Avainsana-arkisto: Brand extension

Drivers of online sales: An integrated study of customer reviews and backward effects

In February 2018, the third movie in an American series Fifty Shades was released. The movie itself earned a significant amount of success in opening weekend revenue – $38,560,195 in USA (Source: imdb.com). At the same time, the book version of the series also enjoyed additional sales from such release. Interestingly enough, not only the book three, the one on which the movie was based, but the first book in the series also gained major benefits. In fact, even though this is not the first time the series released a movie, the Amazon salesrank of the first book Fifty Shades of Grey still dropped to the lowest point 494 within one week of release from the peak 11,715 it reached two months ago (Source: Keepa.com). The decreasing salesrank indicates an increase in book sales on the website.

According to brand extension theories, the phenomenon that an introduction of extension affects the consumption of original product is referred to as reciprocal spillover effect or backward effect. The above-mentioned case of Fifty Shades is an evident example; yet, the phenomenon can be observed in various occurrences such as when artists release new album, etc. Interested in the phenomenon, in my thesis I investigated the effect of releasing a new book on the first book sales using data collected from Amazon.com. With the use of linear mixed-effects models, I found that the first book sales indeed decreased during the release of a new book. Besides that, the success of a new book determined the volume of extra sales. One surprising finding was that for popular book, the earlier release of new book enjoys more radical backward effect than the subsequence. However, this might not be the case for less popular book, particularly for extremely unpopular ones

Factors affecting product sales have always been an intriguing topic of research and word-of-mouth communication has been considered as one of the most influential drivers of sales. Especially in today’s world, online word-of-mouth possesses even more profound effect owning to its incredible spread and breadth. Searching on Google Scholar using keywords ‘effect of online reviews on sales’, one can easily find more than 700,000 papers, which demonstrates the rigorous attention of academic community to the topic. As a result, I chose to examine the role of online reviews. The result suggested that book rating alone did not have any significant persuasive effect on sales. In contrast, the number of reviews and its interaction with ratings did the job once consumers are informed about the parent product upon exposing to extension information.

Hien Nguyen

Master’s Thesis title: The reciprocal spillover effect in online book sales. Integrated with the effect of online reviews

Supervisor: Dr. Ville-Veikko Piispanen