The role of quality in mobile app markets

Mobile application developers have capabilities to promote their products already released in the market by responding to dynamic consumer demands. This research investigates the role of quality updates in stimulating consumer demand in the competitive mobile App market. A panel vector autoregresive model (PVAR) is adopted to investigate the interdependencies among rankings, price discounts, and quality updates made from 1,259 Apps over 215 days in Apple App Store. The preliminary findings empirically substantiate predominant ranking effects in the market, and suggest developers make strategic update decisions based upon dynamic consumer needs. Specifically, a quality update has a positive impact on App sales when consumers want better quality Apps and a price promotion strategy is important when there is growing App demand along with increased device sales. We further find while a quality update has a delayed and long-term impact on sales, a price discount has an immediate and short-term impact.