Consumer segmentation and the information rule of online reviews in horizontally differentiated product markets

Abstract

Previous studies have explored the impact of online reviews on product sales at the aggregate level. This study contributes to the literature by investigating how online reviews take effect at the individual consumer level in a horizontally differentiated product market. We empirically test our hypotheses using data from a popular review website in China and consumers' actual dining records. We find evidence that the information role of online reviews is moderated by consumers' geographical locations. Our results have implications for consumer segmentation and targeting of consumers through local market advertising. © 2012 Springer-Verlag Berlin Heidelberg.