Online Reviews Vs Company Advertising – Literature Review

The use of the Internet as a place for voicing opinions, criticisms, and approvals has become conventional in the modern day society. Prospective buyers, particularly millennials, are now increasingly evaluating products based on information that they have gathered from online reviews. At the same time, companies that strive to establish a market presence and publicize their products have remained vigilant by utilizing traditional company advertising as a marketing approach. This creates two possible methods of growing a firm’s market share and profitability. However, with the intensifying dependency on online sources of information and the ever-booming social media evolution, it is quite challenging for a company to know what course of action is best for marketing its goods or services. This paper attempts to respond to this challenge by evaluating existing literature concerning online reviews as well as why their relevance outweighs the significance of company adverstising.

            According to Miller (2015), 60 percent of consumers read online reviews before purchasing products because they get a feeling of security when reading the recommendations of other consumers. They also believe that fellow consumers are more likely to expose other attributes that may have not been covered in the original product descriptions. Nevertheless, a part of this multitude of online readers is not often utterly convinced by the reviews. Sher & Lee (2009) claim that skeptical consumers will tend to lean more on intrinsic beliefs compared to the situational factors. This implies that, although consumers may find online reviews dependable, they are narrow-minded when it comes particular bits of information and uninterested in the quality of the message. Conversely, those with less skepticism tend to be more tolerant and broadminded, and are more likely to use the peripheral routes when creating their mindsets about the products (Beldad et al., 2010). In other words, these consumers are easily convinced by the quantity of the reviews rather than the quality of the message (Sher & Lee, 2009, pp. 137-143).

Where the consumer is less knowledgeable and self-confident about the products that they are about to purchase, online reviews are preferable because individual buyers have a propensity for seeking independent sources of feedback and facts that may help them pinpoint untrustworthy sellers. In this manner, online reviews can be perceived as a ‘power shift’ tool that enables consumers to amass information instead of having individual firms and retailers deliver it to them through company advertising. Other possible values of online reviews to consumers are that shoppers are given an avenue of making faster decisions and a way to narrow down their searches so that they can identify reviews of specific relevance. Nevertheless, consumers can easily get overinvolved while assessing customer-generated comments, and thus hesitate to purchase a good product owing to inconsistent reviews. Customers may also get a skewed impression of the product if the reviews are limited or negative.

A study by Lee,Park  & Han  (2011) concluded that compared to advertisements, online reviews are influenced by trust. Thus, the higher the perceived credibility, the higher the chance of purchase. The shortcoming to this conclusion is that it raises another question of how people obtain, evaluate and interpret the information they read online (Duan & Whinston, 2008). Yet, consumers do not trust information that they receive from individual brands before referring to online reviews. This shows that it is inevitable for companies to encounter, and thus include online reviews in their e-commerce sites if they are willing to take control of their consumers. Then again, it is crucial to take into account the importance of company advertising when it comes to making a brand visible, attracting customers, and launching visible.

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