Faculty of Economics and Business Administration Publications Database

Decomposing the effects of online customer reviews on brand, price, and product attributes

Kostyra, Daniel
Natter, Martin
Klapper, Daniel
Volume: 33
Number: 1
Pages: 11 - 26
ISSN-Print: 0167-8116
Link External Source: Online Version
Year: 2015
Keywords: Online customer reviews; Choice-based conjoint experiment; Brand management; Pricing; Willingness to pay

Online customer reviews (OCRs) have become a major source of information for customers in the Internet. Understanding the impact of OCRs on customers' decisions is an important challenge for academics and practitioners. We apply a choice-based conjoint experiment that combines all relevant levels of the OCR dimensions (valence, volume, and variance) and that estimates the effect of OCRs on choice. The experimental setting allows us to estimate the direct effects but also the interaction effects of the OCR dimensions, which have been largely neglected in previous research. The impact of the OCR dimensions is evaluated against the results from a control group that did not face OCRs when making their choices. Therefore, our experiment enables us to investigate the extent to which the presence of OCRs affects customers' consideration of brand, price, and technical product attributes. By contrast to previous findings, our results show that volume and variance do not affect customers' choices directly but that they moderate the impact of valence on customers' choices. Moreover, we find that OCRs decrease the importance of brand for customer purchase decisions, indicating that managing OCRs have become a challenge for brand management.