Abstract

Online reviews and ratings

 

The impact on individual decision-making and product demand

 

  

Abstract

Do online customer reviews affect consumer decision-making process and have an impact on product demand? Researcher investigates this question using novel A / B testing research method and collecting dataset with Google Analytics technology. Research participants are exposed to two experimental website designs. Control group does not observe online reviews and ratings (A test). In contrast, recommendations are visible for the test group (B test). Because of contrasting prototype website designs, researcher is able to identify causal impact of ratings on product demand and consumer behaviour. Major findings about the impact of consumer recommendations in relation to event ticketing industry are summarised: (1) 63% of respondents perceive online reviews as important product attributes in their decision making process. (2) Consumers are positively affected by favourable reviews that lead them to buy 50% more products than compared to situation without WOM. (3) The impacts of positive reviews are diminishing for products that are otherwise attractive (e.g. low price) (4) Buyers reject items with negative recommendations (even if they have brand heuristic cues), especially if they are highly priced. (5) Online review heuristics such as product popularity and high average ranking is not effective in helping to make quicker decisions or fewer product selections. The study concludes with academic and managerial implications, as well as limitations and recommendations for further studies.

 

Preface

 

When I started my first year at Cass Business School, they told me having a degree is not enough. In order to stand out, one needs to show evidence of something that inspires you, something that differentiates you from the crowd. With an intuitive interest in graphic design and technology, I started exploring one of the personal website platforms and began developing my own site (ievadargyte.com). This opened doors for tracking tools such as Google Analytics that introduced me to the world of marketing intelligence.

 

A year later, in the summer of 2015, I had an opportunity to intern at one of the most exciting London’s start-ups - YPlan (an events ticketing platform). As part of the team, I was exposed to a range of different digital marketing activities such as CRM (customer relationship management), social media ads and a sophisticated Google Analytics set up. I was taught how to develop tracking links that measure event performance, how to monitor channel revenue contribution and other things. I became very passionate about the scene and therefore decided to somehow contribute to the company I was working for.

 

I approached my supervisor Aneesh with a YPlan website prototype (6u2tbt.axshare.com) (that was already linked to Google Analytics account) and expressed my interest in marketing intelligence. During our discussion how to make it a more focused topic, a theme of online reviews and ratings emerged. Aneesh introduced me to smart business experiments that later crystallized into specific A / B test research design.

 

During the process of dissertation production, I identified two broad areas namely individual and market focus. As I learned from the past studies, researchers identified the importance of online reviews and ratings on two levels, precisely consumer decision-making and revenue contribution. Therefore, this thesis aims to educate and inspire both consumer behavior academics and business practitioners.

 

Reading theory was one thing. However, putting it on paper was another matter. It took me nearly two months of thorough analysis to structure this theme in an organized form that would also have quality content (substance). Additionally, in order to make results matter, I had to collect a significant amount of data. That was a difficult task since participation was voluntary and the number I aimed for was 62 research participants (more than 30 for each website prototype).

 

It was a challenging, nevertheless an extremely interesting experience. Therefore, I now present a thesis of online reviews and ratings in relation to consumer decision-making and impact on product demand that is the product of the bachelor degree in Business Studies at Cass Business School.

 

Acknowledgements

 

Several persons have contributed to this project in both academic and practical terms.  I would firstly like to thank my head supervisor Aneesh Banerjee for his time, valuable insights, direction and constructive comments, as well as academic and psychological support throughout the entire dissertation period.

 

Moreover, I am thankful to Rytis Vitkauskas and Viktoras Jucikas (the co-founders of YPlan) for their business-minded insights, practical recommendations and emotional support that inspired me to begin this research on the topic of digital marketing.

 

Furthermore, I would like to thank Tomas Kacevicius who was my mentor in relation to research method, particularly on website prototyping, design of A / B tests and data collection with Google Analytics.

 

I would also like to thank all research participants who voluntarily participated in this study and therefore allowed me to research eWOM (electronic word of mouth) phenomenon.

 

Finally, I would like to thank my family and friends for being supportive during my time studying Business at Cass Business School.

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