How consumers use product reviews in the purchase decision process

• Published in: Marketing letters Vol. 23; no. 3; pp. 825 - 838
• Main Authors: Jang, Sungha, Prasad, Ashutosh, Ratchford, Brian T.
• Format: Journal Article
• Language: English
• Published: Boston Springer Science + Business Media 01-09-2012; Springer US; Springer Nature B.V
• 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; Bayesian estimation; Consideration set; Choice models; Product reviews
• ISSN: 0923-0645; 1573-059X
• DOI: 10.1007/s11002-012-9191-4

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.