Rebate incentive strategy for online reviews

Abstract

Purpose

We attempt to analyze the impact of retailer’s rebate strategy on consumer reviews and retailer’s profits.

Design/methodology/approach

Retailers' rebates have a chance to affect sales and their profits by encouraging customers to submit product reviews. To investigate the impact of retailer’s rebate strategy on consumer reviews and retailer’s profits, we describe the consumer’s utility function and the number of consumer-written reviews by introducing the concepts of product demand mismatch and consumer review effort, then develop a two-stage model of the retailer’s rebate strategy and examine how the retailer’s rebate affects online reviews, the consumer’s perceived utility and the retailer’s profit. Finally, a number case verifies the validity and rationality of the proposed model.

Findings

The results show that the rebate strategy can effectively reduce consumer dissatisfaction caused by excessive product demand mismatch, improve the consumer utility, prompt more positive comments, and thus increase product sales.

Originality/value

In this paper, we focus on the impact of retailers' rebate strategy on consumer purchase decisions. The research can accurately reflect the influence of online reviews on consumers and retailers, assisting merchants in making the best selections. The analysis indicates that the retailer’s rebate strategy can have a direct impact on consumers' evaluation choices and product sales.