M: Business 3rd Edition by O. C. Ferrell, Geoffrey Hirt, Linda Ferrell

Exercise 40

If you want recommendations on a business, Yelp may be just what you need. Founded by Jeremy Stoppelman and Russel Simmons, Yelp is a site on which consumers can rate and review businesses. Approximately 30 million users visit the site monthly. Yet while consumers may love Yelp, the site has a love-hate relationship with many business owners.

On the one hand, businesses with loyal customers who post positive reviews on Yelp appreciate the viral nature of the site. A positive review can influence a range of potential customers. On the other hand, Yelp makes it easy for consumers to post negative reviews. All a business owner can do is respond either publicly on the site or privately via e-mail to a reviewer. Yelp also runs an algorithm that filters certain reviews, claiming that this helps weed out false reviews.

Yelp earns money by selling ad space on the site to represented businesses, but according to Stoppelman, this does not allow business owners any greater freedom to control review content. What it does give them is the ability to eliminate advertisements of other companies on their pages, the possibility for their ads to appear on other pages, and the opportunity to post photo and video content.

Despite Stoppleman’s assurances, businesses have accused Yelp of manipulating reviews either to gain more advertising customers or to punish companies that refuse to advertise through Yelp’s paid system. To combat complaints, Yelp has made filtered reviews visible, although they are clearly marked as filtered. Stoppelman continues to support the company’s algorithm and claims that Yelp is striving for greater transparency. Whether or not Yelp’s actions serve to pacify its detractors, companies are increasingly realizing that the power structure between business and consumer is changing—often in the consumer’s favor.

How does Yelp contribute to improving competition and the quality of products?

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Y creates a strong positive impact on brand reputation, overall sales and foot traffic for businesses by creating a strong influence over competition and the quality of products they offer. Therefore, it has become a vital part of the marketing strategy because majority of consumers start their search here and drives success and viability of a business.