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Two Studies of Consumer Reviews

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Two Studies of Consumer Reviews

  1. 1. Two Topics from Studying Consumer Reviews 1. When do reviews adequately portray a product or service? 2. Seeing the world with the consumer ecosystem perspective. ©Artistic Analytics, LLC
  2. 2. The Sufficiency Problem Generally the more reviews you have, the more they converge on a consensus assessment of the experience. That suggests to the prospective customer that the experience is very predictable and low risk. Some experiences are polarizing: some people love them while others hate them. Sometimes random chance will bring these two sides together in near equal numbers, with results confusing to the prospective customer. How do you know?
  3. 3. Was this review helpful? There is another dimension to many review sites, where readers assess the helpfulness of reviews. However, it is not obvious what the implications of this information are. Explaining “helpful:” • The writer’s total “helpful” votes (85%) • Length of review (5%) • Mention of the word “excellent” (1%)
  4. 4. Jumps in total helpfulness signal important reviews. A Business’ Helpful Peaks After a certain point readers consistently assess reviews to be less helpful. This may be the point were existing reviews reach sufficiency. The red line is a locally-weighted regression. *Yelp review data from the area around Phoenix, AZ
  5. 5. Satisfaction Minimizes At the approximate point where “helpful” peaks, customer satisfaction seems to minimize. When the entity being reviewed is sufficiently portrayed, the proper market begins to be exclusively attracted and satisfaction rises.
  6. 6. Matching Expectations with Outcomes Since matching expectations with outcomes is the key to customer satisfaction, consumers should be told when the available reviews might not yet allow them to make an informed prediction of their outcome.
  7. 7. McPhee’s (1963) Theory of Exposure There are four (4) consumer clusters based McPhee’s Theory of Exposure: on the proportion of niche venues in their • Natural monopoly. The most popular reviews: Niche Proportion Clusters products get the most users, and those Field 1 2 3 4 who use them least. Consumers 16565 9682 6910 5319 • Double jeopardy. Niche products have Avg. stars 3.82 3.77 3.7 3.6 a double disadvantage: (1) they are not -7168 12016 -2007 -2897 ∑ Helpful well-known; and, (2) when they Niche Prop 2.7% 25.2% 48.6% 98.9% become known, it is by people who use Reviews 60090 124007 57599 11167 the popular products and prefer Rev/Cons 3.2 12.5 9.7 2.1 them. Check/Biz 5839.6 3576.8 1178.5 164.6 – But are they truly engaged by them? Patronizing a mix of 26% niche businesses does not yield the highest satisfaction, but it does inspire the most participation and engagement. This seems to be the ideal point of adventure. Hit venues Niche venues
  8. 8. Seeing the world with the Consumer Ecosystem Perspective
  9. 9. A Typical Business Network • This network was created by linking businesses that are categorized in the same way by Yelp. • It depicts a map of the competitive landscape as these businesses likely perceive it. • The competitive perspective.
  10. 10. But there is another perspective: Consumers link themselves to businesses in a hub-and-spoke network with their patronage. The patronage of the same consumer connects the businesses themselves into a network that in one way can be seen to compete for a share of the consumer’s budget, and in another way sustain the consumer as an ecosystem.
  11. 11. The Consumer Ecosystem • • • The primary businesses patronized by consumers who also patronized Hotel Tempe. Note that the Mission Palms hotel here was not a member of the competitive map, and none of the competitors in that map are in the consumer ecosystem. The most important insight though is that this provides a rich multi-faceted portrait of the consumption habits of those who are patrons of Hotel Tempe.
  12. 12. Applying the Ecosystem to Search Ads Hypothesis: By shifting their repertoire of targeted searches beyond the obvious toward those that are both relevant to their business and consumer needs, consumer-facing businesses like Mission Palms can use search advertising more effectively.
  13. 13. A Nexus of Theory • Market structure analysis (MSA) examines how products in the same market compete more strongly with each other than with those in different markets. • The consumer ecosystem often depicts general brands and is appropriately described as brand mapping; brand mapping often uses consumer choice data similar to MSA. • Many of the brands in consumers’ awareness compete for a share of their disposable income across product categories. The budget allocation research stream is often focused on how consumers prioritize planned purchases. • Business ecosystem research sees consumers and producers as members of an economic community that coevolves in their capabilities and roles (e.g., the increase in economic activity that accrues to shopping centers that maximize heterogeneous retailer agglomeration).
  14. 14. Measuring the Ecosystem Perspective Mutual Information I(A; B) is the mutual information between an advertiser and its consumers, B are all the consumers who clicked A’s ads, p(a, b) is the joint probability of the advertiser and consumers using the same query, p(a) and p(b) are the probabilities of either using a query. To what extent is an advertiser targeting the full range of queries made by consumers that click its ads?
  15. 15. Hierarchical Logistic Regression Parameter Raw Coefficient Relative Importance* Query frequency -.207 .901 -.432 -.039 -.371 -.514 -.048 -1.304 .36 .33 .15 .07 .07 .02 <.01 Ecosystem MI Ad position Query freq.× rel. Past impressions Relevance HHI Constant *Relative importance is the percentage of the overall R2 that is attributed to a variable. Control variables from prior research: • Prior ad exposures • Prior ad clicks • Ad display position • Competitive interference • General query frequency • Ad-query relevance Nagelkerke’s R2 of .262
  16. 16. Authenticity & Promise-Keeping • Advertiser’s targeting of ecosystem queries must authentically empower the consumer to fulfill more needs. • Landing page must match the ad.

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