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How consumers use product reviews in the purchase decision process

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  • Sungha Jang
  • Ashutosh Prasad
  • Brian Ratchford

Abstract

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. Copyright Springer Science+Business Media, LLC 2012

Suggested Citation

  • Sungha Jang & Ashutosh Prasad & Brian Ratchford, 2012. "How consumers use product reviews in the purchase decision process," Marketing Letters, Springer, vol. 23(3), pages 825-838, September.
    • Handle: RePEc:kap:mktlet:v:23:y:2012:i:3:p:825-838
    DOI: 10.1007/s11002-012-9191-4
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    Cited by:

    1. Bartschat, Maria & Cziehso, Gerrit & Hennig-Thurau, Thorsten, 2022. "Searching for word of mouth in the digital age: Determinants of consumers’ uses of face-to-face information, internet opinion sites, and social media," Journal of Business Research, Elsevier, vol. 141(C), pages 393-409.
    2. Antioco, Michael & Coussement, Kristof, 2018. "Misreading of consumer dissatisfaction in online product reviews: Writing style as a cause for bias," International Journal of Information Management, Elsevier, vol. 38(1), pages 301-310.
    3. Erik Maier & Robert Wilken & Florian Dost, 2015. "The double benefits of consumer certainty: combining risk and range effects," Marketing Letters, Springer, vol. 26(4), pages 473-488, December.
    4. Edenbrandt, Anna Kristina & Lagerkvist, Carl-Johan & Lüken, Malte & Orquin, Jacob L., 2022. "Seen but not considered? Awareness and consideration in choice analysis," Journal of choice modelling, Elsevier, vol. 45(C).
    5. Monika Kukar-Kinney & Angeline Close Scheinbaum & Larry Olanrewaju Orimoloye & Jeffrey R. Carlson & Heping He, 2022. "A model of online shopping cart abandonment: evidence from e-tail clickstream data," Journal of the Academy of Marketing Science, Springer, vol. 50(5), pages 961-980, September.
    6. Wu, Yinglu & Wu, Jianan, 2016. "The Impact of User Review Volume on Consumers' Willingness-to-Pay: A Consumer Uncertainty Perspective," Journal of Interactive Marketing, Elsevier, vol. 33(C), pages 43-56.
    7. King, Robert Allen & Racherla, Pradeep & Bush, Victoria D., 2014. "What We Know and Don't Know About Online Word-of-Mouth: A Review and Synthesis of the Literature," Journal of Interactive Marketing, Elsevier, vol. 28(3), pages 167-183.
    8. Aishwarya Deep Shukla & Guodong (Gordon) Gao & Ritu Agarwal, 2021. "How Digital Word-of-Mouth Affects Consumer Decision Making: Evidence from Doctor Appointment Booking," Management Science, INFORMS, vol. 67(3), pages 1546-1568, March.
    9. Guan, Chong & Lam, Shun Yin, 2019. "Product Rating Statistics as Consumer Search Aids," Journal of Interactive Marketing, Elsevier, vol. 48(C), pages 51-70.
    10. Ana B. Casado-Díaz & Leonor M. Pérez-Naranjo & Ricardo Sellers-Rubio, 2017. "Aggregate consumer ratings and booking intention: the role of brand image," Service Business, Springer;Pan-Pacific Business Association, vol. 11(3), pages 543-562, September.
    11. Kostyra, Daniel S. & Reiner, Jochen & Natter, Martin & Klapper, Daniel, 2016. "Decomposing the effects of online customer reviews on brand, price, and product attributes," International Journal of Research in Marketing, Elsevier, vol. 33(1), pages 11-26.
    12. Cró, Susana & Martins, António Miguel, 2017. "The importance of security for hostel price premiums: European empirical evidence," Tourism Management, Elsevier, vol. 60(C), pages 159-165.

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