Apps appeal: where in the world are consumers sensitive to price, updates & reviews?
Thomas Fandrich, Raoul V. Kübler, and Koen Pauwels
Applications for smartphones and tablets represent a global market for developers, who have yet to exploit their freedom in localizing marketing decisions. They face different consumer reviews in each country, and potentially different sensitivity to app price and product update decisions. This paper investigates how sales rank depends on app size, prices, updates, mean ratings and number of reviews for 30,000 apps across 31 countries. Beyond contrasting emerging and mature markets, we analyze how consumer response depends on cultural, economic and structural factors. A truncated random effects model accounts for unobserved heterogeneity and truncation by top-100 sales rank. We find that price sensitivity is lower in countries with high uncertainty avoidance, and that product update sensitivity is lower in individualistic versus collectivist cultures. However, ratings and their sales rank impact do not systematically differ across countries. Contrary to common practice, our results suggest a much higher willingness-to-pay, specifically for product updates, in many emerging markets. We urge developers to revise their pricing scheme, which is currently uniform across the world for globally available apps.