How online reviews with different influencing factors affect the diffusion of new products

Abstract

AbstractOnline reviews are becoming increasingly important for the diffusion of new products. Based on the content of online reviews on JD.com, the study utilizes the Latent Allocation model to identify the critical factors of interest to consumers and categorized them into two categories, namely, product quality and supporting service factors. Thereafter, we use the system generalized method of moments to analyse the dynamic model of the panel data and further study the relationship between online reviews and new product diffusion under the two types of factors. We further investigate how the interaction between the critical metrics of online reviews affects the diffusion of new products. The results indicate that as various factors are considered, online reviews have a significantly different impact on the diffusion of new products. Moreover, compared with supporting service factors, online reviews of product quality factors have a more significant impact. In addition, the interactions between online review metrics demonstrate complex characteristics, especially the volume and positive emotional tendency, which does not promote new product diffusion, as expected.