Promotional Marketing or Word-of-Mouth? Evidence from Online Restaurant Reviews

Information Systems Research, 24(3): 596-612. 2013

46 Pages Posted: 30 May 2013 Last revised: 12 Jan 2017

See all articles by Xianghua Lu

Xianghua Lu

Fudan University - School of Management

Sulin Ba

University of Connecticut School of Business

Lihua Huang

Fudan University

Yue Feng

University of Connecticut - School of Business

Date Written: May 30, 2013

Abstract

The value of promotional marketing and word-of-mouth (WOM) is well recognized, but few studies have compared the effects of these two types of information in online settings. This research examines the effect of marketing efforts and online WOM on product sales by measuring the effects of online coupons, sponsored keyword search, and online reviews. It aims to understand the relationship between firms’ promotional marketing and WOM in the context of a third party review platform. Using a three-year panel dataset from one of the biggest restaurant review websites in China, the study finds that both online promotional marketing and reviews have a significant impact on product sales, which suggests promotional marketing on third party review platforms is still an effective marketing tool. This research further explores the interaction effects between WOM and promotional marketing when these two types of information coexist. The results demonstrate a substitute relationship between the WOM volume and coupon offerings, but a complementary relationship between WOM volume and keyword advertising.

Keywords: Promotional marketing, online review, keyword sponsored search, online coupon, word of mouth, product price, product sales

Suggested Citation

Lu, Xianghua and Ba, Sulin and Huang, Lihua and Feng, Yue, Promotional Marketing or Word-of-Mouth? Evidence from Online Restaurant Reviews (May 30, 2013). Information Systems Research, 24(3): 596-612. 2013. Available at SSRN: https://ssrn.com/abstract=2272131 or http://dx.doi.org/10.2139/ssrn.2272131

Xianghua Lu

Fudan University - School of Management ( email )

670 Handan Road
Shanghai
China

Sulin Ba (Contact Author)

University of Connecticut School of Business ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Lihua Huang

Fudan University ( email )

670 Handan Road
Shanghai
China

Yue Feng

University of Connecticut - School of Business ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

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