The Power of Reviews

 

Today’s connected world seems to get smaller every day.  News travels at the speed of light and every aspect of media has the potential to go viral in the blink of an eye.  This is an exciting time to be alive and I feel lucky to be technologically savvy enough to take part in all of our modern offerings.

Businesses live and die by reputation and brand improvements.  We no longer need to wait for a printed publication to show us statistics about a new gadget or improvement on the market.  Today we have something called TPR’s or third party reviews that could be read and posted the same day a new product hits the streets.  What does this mean for an upcoming company?  It could be great if the reviews are good but if they are bad it could cause fear and its stockholders could pull out and cause financial disaster.  I’m not talking about a silly comment left on some random website I’m talking about professional reviews that are made from third party sources independent from the manufacturer, such as “Consumer Reports” and “Wall Street Journal”  Investors do pay attention to these reviews to update their expectations about product sales potential. 

Product reviews do affect the value of a firm.  I read an article about a study being done on this subject I found on our school database, the article was written by Yubo Chen, Yong Liu, & Jurui Zhang and was called “When Do Third-Party Product Reviews Affect Firm Value and What Can Firms Do?”  They have found that these TPR’s have been proven to be a valuable source of information for consumers and firms in assessing the quality of a product. 

The article talks about how competition on a global scale has increasingly made innovation and new product development the cornerstone of firm growth.  As new product lines are introduced from companies like “Apple”, the introduction and success of those new products is a critical factor in the financial valuation of the firm.  If a new product is introduced and falls flat in the first week it could affect stock prices.  These TPR’s have a lot of power in their hands.  They have the power to predict the future of a product and the investors are listening.

This is something new that the business world never had to deal with before.  How are they going to handle a bump in the road, do they have a marketing strategy ready to go if they need to get it out there quickly?  Will a big marketing push help the situation?  I guess that could be looked at from different points of view. If a firm gets a less than flattering review on a new product or service it may be inclined to increase its marketing campaign.  This will in turn attract more people to want to invest but may increase the amount of hits that the TPR’s sites get.  Is this helpful of harmful?  I don’t know the answer but I do know that companies need to offer quality goods and services if they want to be part of our future.  

 As the Internet becomes more and more a part of our society we will use it to help guide our purchases.  Word of mouth is a good marketing tool also but it all starts with a well made product or service.  We’ll keep these companies on their toes, keep reading reviews before you buy or invest.  





 Chen Y, Liu Y, Zhang J. When Do Third-Party Product Reviews Affect Firm Value and What Can Firms Do?? The Case of Media Critics and Professional Movie Reviews. Journal Of Marketing [serial online]. March 2012;76(2):116-134. Available from: Communication & Mass Media Complete, Ipswich, MA. Accessed March 9, 2012.