Ideas for Leaders #546

Buyers of Experiential Products and Consumer Reviews

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Key Concept

Shoppers find consumer reviews to be less useful, and are less likely to seek out such reviews, for experiential purchases (events to be lived through such as vacation packages) than for material products (objects to keep such as electronics). 

Idea Summary

While material purchases are purchases of tangible products that one intends to keep, experiential purchases are purchases of products that must be experienced. Restaurant meals, movies, or vacations are examples of experiential purchases. While there is no official categorization of products into experiential or material, most consumers intuitively know the difference.

Through an analysis of more than 6 million reviews on Amazon.com and a series of seven experiments, a research team from Olin Business School of the Washington University in St. Louis, The Wharton School of the University of Pennsylvania, and University of Toronto’s Rotman School of Management demonstrates that the decision process for purchasing experiential and material products differs, specifically in the context of consumer reviews: when deciding on whether to buy a product, the research shows, shoppers are less likely to pay attention to the opinion of other purchasers if they are buying an experiential product than if they are buying a material product.

For example, the analysis of millions of reviews on Amazon showed that for reviews dealing with experiential products, shoppers were more likely to respond “No” when asked if the review was helpful, compared to reviews dealing with material products.

The experiments were equally revealing. In one experiment, for example, participants were asked to list either an experiential or material purchase that they intended to buy in the coming year and then tell whether consumer reviews would have an impact on their purchase decision (e.g., which brand to buy, etc.). Another experiment asked the same questions for an experiential or material product, but after the participants had read actual reviews of the product. Still another experiment compared participants’ response to positive and negative reviews, and found that reviews for experiential products had less influence on purchase decision than reviews for material products.

The results from all these experiments were unequivocal: participants assigned to make experiential purchases were less likely to find consumer reviews useful or important, and less likely to be influenced by such reviews, than participants dealing with a material product.

Why do buyers of experiential products reject the importance of consumer reviews? The answer, according to the researchers, comes from the concept of perceived similarity, a term that describes whether consumers believe that the tastes and preferences of other reviewers are similar to their own tastes and preferences. Perceived similarity is lower for experiential products than for material products, the research shows. In other words, many consumers of experiential products don’t believe that the reviewers share the same tastes and preferences — so why should they pay attention to the reviews?

However, is this assumption about low perceived similarity correct? In one of their experiments, the researchers divided participants into two groups: those who would just see a picture of the experiential or material product in question, and those who would actually try either the experiential product (flavoured potato chips) or the material product (a flashlight).

This experiment revealed that people tend to overestimate — when it comes to experiential products — the uniqueness of their preferences or tastes compared to other people. Whether or not they are overestimating their uniqueness, however, the perception of their unique tastes influences their reaction to consumer reviews.

Business Application

At first glance, it may seem that the research contradicts the popularity of such websites as TripAdvisor and other review sites of experiential products. One note of caution is that the research was comparative: consumer reviews are more valued by buyers of material products than of experiential products, but that does not mean that reviews of experiential products are universally ignored.

That said, there might be, the researchers note, another reason for the popularity of websites featuring experiential reviews: consumers would rather review their experiential purchases (their vacation in New York, a great new restaurant in their neighbourhood) than their material purchases (their new vacuum cleaner).

TripAdvisor notwithstanding, therefore, hotels, restaurants and other businesses in experiential industries might want to reconsider how much time and effort they invest in review sites. Part of this study suggested that people considering an experiential purchase were more interested in information from the company and less interested in consumer reviews, compared with people considering a material purchase.

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Authors

Institutions

Source

Idea conceived

  • September 2015

Idea posted

  • September 2015

DOI number

10.13007/546

Subject

Real Time Analytics