Third-Party Product Review and Firm Marketing Strategy

Yubo Chen · Jinhong Xie

376 citations0/0 files storedMarketing Science

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Consumer Market Behavior and Pricing Marketing and Advertising Strategies Digital Marketing and Social Media

Abstract

Product reviews by third parties are growing in popularity. This paper examines when and how a manufacturing firm should adapt its marketing strategies to such reviews. For example, should a firm receiving an unfavorable review reduce its price or adjust its advertising? Should a winning product of a product review (e.g., “editor’s choice”) boost its advertising expenditure to spread the good news? How should firms’ strategic responses to product reviews differ across different types of product reviews (description vs. recommendation) and different advertising media (the reviewer’s publication vs. other media)? We develop a theory to address these issues and derive firms’ optimal responses to product reviews under different product/market/review/media conditions. We show that firms should choose advertising rather than price as a strategic variable in response to product reviews when enough consumers value horizontal product attributes. Surprisingly, we find that using a review-endorsed advertising format (i.e., advertisements containing third-party award logos) to broadcast its victory can hurt the winning product of a product review. Also, it is not necessarily wise for the winning products to boost advertising expenditures to spread the good news. Data from two industries—printers and running shoes—are used to illustrate some of our findings.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 376 citations exist upstream.

References

1970The Market for "Lemons": Quality Uncertainty and the Market Mechanism 1988The Theory of Industrial Organization 1966A New Approach to Consumer Theory 1976A New Approach to Consumer Theory 1974Advertising as Information 2004Using Online Conversations to Study Word-of-Mouth Communication 1977Equilibrium Distributions of Sales and Advertising Prices 1985Do Higher Prices Signal Higher Quality?

Cited by

2010What makes a helpful online review? a study of customer reviews on amazon.com 2015Social commerce constructs and consumer's intention to buy 2010The impact of e-word-of-mouth on the online popularity of restaurants: A comparison of consumer reviews and editor reviews 2011Online Social Interactions: A Natural Experiment on Word of Mouth versus Observational Learning 2013Web reviews influence on expectations and purchasing intentions of hotel potential customers 2011The Role of Marketing in Social Media: How Online Consumer Reviews Evolve

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.