Two essays on product positioning and social media

This dissertation consists of two essays on product positioning and social media. In chapter 1, I study how firms should compete with existing products by enhancing product attributes that are important to consumers. I propose that firms can either improve upon one important attribute significantly (the dominant attribute design strategy) or enhance as many important attributes as possible moderately (the general improvement strategy), given that firms’ R&D resources are limited. Results from three empirical studies suggest that when the expected product quality is low or the marketing competition is high, the dominant attribute design strategy is more effective in increasing sales and product evaluations, whereas the general improvement strategy is more effective when the market conditions are the opposite. In chapter 2, I study how online user reviews and online expert reviews jointly affect sales. Although numerous studies have examined their effects separately, their joint effects have been largely neglected. Through three empirical studies, I find that the inconsistency of user reviews and that of expert reviews substitute each other, thus mitigating the negative influences of the inconsistency of user reviews and increasing sales. In addition, product quality could moderate these effects. I also identify the customer breadth effect and the customer depth effect as the underlying mechanisms