How to influence my customers?

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How to influence my customers?: the impact of electronic market design

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International World Wide Web Conference archive
Proceeding of the 17th international conference on World Wide Web table of contents

Beijing, China

POSTER SESSION: Posters table of contents

Pages 1117-1118

Year of Publication: 2008

ISBN:978-1-60558-085-2

Authors

Nan Hu	Singapore Management University, Singapore
Ling Liu	University of Texas at Dallas, Dallas, USA
Bin Chen	Singapore Management University, Singapore
Jialie Shen	Singapore Management University, Singapore

Sponsor

ACM: Association for Computing Machinery

Publisher

ACM New York, NY, USA

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ABSTRACT

This paper investigates the strategic decisions of online vendors for offering different mechanism, such as sampling and online reviews of information products, to increase their online sales. Focusing on measuring the effectiveness of electronic market design (offering reviews, sampling, or both), our study shows that online markets behavior as communication markets, and consumers learn product quality information both passively (reading online reviews) and actively but subjectively (listening to music sampling). Using data from Amazon, first we show that sampling along is a strong product quality signal that reduces the product uncertainty after controlling for halo effect. In general, products with sampling option enjoy a higher conversion rate (which leads to better sales) than those without sampling because sampling decreases the uncertainty of consuming experience goods. Second, the impact of online reviews on sales conversion rate is lower for experience goods with a sampling option than those without. Third, when the uncertainty of the societal reviews is higher, sampling plays a more important role because it mitigates such uncertainty introduced by online reviews.

REFERENCES

Note: OCR errors may be found in this Reference List extracted from the full text article. ACM has opted to expose the complete List rather than only correct and linked references.

	1	Chevalier, J., and Goolsbee, A. "Measuring Prices and Price Competition Online: Amazon and Barnes and Noble," Quantitative Marketing and Economics (1:2) 2003, pp 203--222.
	2	Chevalier, J., and Mayzlin, D. "The Effect of Word of Mouth on Sales: Online Book Reviews," Journal of Marketing Research, 2006.