Should You Adapt Your Pricing and Ratings Reaction to a Country’s Cultural and Socioeconomic Setting?
Raoul Kuebler, Koen Pauwels, Gokhan Yildirim, and Thomas Fandrich, 2016, 16-100
Despite decades of research on price sensitivity, only a few studies provide insights into how customers in different countries respond to marketing actions such as price and user feedback such as ratings. Thus, despite their ability to differentiate across countries, many managers of globally and online distributed products tend to offer similar prices and marketing around the world.
In this study—the first to analyze the sensitivity of sales to price and user ratings across developing and developed markets—Raoul Kuebler, Koen Pauwels, Gokhan Yildirim, and Thomas Fandrich investigate two questions: How do countries differ in the market’s response to price and ratings? Which cultural, economic, and social factors help explain these differences?
Their empirical study is based on 276 days’ worth of daily data of app sales rank, price, star ratings, and product updates for 1,872 mobile apps in 60 emerging and developed countries.
The authors find that price and ratings elasticities vary widely and systematically along the countries’ cultural, economic, and social dimensions. Price sensitivity is higher in countries with high individualism, but lower in countries with high masculinity and income. Rating sensitivity is lower in countries with high power distance, masculinity, and more people older than 44 years.
These different sales elasticities reveal the potential benefits of marketing adaption. Cultural and other systematic factors partially explain these differences, indicating that managers can group countries by these factors.
The results also allow managers to predict marketing sensitivities for almost any country worldwide, using publicly available data on the country’s specific cultural and other factors.
Raoul Kuebler is Assistant Professor and Koen Pauwels is Professor, both at Ozyegin University, Istanbul, Turkey. Gokhan Yildirim is Assistant Professor of Marketing Analytics, Lancaster University, U.K. Thomas Fandrich is CEO Analytic Dashboards GmbH.
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