Apps Appeal: Where in the World are Consumers Sensitive to Price, Ratings and Product Characteristics?

Abstract

Research abounds on consumer price response in Western markets, but offers little guidance to managers marketing their products around the world. For instance, smartphone/tablet applications represent a global market for developers, who have yet to exploit their freedom in localizing marketing. This paper investigates how sales rank depends on app price, ratings, product complexity, product improvement and product labels for 1,800 apps across 60 countries. Beyond contrasting emerging and mature markets, we analyze how consumer response depends on cultural and economic factors. A hierarchical model distinguishes variation among apps in one country from country-level differences. We find that sales rank elasticities vary widely and systematically. The results support our hypotheses that price sensitivity is lower in countries with high uncertainty avoidance, while rating sensitivity is lower in countries with more income equality, higher individualism and higher masculinity. Product complexity hurts sales rank more in countries with high uncertainty avoidance. Finally, apps with age restriction labels score better in masculine countries with higher income and income inequality. Contrary to the common practice of global integration, we urge developers to adapt pricing and product characteristics. Economic and cultural communalities between countries allow ‘local learning’, as consumer sensitivities vary systematically in predictable patterns.

Keywords: apps, marketing effectiveness, emerging market, hierarchical linear model, individualism, power distance, uncertainty avoidance, masculinity, GDP, income inequality