The power of consumer-to-consumer community (network) on the Internet: consumer decision-making, product sales, and product diffusion

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Duan, Wenjing

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The prevalent usage of the Internet and other information technologies (IT) has fundamentally changed the information balance between businesses and consumers. Prior to the information age, businesses carefully controlled the information they fed to the media and consumers through orchestrated marketing efforts. Little else was revealed to consumers except on the rare occasions where the businesses made headlines. The Internet and the resulting mass media, however, have turned a business’s information advantage on its head. Visiting any online retailer today, you will notice that consumers actively share their experiences and product information with each other. The popularity of a product is increasingly determined by such consumer-to-consumer communications instead of a business’s marketing budget. Even so, there is still limited understanding of the influences of consumer-generated media on the Internet, particularly its impact on business strategies. My dissertation investigates the information effect of the electronic communities on consumer decision-making, product sales, and strategic product diffusion. First, my dissertation considers the case where consumers can observe others’ product choices, as well as gain access to public product information on the Internet. In such cases it is shown that consumers engage in significant herd behavior, and my research further investigates the impact of herding on consumer product choices. Second, my dissertation explores how online user feedback systems affect product sales. Using data from the entertainment industry, my research studies the dynamic relationship between online user feedback information and product sales. Following this line of inquiry, my dissertation also examines the impact of the Internet on a firm’s global diffusion strategy. Information can be disseminated on the Web at rocket speed, which will fundamentally transform firms’ and companies’ strategic diffusion processes. In light of such a transformation, my research investigates the impact of the Internet on the international distribution of entertainment products. All in all, my dissertation expects to advance our understanding of the information value of the Internet.