Users from different countries and cultures differ in price-, as well as e-WoM sensitivities. Our study shows that these differences can be explained (and predicted) by socio-economic and cultural values. The slide deck shows how to use this knowledge to localize price campaigns for apps (or other digitally distributed goods) for individual countries depending on the volume and sentiment of online reviews.
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Kübler, Raoul, Koen Pauwels, Gökhan Yildirim, and Thomas Fandrich (2018), “App Popularity: Where in the World Are Consumers Most Sensitive to Price and User Ratings?,” Journal of Marketing, 82(5), 20-44.
Many companies compete globally in a world in which user ratings and price are important drivers of performance but whose importance may differ by country. This study builds on the cultural, economic, and structural differences across countries to examine how app popularity reacts to price and ratings, controlling for product characteristics. Estimated across 60 countries, a dynamic panel model with product-specific effects reveals that price sensitivity is higher in countries with higher masculinity and uncertainty avoidance. Ratings valence sensitivity is higher in countries with higher individualism and uncertainty avoidance, while ratings volume sensitivity is higher in countries with higher power distance and uncertainty avoidance and those that are richer and have more income equality. For managers, the authors visualize country groups and calculate how much price should decrease to compensate for a negative review or lack of reviews. For researchers, they highlight the moderators of the volume and valence effects of online ratings, which are becoming ubiquitous in this connected world.
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