The Impact of Consumer Reviews on Consumer Search and Firm Profits

How do customer reviews affect consumer search, company profits, and category-level performance? Reviews can serve as a matching tool, reducing consumer uncertainty. Consequently, introducing reviewing at the retailer level may have two possible effects: 1) Re-allocate sales across different products within a category which may boost consumer utility but have little effect on short-run retailer profits, and/or 2) Raise firm profits by increasing consumers purchase probability and willingness to pay. We look at the effect of consumer reviews on category sales and traffic within a site. We find that reviews impact both search and sales and increase consumer willingness to pay.



Citation:

Dina Mayzlin and Wendy Moe (2010) ,"The Impact of Consumer Reviews on Consumer Search and Firm Profits", in NA - Advances in Consumer Research Volume 37, eds. Margaret C. Campbell, Jeff Inman, and Rik Pieters, Duluth, MN : Association for Consumer Research, Pages: 118-121 .

Authors

Dina Mayzlin, Yale School of Management, USA
Wendy Moe, University of Maryland, USA



Volume

NA - Advances in Consumer Research Volume 37 | 2010



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