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Title
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CRITICAL REVIEWS AND MARKET PERFORMANCE.
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Creator
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Pomirleanu, Elena, Ganesh, Jaishankar, University of Central Florida
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Abstract / Description
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Firms invest significant resources to improve the quality of their products but also to communicate to consumers about their efforts. However, information regarding quality of product offerings is now increasingly being generated by short or long term users of products or services. The growing popularity of critical reviews has prompted attention from both academics and practitioners alike. Current academic findings do not seem conclusive with respect to the impact critical reviews have on...
Show moreFirms invest significant resources to improve the quality of their products but also to communicate to consumers about their efforts. However, information regarding quality of product offerings is now increasingly being generated by short or long term users of products or services. The growing popularity of critical reviews has prompted attention from both academics and practitioners alike. Current academic findings do not seem conclusive with respect to the impact critical reviews have on product performance on the market. The current dissertation aims to clarify the role critical reviews have in relation to economic outcomes such as sales, category market share, price premiums and product success. Using four years of cross-sectional data from the automobile market, the first essay of this dissertation conceptualizes consumer and expert ratings as market-based signals and investigates the impact critical reviews have on product performance of new and used automobiles. Results show that both consumer and expert ratings are positively related to market performance (sales and category market share of new automobiles) but they exhibit a non-synergistic interaction. More specifically, at higher levels of consumer ratings, the impact of expert ratings on product performance is decreased and vice-versa. Furthermore, results show that critical ratings are significantly associated with the firm's ability to command higher price premiums. Comparatively, a firm-based driver of product performance, product improvement failed to show a significant association with product market performance but it exhibited a non-linear relationship with price premiums. Moreover, the impact of expert ratings proved to be significantly higher for utilitarian products than hedonic products whereas consumer ratings do not have a differential effect across product types. Finally, the results did not show that the impact of consumer ratings on sales of used automobiles is increasing over time. The second essay focuses on expert reviews (entertainment critics) and provides a more nuanced examination of the role of critics and critical reviews and their impact on probability of product success. Based on qualitative data, two types of expert reviews are distinguished to be influential (opinions and evaluations), however, their role differs in importance over time. The hypotheses are tested using data from the fourth season of American Idol. Results show that on average, opinions are significantly impacting the probability of success whereas evaluations do not. Moreover, the numbers of statements that contain evaluation negatively impact the success in early periods. Overall, the results highlight the facts that critical reviews from both experts and consumers should be monitored, that they are a key driver of product market-success and that select expert reviews may influence product success in early stages of product existence.
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Date Issued
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2009
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Identifier
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CFE0002788, ucf:48131
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Format
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Document (PDF)
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PURL
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http://purl.flvc.org/ucf/fd/CFE0002788
