Reducing Buyers' Uncertainty About Taste-Related Product Attributes.

Author List: Markopoulos, Panos M.; Clemons, Eric K.;
Journal of Management Information Systems, 2013, Volume 30, Issue 2, Page 269-299.
It is becoming increasingly important for firms to know when to take steps to reduce buyers' uncertainty about products and services. This paper focuses on investments that firms can make to reduce buyers' uncertainty about taste-related product attributes. Using an analytical model, we show that firms should disclose more taste-related information when the customer segment they directly target represents a larger share of the overall market. We further show that there are practical ways by which managers can decide if such disclosure investments are financially beneficial to their firms. Specifically, we show that the variance of consumer reviews can guide such decisions. The paper's main contribution to the extant literature is to show that firms must consider the variance, but not the mean, of buyer reviews, to determine the need to invest in reducing consumer uncertainty about taste-related attributes. The papers's findings are managerially important due to the ubiquity of consumer reviews. They are novel because most of the previous literature views the mean of the review as the key indicator. Finally, they are general in their applicability since they are independent of any assumptions about heuristics that buyers may use to ascertain product quality from the reviews of previous buyers.
Keywords: consumer uncertainty reduction; information dissemination; product ratings; product review variance
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#202 0.183 online uncertainty reputation sellers buyers seller marketplaces markets marketplace buyer price signaling auctions market premiums ebay transaction reverse literature comments
#199 0.171 reviews product online review products wom consumers consumer ratings sales word-of-mouth impact reviewers word using effect marketing helpfulness electronic commerce
#225 0.130 information environment provide analysis paper overall better relationships outcomes increasingly useful valuable available increasing greater regarding levels decisions viewed relative
#5 0.092 consumer consumers model optimal welfare price market pricing equilibrium surplus different higher results strategy quality cost lower competition firm paper
#0 0.086 information types different type sources analysis develop used behavior specific conditions consider improve using alternative understanding data available main target
#271 0.080 technology investments investment information firm firms profitability value performance impact data higher evidence diversification industry payoff return findings decisions greater
#209 0.070 results study research information studies relationship size variables previous variable examining dependent increases empirical variance accounting independent demonstrate important addition
#238 0.070 shared contribution groups understanding contributions group contribute work make members experience phenomenon largely central key common especially major conceptualizing study