How consumers use product reviews in the purchase decision process

This paper uses individual level data to examine the influence of product reviews in different stages of the consumer's purchase decision process. Specifically, a two-stage model consisting of consideration set formation and choice is posited, where the consumer can incorporate information from...

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Bibliographic Details
Published in:Marketing letters 2012-09, Vol.23 (3), p.825-838
Main Authors: Jang, Sungha, Prasad, Ashutosh, Ratchford, Brian T.
Format: Article
Language:English
Subjects:
Average product
Bayesian method
Business and Management
Consumer behaviour
Consumers
Decision making
Decision models
Estimation methods
Financial budgets
Hotels
Hotels & motels
Marketing
Mathematical vectors
Modeling
Monetary dynamics
Panel surveys
Parametric models
Product quality
Product reviews
Production measurement
Statistical variance
Utility rates
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Summary:This paper uses individual level data to examine the influence of product reviews in different stages of the consumer's purchase decision process. Specifically, a two-stage model consisting of consideration set formation and choice is posited, where the consumer can incorporate information from product reviews in each stage. The model is estimated using an online panel survey about hotel choice. We find that (1) consumers use product reviews more in the consideration set stage and less in the choice stage, (2) Bayesian updating of prior perceived quality better explains how consumers use product reviews compared to two competing updating methods, and (3) the monetary value of a unit increase in the mean of product reviews is computed. Our results suggest that managers should make product review information (their number, average, and variance) available from the beginning of the search process and encourage satisfied customers to write reviews.
ISSN:0923-0645
1573-059X
DOI:10.1007/s11002-012-9191-4