, while scepticism acts as a moderating variable. Trust in UGR positively influences consumer attitudes and purchase intentions, highlighting the importance of digital word-of-mouth in consumer decision-making. The study provides insights into how marketers can leverage UGR effectively by fostering authenticity, addressing scepticism, and optimizing digital strategies to promote sustainable beauty products in India.
Contemporary Business Practices and Sustainable Strategic Growth explores the dynamic relationship between technological advancements, economic development, and sustainability. Covering diverse industries, this volume highlights the role of innovation in shaping modern business practices, from AI-driven financial markets to augmented reality in e-commerce. It examines topics such as crowdfunding for socio-economic impact, workforce retention in IT, waste management, automation in the automobile sector, and the influence of AI on consumer behavior. The book also covers financial inclusion, stock market prediction, and challenges in India's banking sector, while addressing cultural preservation, labor training, and competition law.
Key Features:
- Interdisciplinary research on innovation, sustainability, and business strategy.
- Case studies on AI, digital economy, financial markets, and consumer behavior.
- Insights into workforce management, education, and industry-specific challenges.
- Practical models for sustainable business development.
Product ratings are so important that sellers need to focus on rating rules, i.e., how ratings are calculated by e-commerce platforms. However, limited studies have examined the impact of these rules on the review system design. Using programming codes, we simulate consumers’ online shopping activities and the functioning of the review system. Through an indicator system, we compare the performance of the dynamic rating rule, which displays the mean of recent ratings in one rating cycle, and the traditional rating rule, which displays the average of all posted ratings. Results show that the dynamic rating rule always performs better on competition fairness. This rule also usually displays higher values of ratings and diminishes the disconfirmation effect, although it generates a lower number of reviews. Interestingly, these results may be reversed for search products. This study offers guidance to e-commerce platforms on how to manipulate the review system by adapting rating rules.
We investigate whether users’ reputations on Airbnb are racially biased. We do so by comparing the ratings of vacation rentals cross-listed on two sharing economy platforms: Airbnb and HomeAway. While the sociodemographic characteristics of hosts are salient on Airbnb, they are not on HomeAway. We find that when the perceived race of hosts is salient (i.e., on Airbnb), Black hosts are penalized: they receive lower ratings than they would have received for the same property if they were non-Black. This gap in evaluations has negative monetary implications for Black hosts on the Airbnb platform. We experimentally replicate these findings in a controlled setting, establishing a causal link between the perceived race of hosts and the ratings they receive. An additional experiment explores the underlying mechanism, revealing that people stereotypically expect Black hosts to perform worse than white hosts. Our findings suggest that because reputations are themselves biased, they lead to systematic indirect discrimination based on race. Unlike direct discrimination, discrimination generated via reputation systems is more elusive to detect and, consequently, more challenging to regulate.
Quality promotes agriculture and branding strengthens agriculture. The branding of agricultural product is a driving force for agricultural development and an effective choice for realizing farmers’ income, agricultural efficiency and rural development. On the basis of the TAM model and the theory of persuasion knowledge, this paper uses multiple linear regression and stepwise regression to study the influence mechanism of key opinion leader on the brand advocacy of agricultural product from the perspective of key opinion leader. The results show that: key opinion leader’ professionalism, product involvement, and interactivity have a significant positive effect on the promotion of agricultural product brands, while reputation has no significant effect on the promotion of agricultural brand advocacy; key opinion leader’ professionalism, product involvement, interactivity, and reputation significantly promote consumer trust; and consumer trust plays a partial mediating role in the influence of key opinion leader on the brand advocacy of agricultural product. The study integrates a theoretical model for analyzing the impact of key opinion leader on agricultural brand advocacy, and the findings help complement related research on influencer marketing and agricultural brand advocacy. The conclusions of the study provide suggestions for agribusinesses to carry out brand marketing in new media, which can help create a clear and satisfying online consumption environment for consumers.
This study investigates the impact of impulse buying and hedonic buying on Cognitive Dissonance in the context of Tenkasi, Tamil Nadu. The impulse buying refers to status consumption and pursuit of happiness, while hedonic buying refers to the digital payments and online review which induce buying. Both impulse buying and hedonic buying are closely linked to materialism, which in turn influences cognitive dissonance. Cognitive dissonance the psychological discomfort experienced after making a purchase is a significant concern in the context. The study employs a structured questionnaire to collect primary data from 385 respondents. The statistical model was tested by using the Structural Equation Modeling (SEM), analyzed using SPSS and AMOS software.
Nowadays, many consumers search and compare reviews online before making a purchase decision, including accessing information from @FOODFESS2. By sharing information on @FOODFESS2 via Twitter, consumers can easily find reviews of various foods and beverages, including Esteh Indonesia products. Electronic Word of Mouth (eWOM) information disseminated by Autobase members on @FOODFESS2 is very effective in influencing consumer decisions to buy Esteh Indonesia products. This study aims to analyze the influence of electronic Word of Mouth (eWOM) on purchasing decisions for Esteh Indonesia products. Data analysis uses descriptive analysis and SEM-PLS analysis. The results of SEM-PLS analysis show that the dimension of positive emotional expression has a significant influence on purchasing decisions for Esteh Indonesia products. Meanwhile, Esteh Indonesia's purchasing decision was not significantly influenced by the dimensions of platform assistance, concern for other customers, release of negative emotions and asking for advice. Based on the results of this survey, Esteh Indonesia is motivated to continue to improve product quality, improve customer service, continue to invite consumers to share their positive experiences and collect customer experiences so that consumers can share their positive experiences with Esteh Indonesia.
Critics and their reviews pervade many industries and are particularly important in the entertainment industry. Few marketing scholars, however, have considered the relationship between the market performance of entertainment services and the role of critics. The authors do so here. They show empirically that critical reviews correlate with late and cumulative box office receipts but do not have a significant correlation with early box office receipts. Although still far from any definitive conclusion, this finding suggests that critics, at least from an aggregate-level perspective, appear to act more as leading indicators than as opinion leaders.
There have been many claims that the Internet represents a new nearly “frictionless market.” Our research empirically analyzes the characteristics of the Internet as a channel for two categories of homogeneous products—books and CDs. Using a data set of over 8,500 price observations collected over a period of 15 months, we compare pricing behavior at 41 Internet and conventional retail outlets.
We find that prices on the Internet are 9–16% lower than prices in conventional outlets, depending on whether taxes, shipping, and shopping costs are included in the price. Additionally, we find that Internet retailers' price adjustments over time are up to 100 times smaller than conventional retailers' price adjustments—presumably reflecting lower menu costs in Internet channels. We also find that levels of price dispersion depend importantly on the measures employed. When we compare the prices posted by different Internet retailers we find substantial dispersion. Internet retailer prices differ by an average of 33% for books and 25% for CDs. However, when we weight these prices by proxies for market share, we find dispersion is lower in Internet channels than in conventional channels, reflecting the dominance of certain heavily branded retailers.
We conclude that while there is lower friction in many dimensions of Internet competition, branding, awareness, and trust remain important sources of heterogeneity among Internet retailers.
Household-level panel data from a nationally representative sample of rural Indian households describing the adoption and profitability of high-yielding seed varieties (HYVs) associated with the Green Revolution are used to test the implications of a model incorporating learning by doing and learning spillovers. The estimates indicate that imperfect knowledge about the management of the new seeds was a significant barrier to adoption; this barrier diminished as farmer experience with the new technologies increased; own experience and neighbors' experience with HYVs significantly increased HYV profitability; and farmers do not fully incorporate the village returns to learning in making adoption decisions. Copyright 1995 by University of Chicago Press.
Using data collected between August, 1999, and January, 2000, covering 399 books, we examine pricing by thirty-two online United States-based bookstores. At the aggregate level, we find that both advertising and competitive structure had the predicted effects. More competition led to lower prices and to lower price dispersion. Holding competitive structure constant, more widely advertised items also had lower prices. At the firm level, we observe considerable heterogeneity in behavior. Firms had differentiated (or attempted to differentiate) on dimensions such as brand, price, and selection. Copyright 2001 by Blackwell Publishing Ltd
Consumer brand companies need skills new management skills, and brand managers must understand outline behavior if they wish to develop strong, sustainable, and beneficial online communities around their brands.
Reputations that are transmitted from person to person can deter moral hazard and discourage entry by bad types in markets where players repeat transactions but rarely with the same player. On the Internet, information about past transactions may be both limited and potentially unreliable, but it can be distributed far more systematically than the informal gossip among friends that characterizes conventional marketplaces. One of the earliest and best known Internet reputation systems is run by eBay, which gathers comments from buyers and sellers about each other after each transaction. Examination of a large data set from 1999 reveals several interesting features of this system, which facilitates many millions of sales each month. First, despite incentives to free ride, feedback was provided more than half the time. Second, well beyond reasonable expectation, it was almost always positive. Third, reputation profiles were predictive of future performance. However, the net feedback scores that eBay displays encourages Pollyanna assessments of reputations, and is far from the best predictor available. Fourth, although sellers with better reputations were more likely to sell their items, they enjoyed no boost in price, at least for the two sets of items that we examined. Fifth, there was a high correlation between buyer and seller feedback, suggesting that the players reciprocate and retaliate.
Despite the interest in measuring price sensitivity of online consumers, most academic work on Internet commerce is hindered by a lack of data on quantity. In this paper we use publicly available data on the sales ranks of about 20,000 books to derive quantity proxies at the two leading online booksellers. Matching this information to prices, we can directly estimate the elasticities of demand facing both merchants as well as create a price index for online books. The results show significant price sensitivity at both merchants but demand at BarnesandNoble.com is much more price-elastic than is demand at Amazon.com. The data also allow us to estimate the magnitude of bias in the CPI due to the rise of Internet sales.
This paper studies the way that word-of-mouth communication aggregates the information of individual agents. The authors find that the structure of the communication process determines whether all agents end up making identical choices, with less communication making this conformity more likely. Despite the players' naive decision rules and the stochastic decision environment, word-of-mouth communication may lead all players to adopt the action that is on average superior. These socially efficient outcomes tend to occur when each agent samples only a few others. Copyright 1995, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Many Internet retailers must raise margins in the future if they are to survive. This raises the important issues of whether they will be able to raise margins as well as how valuation estimates made today should evaluate projected changes to margins in the future. In this paper, we describe retail strategies of pricing for market share in growing markets and show how measures of the price elasticity of demand facing retailers in the current year can be combined with standard accounting variables to inform calculations about future margins. Our analysis suggests that the capital market projects greater future margin improvements for Amazon.com than for BN.com and that this may be due to Amazon benefiting from network effects.
Managers are very interested in word-of-mouth communication because it can have a tremendous impact on a product's sales. However, there are at least three significant challenges associated with measuring word of mouth. It is our primary objective in this paper to address these challenges. First and foremost, how does one even gather the data? Since the information is exchanged in private conversations, direct observation is (or at least has traditionally been) quite difficult. Second, even if one could observe the conversations, what aspect of them should one measure? The third challenge comes from the fact that word of mouth is not exogenous. While the mapping from word of mouth to future sales is of great interest to the firm, we must also recognize that word of mouth is at the same time an outcome of past sales. Our core result is that on-line conversations may offer an easy and cost-effective opportunity to measure word-of-mouth. However, simply counting on-line conversations may not be informative. On the other hand, measuring the "dispersion" of these conversations across communities is. Specifically, we show that a measure of dispersion has explanatory power in a dynamic model of sales, while pure counts do not. As a context for our study, we have chosen new TV shows during the 1999/2000 seasons. Our source of word-of-mouth conversations is Usenet, a collection of thousands of newsgroups with very diverse topics.
Recent developments in computer networks have driven the cost of distributing information virtually to zero, creating extraordinary opportunities for sharing product evaluations. We present pricing and subsidy mechanisms that operate through a computerized market and induce the efficient provision of evaluations. The mechanisms overcome three major challenges: first, evaluations, which are public goods, are likely to be underprovided; second, an inefficient ordering of evaluators may arise; third, the optimal quantity of evaluations depends on what is learned from the initial evaluations. Keywords: evaluations, information sharing, product quality, computer network, market (JEL D70, D83, H41, L15) 2 Subjective evaluations by others are a valuable tool for consumers who are choosing which products to buy or how to spend their time. For example, we read magazines devoted to product evaluation before purchasing cars and appliances. We ask our friends and read reviews by professional cr...
Scholar Invents Fans to Answer his Critics
- R Morin
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Measuring Prices and Price Competition Online: Amazon
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The Effect of Word of Mouth on Sales: Online Book Reviews
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Estimating How Many Books Sold by Amazon Rank
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