1. When do reviews adequately

portray a product or service?

2. Seeing the world with the consumer ecosystem perspective.

Two Topics from Studying

Consumer Reviews

©Artistic Analytics, LLC

The Sufficiency ProblemGenerally the more

reviews you have, the

more they converge on

a consensus assessment

of the experience. That

suggests to the prospective

customer that the

experience is very

predictable and low risk.

Some experiences are polarizing: some people love them while

others hate them. Sometimes random chance will bring

these two sides

together in near

equal numbers,

with results

confusing to the

prospective

customer. How do

you know?

Was this review helpful?

Explaining “helpful:”

• The writer’s total “helpful” votes (85%)

• Length of review (5%)

• Mention of the word “excellent” (1%)

There is another dimension to

many review sites, where readers

assess the helpfulness of reviews.

However, it is not obvious what

the implications of this

information are.

A Business’ Helpful Peaks

After a certain point readers

consistently assess reviews

to be less helpful. This may

be the point were existing

reviews reach sufficiency.

The red line is a

locally-weighted

regression.

Jumps in total

helpfulness

signal important

reviews.

*Yelp review data from the area around Phoenix, AZ

Satisfaction Minimizes

At the approximate

point where “helpful”

peaks, customer

satisfaction seems to

minimize.

When the entity being

reviewed is sufficiently

portrayed, the proper

market begins to be

exclusively attracted

and satisfaction rises.

Matching Expectations with Outcomes

Since matching expectations with outcomes is the key to customer satisfaction,

consumers should be told when the available reviews might not yet allow them

to make an informed prediction of their outcome.

McPhee’s (1963) Theory of ExposureMcPhee’s Theory of Exposure:

• Natural monopoly. The most popular

products get the most users, and those

who use them least.

• Double jeopardy. Niche products have

a double disadvantage: (1) they are not

well-known; and, (2) when they

become known, it is by people who use

the popular products and prefer

them.

– But are they truly engaged by them?

Niche venues

Niche Proportion Clusters

Field 1 2 3 4

Consumers 16565 9682 6910 5319

Avg. stars 3.82 3.77 3.7 3.6

∑ Helpful -7168 12016 -2007 -2897

Niche Prop 2.7% 25.2% 48.6% 98.9%

Reviews 60090 124007 57599 11167

Rev/Cons 3.2 12.5 9.7 2.1

Check/Biz 5839.6 3576.8 1178.5 164.6

There are four (4) consumer clusters based

on the proportion of niche venues in their

reviews:

Hit venuesPatronizing a mix of 26% niche

businesses does not yield the

highest satisfaction, but it does

inspire the most participation

and engagement. This seems to

be the ideal point of

adventure.

Seeing the world with the

Consumer Ecosystem Perspective

A Typical Business Network

• This network was created by linking businesses that are categorized in the same way by Yelp.

• It depicts a map of the competitive landscape as these businesses likely perceive it.

• The competitive

perspective.

But there is another perspective:

Consumers link themselves to businesses in a hub-and-spoke network with their

patronage. The patronage of the same consumer connects the businesses

themselves into a network that in one way can be seen to compete for a share

of the consumer’s budget, and in another way sustain the consumer as an

ecosystem.

The Consumer

Ecosystem• The primary businesses

patronized by consumers

who also patronized Hotel

Tempe.

• Note that the Mission

Palms hotel here was not a

member of the competitive

map, and none of the

competitors in that map are

in the consumer ecosystem.

• The most important insight

though is that this provides

a rich multi-faceted portrait

of the consumption habits

of those who are patrons of

Hotel Tempe.

Applying the Ecosystem to Search AdsHypothesis: By shifting their repertoire of targeted searches beyond the obvious toward

those that are both relevant to their business and consumer needs, consumer-facing

businesses like Mission Palms can use search advertising more effectively.

A Nexus of Theory

• Market structure analysis (MSA) examines how products in the same market compete more strongly with each other than with those in different markets.

• The consumer ecosystem often depicts general brands and is appropriately described as brand mapping; brand mapping often uses consumer choice data similar to MSA.

• Many of the brands in consumers’ awareness compete for a share of their disposable income across product categories. The budget allocation research stream is often focused on how consumers prioritize planned purchases.

• Business ecosystem research sees consumers and producers as members of an economic community that coevolves in their capabilities and roles (e.g., the increase in economic activity that accrues to shopping centers that maximize heterogeneous retailer agglomeration).

Measuring the Ecosystem Perspective

Mutual Information

I(A; B) is the mutual information between an

advertiser and its consumers, B are all the consumers

who clicked A’s ads, p(a, b) is the joint probability of

the advertiser and consumers using the same query,

p(a) and p(b) are the probabilities of either using a

query.

To what

extent is an

advertiser

targeting the

full range of

queries

made by

consumers

that click its

ads?

Hierarchical Logistic Regression

Parameter Raw

Coefficient

Relative

Importance*

Query frequency -.207 .36Ecosystem MI .901 .33

Ad position -.432 .15Query freq.× rel. -.039 .07Past impressions -.371 .07

Relevance -.514 .02HHI -.048 <.01

Constant -1.304

Control variables from prior research:

• Prior ad exposures

• Prior ad clicks

• Ad display position

• Competitive interference

• General query frequency

• Ad-query relevance*Relative importance is the percentage of the

overall R2 that is attributed to a variable. Nagelkerke’s R2 of .262

Authenticity & Promise-Keeping

• Advertiser’s targeting of ecosystem queries must authenticallyempower the consumer to fulfill more needs.

• Landing page must match the ad.