Online review ratings: An analysis of product attributes and competitive environment

Abstract

Online reviews generated by consumers have reached a huge diffusion among buyers and constitute an important marketing communications tool for companies that allow them to successfully promote a product. This study adopts a less developed approach in previous studies and tries to analyse what attributes of a product or service are relevant when it comes to getting a good online assessment of consumers as well as to analyse if the competitive environment of the company also affects the ratings. Based on a sample of 1,870 Spanish hotels and using regression analysis, our results show that vertical and horizontal differentiation, age, and price are characteristics of a product that positively impact the online rating given by consumers. However, pricing of additional features can reduce the effect of horizontal differentiation on online rating due to the different value to consumers of those features. Additionally, the competitive environment also has an impact on the online rating and paradoxically, areas with a higher concentration of competitors allow companies to obtain a better evaluation if the competitors are not co-located very close to the company. These findings can support company marketers to manage consumer online reviews and help marketers in promoting a product.