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Rebate strategy to stimulate online customer reviews

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  • Yang, Liu
  • Dong, Shaozeng

Abstract

With the development of e-commerce and communication technology, consumers are heavily relying on the online customer reviews to access to more product information before making purchase decisions online. How to stimulate consumers to provide online customer reviews becomes a critical issue for the online retailers. This paper develops an analytical framework to study the online retailer's optimal rebate strategy and product pricing strategy in a two-period setting. Our analysis shows that the review effort plays a critical role in deterring the retailer's rebate decision and pricing decisions. When the review effort is small, it is efficient for the retailer to set a higher rebate value to persuade consumers to share their opinions online, and charge for a higher product price in the first period to extract more profit. We find that the Rebate strategy expands the market demand in both periods, and earns the retailer more profit. We also examine other influential factors including the unit product cost and the review impact factor.

Suggested Citation

  • Yang, Liu & Dong, Shaozeng, 2018. "Rebate strategy to stimulate online customer reviews," International Journal of Production Economics, Elsevier, vol. 204(C), pages 99-107.
    • Handle: RePEc:eee:proeco:v:204:y:2018:i:c:p:99-107
    DOI: 10.1016/j.ijpe.2018.07.032
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    4. Yang, Wenjuan & Zhang, Jiantong & Yan, Hong, 2022. "Promotions of online reviews from a channel perspective," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 161(C).
    5. Liu, Yong & Gan, Wen-xue & Zhang, Qi, 2021. "Decision-making mechanism of online retailer based on additional online comments of consumers," Journal of Retailing and Consumer Services, Elsevier, vol. 59(C).
    6. Xu, Xun & Lee, Chieh, 2020. "Utilizing the platform economy effect through EWOM: Does the platform matter?," International Journal of Production Economics, Elsevier, vol. 227(C).
    7. Yong Liu & Wen‐xue Gan & Wen‐wen Ren, 2021. "Influence mechanism of online consumer comments on e‐retailer," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(5), pages 1132-1145, July.
    8. Wang, Xuerong & Leng, Mingming & Song, Jingpu & Luo, Chunlin & Hui, Sunyuen, 2019. "Managing a supply chain under the impact of customer reviews: A two-period game analysis," European Journal of Operational Research, Elsevier, vol. 277(2), pages 454-468.
    9. Cao, Kaiying & Han, Guoxin & Xu, Bing & Wang, Jia, 2020. "Gift card payment or cash payment: Which payment is suitable for trade-in rebate?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 134(C).
    10. Xijia Huang & Shuai Zhu & Jia Wang, 2021. "Optimal Emission Reduction and Pricing in the Tourism Supply Chain Considering Different Market Structures and Word-of-Mouth Effect," Sustainability, MDPI, vol. 13(7), pages 1-13, April.
    11. Xueyu Liu & Shue Mei & Weijun Zhong, 2023. "Video‐sharing platform's optimal monetary incentive decisions considering motivation crowding‐out effect," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 371-387, January.

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