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Promotions of online reviews from a channel perspective

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  • Yang, Wenjuan
  • Zhang, Jiantong
  • Yan, Hong

Abstract

The impact of promoting online reviews on pricing strategies and profits of a supply chain with one manufacturer and one retailer is modeled: channel members can improve their average rating in a reasonable range by promotional strategies with some costs. In the promotion process, a retailer can either increase or decrease the variance. Two channel structures, centralized and decentralized, are examined. By comparing the results with and without review promotion, it is discovered that a change of variance may enhance or undermine the effect of review promotion. First, a reduced variance can always increase the demand of the product but may hurt the profits of the manufacturer and retailer, regardless of the channel structures. Second, with an increased variance, both the manufacturer and the retailer gain more profits, but the efficiency of the promotion may decrease with the quality level. Third, under the decentralized structure, the manufacturer has a greater threshold interval to benefit from review promotion than the retailer, but the promotion strategy may not always play a positive role in improving the channel efficiency of the decentralized channel.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:transe:v:161:y:2022:i:c:s1366554522000886
    DOI: 10.1016/j.tre.2022.102697
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