The Power of Product Reviews
https://spiegel.medill.northwestern.edu/_pdf/Spiegel_Online%20Review_eBook_Jun2017_FINAL.pdf
The research article above details the influence of consumer ratings and reviews of products on sales. 95 percent of online shoppers(or aspiring consumers) read product reviews before making a purchase. Reviews are used by shoppers to gather information about a product – whether it will meet a particular need, is long-lasting, or will be worth the purchase. When a “risky” or expensive product receives a 4 star rating (or lower) from a verified buyer, the shopper is more likely to be influenced by the product reviews. However if the product receives a 5 star rating or a review from a non-verified, the shopper is less likely to be influenced by the product. When a product receives a product with 5 stars, shoppers assume that the rating is “too good to be true” – assume that the reviewer is withholding useful information.
This article relates to the concept learned in class: information cascades. When a consumer is considering purchasing a product he or she often references the product’s reviews. If the aspiring consumers sees that majority of the reviews or negative and/or the previous buyers have chosen to return the product or not to repurchase the products, the aspiring consumer will likely choose not to buy the product. However, if the aspiring consumer sees that the majority of the reviews are positive and/or the previous buyers have chosen to keep or repurchase the product, the aspiring consumer is more likely to purchase the product as well. The aspiring consumer makes either one of these decisions because he/she assumes that the other buyers know information that is useful for his/her decision (information-based reasons). The decision may also be based on a direct-benefit reason – the consumer may desire to experience a direct benefit of having product by aligning his/her behavior with the other buyers. On the contrary, if a the product does not currently have reviews, the decision of the aspiring consumer is based on his/her perceived value of the product.