When Online Reviews Meet Hyperdifferentiation: A Study of Craft Beer Industry

Abstract

We analyze how online reviews can be used to evaluate product differentiation strategy based on the theories of hyperdifferentiation and resonance marketing. Hyperdifferentiation says that firms can now produce almost anything that will appeal to consumers and can manage the complexity of diverse product portfolios. Resonance marketing says that informed consumers will only purchase products that they actually truly want. When consumers become more informed, firms that provide highly differentiated products should experience higher growth rate. We construct measures of product positioning based on online ratings and find supportive evidence using craft beer industry data. In particular, we find that the variance of ratings and the strength of the top quartile of reviews play a significant role in determining which new products grow in the marketplace (resonance). It is more important that some consumers love you than it is that most consumers like you.