App Appeal: Where in the World Are Consumers Most Sensitive to Price and User Ratings?

Mobile apps represent a truly global product, with 24/7 availability and accessible price points. As a result, app developers typically charge a similar worldwide price, and believe the quality (star rating) and number of reviews has a similar impact across countries. That practice leaves a lot of money on the table, says this Journal of Marketing publication by professors Raoul Kuebler, Gokhan Yildirim and co-founder of Agile Insights platform (Quantilope) Thomas Fandrich: appappealpauwels

Linking marketing to sales rank across 60 countries, the study shows that:

(1) price sensitivity is higher in countries with higher masculinity and uncertainty avoidance, such as Italy, India and Saudi Arabia:

(2) star rating sensitivity is higher in cultures that value the expressed opinions of others, such as Japan, Italy, and the US – but lower in collectivist cultures where mass appeal is more important, such as Brazil, Vietnam, Panama and the Philippines:

(3) sensitivity to the number of reviews is higher in countries that are richer and have more income equality, such as Western European countries France, Portugal and Norway

How can managers use our insights? First, they should examine whether they can charge lower prices, bring out cheaper versions and/or give more price discounts in countries with higher versus lower price sensitivity. Second, they should focus more on increasing the number of reviews in countries where the quantity matters more. This may require giving incentives, which cost the company money. Therefore, we analyzed how much the product’s price can be increased for an increase in number of reviews. The top figure visualizes the consumers’ tradeoff between product price and the number of reviews for Luxembourg, the bottom for the USA. Note that the ‘price slope’ is much steeper for the USA (sales rank is largely determined by product price), while Luxembourg shows a steep slope for number of reviews. In Luxembourg, doubling the number of reviews allows the manager to maintain the same sales rank with double the price. In contrast, in the USA, doubling the number of reviews is only worth a 25% price increase to maintain the same sales rank. The paper’s Web Appendix shows this for all analyzed countries.

Has the world economy become a global village of similar consumer sensitivities, implying standardized marketing programs? Our analysis shows a different story, even for a global technology product with 24/7 availability. Fortunately for marketers, these differences are largely predictable and are related to cultural and economic factors  shared by groups of countries. Developers with knowledge of these factors can customize prices and choose where to stimulate more and more positive ratings. Our research provides a first step toward such an understanding. What do you think?

 

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