The Influence of Customer Product Ratings on Purchase Decisions: An Abstract

Abstract

The way people buy things has fundamentally changed. While purchase behavior in traditional bricks-and-mortar stores is constricted by, for instance, limited retail spaces and finite opening hours, the Internet enables customers to buy whatever, whenever, from wherever they want to. In addition, while in the past, customers—when seeking for additional information beyond product descriptions and attributes such as brand, functional aspects, or price—were reliant on sales people’s advice or recommendations from friends, nowadays, most online retailers provide access to hundreds of product evaluations written by previous customers with only a few clicks. As a consequence, when making purchase decisions people increasingly rely on these customer product ratings as a credible information source for decision making. Previous research suggests that these product ratings may even serve as a substitute for traditional information sources rather than as a complement by, for example, curtailing the relevance of brands in purchase decision making (Chen et al. 2008; Luca 2011; Zhu and Zhang 2009); traditionally one of the key criteria when assessing the quality of a specific product or service (e.g., Jacoby et al. 1971). Although a large body of literature has focused on the impact of online product reviews and ratings on consumer decision making (see Cheung and Thadani 2012 for an extensive review), insights into the effects of the mere presence of online customer ratings on the formation of purchase decisions are still rare. Thus, the purpose of this research is to improve our knowledge regarding how the relative decision weights of different types of product characteristics (i.e., brand, functional aspects, and price) can change due to the presence of customer ratings as an additional information source for purchase decisions. Furthermore, previous research (e.g., Hu et al. 2008) suggests that the incorporation of customer reviews as an information source into decision making may serve as a means to reduce the risk associated with purchase decisions. Therefore, we incorporated the three most salient types of risk perceptions; namely, financial, performance, and social risk (e.g., DelVecchio and Smith 2005; Dowling and Staelin 1994; Taylor 1974; Dunn et al. 1986) into our model (study 2). We conducted three single-factor between-subjects experiments with two groups (customer ratings absent vs. customer ratings present) including choice-based conjoint designs with student samples (N1a = 182, N1b = 156, N2 = 335). Additionally, we conducted several regression analyses. In sum, our findings reveal that the presence of customer ratings curtails the relevance of product characteristics (i.e., brand, functional aspects, and price) significantly. In addition, the fact that online ratings are incorporated into decision making to reduce purchase risks (i.e., social, performance, and financial risk) can be held responsible for the changes in decision weights of a product’s core characteristics which serve to alleviate risk perceptions when online ratings are absent.