The DOI matches its Crossref record; 2 of the 2 references it cites were found in a registry or an index.
Third-Party Product Review and Firm Marketing Strategy
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.
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Cites
The Market for "Lemons": Quality Uncertainty and the Market Mechanism
Akerlof, G. A. (1970) · The Quarterly Journal of Economics · doi:10.2307/1879431 · Cited by 23,016
A New Approach to Consumer Theory
Lancaster, K. J. (1966) · Journal of Political Economy · doi:10.1086/259131 · Cited by 8,471
Cited by
Park, D.-H., Lee, J., & Han, I. (2007) · International Journal of Electronic Commerce · doi:10.2753/jec1086-4415110405 · Cited by 2,106
The impact of electronic word-of-mouth communication: A literature analysis and integrative model
Cheung, C. M. K., & Thadani, D. R. (2012) · Decision Support Systems · doi:10.1016/j.dss.2012.06.008 · Cited by 2,005
Parguel, B., Benoît-Moreau, F., & Larceneux, F. (2011) · Journal of Business Ethics · doi:10.1007/s10551-011-0901-2 · Cited by 1,024
Social commerce constructs and consumer’s intention to buy
Hajli, N. (2015) · International Journal of Information Management · doi:10.1016/j.ijinfomgt.2014.12.005 · Cited by 826
Zhang, Z., Ye, Q., Law, R., & Li, Y. (2010) · International Journal of Hospitality Management · doi:10.1016/j.ijhm.2010.02.002 · Cited by 760
Metadata
- Authors
- Chen, Y., & Xie, J.
- Venue
- Marketing Science
- Published
- 2005-05
- Volume
- 24
- Issue
- 2
- Pages
- 218-240
- ISSN
- 0732-2399 (ISSN-L)
- 1526-548X
- OpenAlex
- W2108908656
- Cited by
- 375
- References
- 2
- FWCI
- 29.25
- Type
- journal article
- Language
- en
- Open access
- closed
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
