How e-WOM recommendations influence product consideration and quality of choice: A motivation to process information perspective

A laboratory experiment examines the effects of electronic word-of-mouth (e-WOM) on consumer consideration and choice of an experience product. Specifically, we manipulated the number of consumer recommendations and the optimality of the recommended product in a realistic online shopping environment. The results indicate that e-WOM is likely to result in more time considering the recommended product. For consumers more motivated to process information, e-WOM recommendations lead to more time spent on the choice task overall. Further, consumers with less motivation to process information make suboptimal decisions based on e-WOM recommendations. Consumers with a high motivation to process information are willing to accept recommendations and switch from declared attribute preferences, but choose only optimal products.     

Evaluation and Choice as a Satisficing Process

The question of whether individuals are rational or irrational in their decision‐making has long been an area of interest to academics and marketers, as the different decision styles require differing use of information sources and choice criteria by consumers during the buying process. As such, marketers would be required to adopt different communication strategies and stress different marketing mix or product features if they were to be successful in influencing the consumer’ s final choice.

The debate can be classified into whether or not consumers follow a formalised decision sequence of search and evaluation leading to final product choice. If consumers are not prepared to commit themselves to the cognitive and behavioural effort required by this formal process then they will satisfice their decision‐making, applying simplifying strategies to arrive at a satisfactory, although not the optimum, choice.

This paper reviews the common assumptions of search and choice, suggesting a three‐stage model which can be used to guide marketing strategy. Research into the decision process used by consumers in the acquisition of a video recorder is used to illustrate the operation of the satisficing model. Implications for marketing strategy are then discussed.     

Unveiling user-generated content: Designing websites to best present customer reviews

Online customer reviews are an important type of user-generated content, through which consumers share their experiences with products and services in order to help others make informed purchasing decisions. In this article, we discuss the goals of online customer reviews and develop practical, actionable principles that can be used to improve the presentations of customer reviews. We identify four goals—two ultimate, and two intermediate—of online customer reviews. The two ultimate goals are: (1) to assist consumers in making accurate choices, and (2) to reduce the cognitive costs of making such choices. The two intermediate goals are: (1) to help consumers form an unbiased understanding of the product, and (2) to construct a set of evaluative criteria. Drawing on the constructive view of consumer judgment and choice, we present a conceptual model of online-review based consumer judgment and choice. We report principles that will improve the presentation of reviews, and discuss the benefits of the new design over the traditional presentation of online reviews.     

The influence of pre-decisional constraints on information search and consideration set formation in new automobile purchases

We propose that the manner in which a purchase decision is initiated has an important influence on subsequent product evaluation and choice. Specifically, we propose that the problem recognition “event” and the consequent retrieval of pre-decisional constraints from memory significantly influence the ensuing processes of external information search and consideration set formation. Several hypotheses are developed to model these interrelationships. The data were collected from a national probability sample of new automobile buyers. Log-linear, logistic regression and linear regression analyses were used to test the hypotheses. The results suggest that the type of pre-decisional constraints that are activated as a consequence of the problem recognition event significantly influences the “route” consumers follow through the remainder of the purchase process. The findings have important theoretical and practical implications for understanding the consumer decision process for consumer durables.     

Multiple-Category Decision-Making: Review and Synthesis

In many purchase environments, consumers use information from a number of product categories prior to making a decision. These purchase situations create dependencies in choice outcomes across categories. As such, these decision problems cannot be easily modeled using the single-category, single-choice paradigm commonly used by researchers in marketing. We outline a conceptual framework for categorization, and then discuss three types of cross-category dependence: cross-category consideration cross-category learning, and product bundling. We argue that the key to modeling choice dependence across categories is knowledge of the goals driving consumer behavior.     

A self‐regulatory model of consideration set formation

The goal of this article is to deepen the understanding of the consideration stage in choice processes. The basic questions are: Why do people consider different brands/products in the first place? What cognitive processes lead to the formation of consideration sets? Based on the notion that consumers are volitional decision makers capable of controlling their own behavior according to their goals, a self‐regulatory model of consideration‐set formation is developed. Goals at different levels of abstraction are hypothesized to determine considerationset formation. In contrast to the notion of congruence, which relates the ideal self to consumer choice, the authors focus on the motivational function of the self. Based on a self‐regulatory model, it is shown that the ideal self, as a macrolevel goal, determines desired benefits. Desired benefits, as more specific goals, then determine brand consideration. In contrast to stimulus‐based choice approaches, consideration‐set composition is investigated in a memory‐based, comparable‐choice context of real adult consumers considering the purchase of automobiles. © 2005 Wiley Periodicals, Inc.     

Learning About Computers: An Analysis of Information Search and Technology Choice

We estimate a dynamic model of how consumers learn about and choose between different brands of personal computers (PCs). To estimate the model, we use a panel data set that contains the search and purchase behavior of a set of consumers who were in the market for a PC. The data includes the information sources visited each period, search durations, as well as measures of price expectations and stated attitudes toward the alternatives during the search process. Our model extends recent work on estimation of Bayesian learning models of consumer choice behavior in environments characterized by uncertainty by estimating a model of active learning—i.e., a model in which consumers make optimal sequential decisions about how much information to gather prior to making a purchase. Also, following the suggestion of Manski (2003), we use our data on price expectations to model consumers’ price expectation process, and, following the suggestion of McFadden (1989a), we incorporate the stated brand quality information into our likelihood function, rather than modeling only revealed preference data.Our analysis sheds light on how consumer forward-looking price expectations and the process of learning about quality influence the consumer choice process. A key finding is that estimates of dynamic price elasticities of demand exceed estimates that ignore the expectations effect by roughly 50%. This occurs because our estimated expectations formation process implies that consumers expect mean reversion in price changes. This enhances the impact of a temporary price cut. Finally, while our work focuses specifically on the PC market, the modeling approach we develop here may be useful for studying a wide range of high-tech, high-involvement durable goods markets where active learning is important.JEL Classification: C15, C33, C35, C42, C51, C52, D83, D84     

An Analysis of Assortment Choice in Grocery Retailing

Consumers in grocery retailing commonly buy bundles of products to accommodate current and future consumption. When all products in a particular bundle share common attributes (and are selected from the same product category), the consumer is said to assemble an assortment. This research examines the impact of assortment variety on the assortment choice process. In particular, we test the prediction that consumers demand less variety for higher quality items. To investigate this relationship, we employ a flexible choice model, suitable for the analysis of assortment choice. The model, based upon the assumption that the utility of purchase of one item in an assortment depends upon the set of items already selected, allows for a general utility structure across the assortment items. We apply the model to household assortment choice histories from the yogurt product category. Substantively, we show that yogurt choice is affected by brand quality perceptions (quality-tier competition). Moreover, we show that reaction to reductions in variety (number of yogurt flavors) is mediated by brand quality perceptions. Taken together, these empirical facts paint a picture of a consumer who is willing to trade-off variety against product quality in assortment choice.     

Consumer participation in the design and realization stages of production: How self-production shapes consumer evaluations and relationships to products

Psychological responses of consumers to specific stages of self-production activities are investigated in four studies. Findings reveal that consumer participation in the realization stage (physical production) enhances affective commitment to the product. However, physical production without opportunity to express choice or creativity during the production process does not change the symbolic meaning of the product (how self-expressive it is) and, therefore, does not result in identification with the product. Participation during the design stage (input-specification) enhances identification, leading to affective commitment, which in turn enhances evaluation of the self-made product. Finally, engaging consumers in both the realization and design stages of the production process does not create value for consumers over and above the main effects created by a high level of participation in either stage.     

Do consumers who conduct online research also post online reviews? A model of the relationship between online research and review posting behavior

The purpose of the research is to investigate whether consumers who conduct online product research also more likely to post online product reviews. An information theory-based classification algorithm is used to estimate the likelihood of a consumer posting an online review conditional on having conducted online product research. Data from a nationally representative probability sample of American internet users are used to estimate the model. The results indicate that the characteristics of consumers who have a greater propensity to conduct online product research but a lower tendency to post online product reviews differ substantially from those who are more likely to post online product reviews but less likely to conduct online product research. The research is important because the degree to which consumers who conduct online product research are similar to those who post online product reviews can be used to track the effectiveness of online word-of-mouth marketing campaigns.     

The effect of information overload on consumer choice quality in an on‐line environment

As more and more consumers become part of the net population, retailers and manufacturers as well as dot‐com storefronts are touting consumers by providing an ever‐increasing amount of product information. Their long‐term survival and profitability may be determined by how much and how well their product information is presented to and processed by the consumers. By combining both the traditional and structural approaches to the information‐overload phenomenon, this study investigates the impact of Web site information on consumer choice and psychological states in an on‐line environment. Varying the number of alternatives and attributes (traditional measure) and attribute level distribution across alternatives (structural measure), this study asks subjects to choose the best (dominant) CD player in a given set. Their subjective states such as satisfaction, confidence, and confusion are also measured. Results show that the number of attributes and attribute level distribution are good predictors of the effect of information overload on consumer choice. In addition, the study finds that on‐line information overload results in less satisfied, less confident, and more confused consumers. Implications and suggestions for future research are provided. © 2004 Wiley Periodicals, Inc.     

Overcoming data limitations for store choice modelling.: Exploiting retail chain choice data by means of aggregate logit models

This paper reports on research aimed at exploiting certain data sources for store choice modelling purposes. Many databases, such as some consumer panels, only record the firm chosen by consumers and not the specific store at which they shop. Four alternative approaches are proposed in order to use this raw information for studying patronage determinants at store level: (a) an ordinary logit model in which chain utility is averaged across stores within; (b) an ordinary logit model in which the choice set is assumed to be composed of the nearest store for each chain; (c) a straightforward application of an aggregate logit model; and (d) the application of an aggregate logit model with choice sets spatially bounded by a distance threshold representing the maximum distance that consumers are willing to travel for shopping. The models are empirically tested in the context of spatial choice behaviour. Goodness of fit indicators reveal that only models (b), (c) and (d) acceptably represent competitive interaction dynamics. As performance of (b) is slightly better than that of (c), it seems that a priori the ‘nearest store assumption’ is a better approach than the modelling of aggregate choice structures. However, when the latter approach is applied with more reliable choice sets, as suggested in model (d), the best performance is achieved. The results thus lead us to think that the aggregate logit model is a promising methodology for solving the problem at issue, but subject to an appropriate definition of the consumers’ choice sets. In fact, such an approach provides a more suitable modelling solution to the extent that the saturation and the intra-firm store heterogeneity become more intense, because these situations presumably imply that consideration sets include several stores from the same chain.     

Dynamic assortment in the presence of brand heterogeneity

In this paper, we study the dynamic assortment planning problem in the presence of heterogeneous brands. Over a limited selling season, the retailer sells heterogeneous products from one store brand and one national brand. We use the nested multinomial logit (NMNL) framework to model consumer choice process, in which consumers choose first which brand to buy and then a product within that brand. We formulate this problem using the finite-horizon dynamic programming approach. Using available sales transaction data, we estimate the consumer choice behavior and empirically demonstrate existence of brand heterogeneity. Further, our results suggest that ignoring brand heterogeneity will make the retailer’s expected revenues significantly overestimated, and the potential revenue overestimation depends on initial inventories and prices of products of two brands. We finally show that the retailer will benefit from dynamic assortment optimization with the estimated consumer choice model.     

Food choice: student consumers' decision‐making process regarding food products with limited label information

Food label information theoretically facilitates consumer decision‐making and food choice, but the extent to which consumers actually use this information during decision‐making is a subject of considerable debate. Therefore, this study focused on the importance of label information in student consumers' decision‐making process when exposed to limited label information food in a cafeteria environment. Because of a paucity of research in this area, a qualitative research approach that was exploratory in nature was used, accompanied by semi‐structured interviewing and a vignette. Undergraduate students from the North‐West University, Potchefstroom Campus, in South Africa served as the target population. The findings suggest that internal and product‐related strategies are applied when food choices are made whereby the importance of label information only features in the latter strategy. Student consumers with a label interest were more inclined to use label information strategies in the absence of complete label information to base food choice on. Those with a lack of label interest made use of alternative strategies using product and personal‐related information, such as freshness and product knowledge to make decisions. The decision‐making process was more complex because of insufficient label information and product appearance, and thus previous experiences and habitual purchasing became more important to participants. Student consumers should be supported to make healthier food choices through food manufacturers supplying cafeteria products with more complete label information and by providing students with the knowledge to use label information correctly through educational programmes.     

Comparing consumer-produced product reviews across multiple websites with sentiment classification

ABSTRACT

Online consumer reviews have been extensively studied. However, existing literature analyzing online consumer review data mostly relies on a single data source, resulting in potentially biased analytics conclusions. Many websites encourage consumers to post reviews of their purchased products, so that new consumers can evaluate these reviews for the same product across different websites to help them make purchasing decisions. Confusions often arise in this process, because there often exist substantial discrepancies in customer reviews across different retailers on the same product. Clarifying such confusions can help consumers reduce concerns to make up their mind for their purchases, therefore benefiting both consumers and retailers. Through text analytics and sentiment analysis, we comparatively examine the underlying patterns of online consumer reviews of three large retailers including Sears, Home Depot, and Best Buy for a same product. Afterward, we combine online consumer reviews from these large retailers and conduct an overall text analytics and sentiment analysis. The overall results are further compared with the results from individual retailers. The findings show that the sentiment of the online consumer reviews could vary substantially so relying on a single data source to make purchase decision is not a wise idea. Based on the results, we further devise a framework to comparatively examine and integrate multiple data sources for social media analytics of online consumer reviews. This study offers important managerial implications and identifies several new research directions for social media analytics.     

Consumer decision making within a goal-driven framework

Research and theory in consumer decision making has been dominated by a perspective that assumes that a consumer knows what product category he or she needs. This limited view has resulted in equating consumer decisions with brand choice. The purpose of this article is to provide a framework for considering a wider range of consumer decision-making processes by linking them to different goals that consumers might pursue. A hierarchical goal structure consisting of four levels of goals; abstract principles or values, action programs, more concrete product acquisition, and brand acquisition goals, is proposed as the theoretical construct which ties together a wide range of consumer decision making phenomena. An experiment in which consumers think out loud in contemplating two levels of more familiar or unfamiliar goals reveals that their thoughts are constrained by the proposed goal hierarchy. The goals provide a useful framework for understanding decision-making processes involving product level consideration, set generation, and the evaluation of those self-generated sets. © 1997 John Wiley & Sons, Inc.     

eWOM Watchdogs: Ego‐Threatening Product Domains and the Policing of Positive Online Reviews

Suspicion regarding dishonest electronic word‐of‐mouth is a growing concern for consumers online. Individual consumers are occasionally seen acting as product review forum “watchdogs” within the websites they visit, posting vigilante comments against reviews they perceive to be fraudulent. This multimethod set of studies investigates consumer “watchdog comments,” and the way in which ego‐threatening product categories themselves may actually induce a prosecutorial mindset, leading to greater levels of suspicion toward positive online product reviews and the impulse to prosecute potential fraudsters. In Study 1, laboratory‐induced ego threat increased punitive severity against the act of falsifying online product reviews. In Study 2, a content analysis of actual Amazon.com reviews and consumer commentary indicates that the occurrence of watchdog comments is more common within ego‐threatening product categories.     

The influence of price on the relationship between involvement and consideration set size

This study examined the relationship between involvement and consideration set size for a product category featuring wide variability in the price and quality of choice alternatives. The use of a heterogeneous choice domain is considered important because it gives consumers the opportunity to make price and quality tradeoffs in the selection of their consideration sets. The results indicate that in such a choice context, the total effect of involvement on consideration set size is positive. A path analysis of the data indicates the reason for this positive relationship was that high-involvement subjects set wider latitudes of acceptance for price and thus were more likely to consider the more expensive models in the choice domain.     

Understanding consumers’ multichannel choices across the different stages of the buying process

This article provides a more integrative approach toward channel choice than previous research by considering all stages of the buying process (search, purchase, and after-sales), and by taking channel attributes, experience, and spillover effects into account when examining consumers?? channel choice intentions. The authors show that such an integrative perspective is important as channel attributes, experience, and spillover matter for consumers?? channel choices in all stages of the buying process. Notably, the study stresses the importance of channel experience and spillover effects for explaining consumers?? channel choice intentions in the different stages of the buying process. Channel experience effects occur when using the channel increases the likelihood that the consumer will use the very same channel on the next occasion. Spillover effects result when the likelihood of using a channel in one stage of the buying process affects the likelihood of choosing that channel in another stage. The results show that both effects influence consumers?? channel choice intentions over and above channel attributes. Importantly, the model results strongly pledge for studying attribute, experience, and spillover effects simultaneously.     

Preference for green packaging in consumer product choices – Do consumers care?

In this paper, consumer environmental choice is studied by analysing the relative importance of green packaging when compared with other relevant product attributes. The empirical study is based on a choice‐based conjoint analysis of preferences for functional drink products of a sample of 330 consumers using these products. Our choice‐based approach on environmental behaviour brings new insights to previous research, which predominantly relies on attitude models. Results indicate that consumers differ in their preferences for packaging, brand, price and convenience of use of daily products. In addition, various distinctive consumer segments can be identified on the market. Contrary to several previous studies, we found that the largest consumer segment, one‐third of consumers, favoured environmentally labelled packaging as the most important criteria in their choice. The findings emphasize the increasing importance of ethical and environmental dimension in product choices. We also propose that the attention in environmental consumer research should be shifted from general attitude studies towards the study of actual product choices.