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Executive Summary
Understanding how online consumer reviews affect consumers’ purchase decisions is of vital importance to firms that rely on online word of mouth (WOM) to disseminate information about their products. In this article, the authors examine contextual factors that moderate this relationship. They propose a conceptual framework and hypothesize that product- and consumer-specific characteristics affect consumers’ reliance on online consumer reviews and thus are important factors governing the efficacy of online reviews. Using a data set on sales and consumer reviews of video games, the authors find that online consumer reviews have a greater influence on the sale of games whose players have more Internet experience. In addition, online reviews are significantly more influential in affecting sales of less popular games than of more popular games. This study is the first to empirically demonstrate the differential impact of consumer reviews across products in the same product category. The results imply that firms’ online marketing strategies may not be effective for all types of products, even if they are in the same category. This implication contrasts with the extant view that all firms need to actively manage online WOM and strategically respond to online consumer reviews, given the great efficiency of the Internet in spreading WOM. The study also suggests that niche producers and producers that sell mostly through online channels should be more concerned about online consumer reviews and manipulations of online review systems. Because the proliferation of online markets has led to the emergence of many niche producers, the results have important implications for their survival. At the same time, as the Internet population continues to grow, consumers inevitably become more experienced with the Internet. The study suggests that over time, marketing managers will find online consumer reviews to be increasingly influential and thus should devote more resources to online channels.

Biography
Feng Zhu is Assistant Professor of Strategy in the Marshall School of Business at the University of Southern California. He conducts both theoretical and empirical research on innovation and technology strategy in platform-based markets. He received his PhD in Science, Technology, and Management and a Master in Computer Science from Harvard University, as well as his BA in Economics, Mathematics, and Computer Science from Williams College.

Xiaoquan (Michael) Zhang is Assistant Professor of ISOM at the Hong Kong University of Science and Technology. He holds a PhD of Management from the Sloan School of Management at the Massachusetts Institute of Technology and an MSc in Management, a BE in Computer Science, and a BA in English from Tsinghua University. Before joining the academia, he worked as a consultant for an investment bank and as an international marketing manager for a high-tech company. Professor Zhang’s research interests are on issues related to creation, dissemination, and processing of information in business and management contexts. His works study pricing of information goods, online word of mouth, online advertising, incentives of creation in open source and open content projects, and use of information in financial markets.

Journal of Marketing, Volume 74, Number 2, March 2010
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