Consumer decisions on share of wallet, automobile search, and online product reviews

The objective of three essays is to understand consumers' decisions on allocating budget to credit card expenditures, using information sources for automobile purchases, and incorporating online product reviews with their prior knowledge.;In the first essay, we examine how consumers allocate their budget to multiple firms and categories. As expenditures are simultaneous and censored, we propose a Bayesian estimation of a simultaneous equations Tobit model with latent classes. Our approach taking into account expenditure interrelationships and consumer heterogeneity results in the more accurate prediction of the size and share of wallet, which firms can use for better segmenting and targeting. In the second essay, we examine the interdependency between various information sources, segment consumers based on their search patterns, and compare search results by the segments. We find out that both online search and offline search affect each other and that low external search segments choose American brands and get lower discounts while high external search segments choose foreign brands and get better price deals. Our results can give managers guidelines in which media they should provide information and which search segments they should target.;In the third essay, we examine the effects and value of online product reviews on the purchase decision process. In our approach, consumers incorporate product reviews with their prior perceived quality in order to construct posterior perceived quality which affects the consideration set and choice decisions. Our findings show that consumers use product reviews mainly in the consideration set stage and their updating method is consistent with Bayesian updating. We also compute the monetary values of each component of the product reviews. Our results have managerial implications such as product review providers should display all components of consumer reviews from the beginning of the search and manufacturers should keep consumers' perceived quality high by managing their prior quality at all times. They should also encourage satisfied customers to write good reviews.