Strategies for new product diffusion: Whom and how to target?

This paper examines the promotional strategies for new product diffusion by leveraging peer effects among consumers. Previous studies have offered conflicting recommendations on whom to target (e.g., influentials, susceptibles, or unsusceptibles) with respect to new product promotions. Utilizing agent-based modeling and simulation (ABMS), we show that each of the proposed consumer groups can be a promising target, depending on how they are targeted, according to target size and promotion intensity. The authors further recommend the optimal combination of whom and how to target under budget constraints. Specifically, where a budget is limited, the best approach is to target as many susceptibles as possible with a weak promotion. Targeting unsusceptibles with free products should be the first choice, where the budget is large. In other cases, the best approach is to target as many influentials as possible with a moderate promotion.

[1]  R. Ross,et al.  Enter the Dragon , 1996 .

[2]  R. Burt.  Social Contagion and Innovation: Cohesion versus Structural Equivalence , 1987, American Journal of Sociology.

[3]  Paul DiMaggio,et al.  Network Effects and Social Inequality , 2012 .

[4]  Donald R. Lehmann,et al.  When giving some away makes sense to jump-start the diffusion process , 2006 .

[5]  D. Watts,et al.  Influentials, Networks, and Public Opinion Formation , 2007 .

[6]  Shaul Oreg,et al.  Laggards in disguise: Resistance to adopt and the leapfrogging effect☆ , 2007 .

[7]  Roland Soong,et al.  Threshold models of interpersonal effects in consumer demand , 1986 .

[8]  E. Muller,et al.  Decomposing the Value of Word-of-Mouth Seeding Programs: Acceleration vs. Expansion , 2012 .

[9]  Haihua Hu,et al.  Local Opinion Heterogeneity and Individual Participation in Collective Behavior: A Reconsideration , 2015, J. Artif. Soc. Soc. Simul..

[10]  Thomas W. Valente,et al.  Opinion Leadership and Social Contagion in New Product Diffusion , 2011, Mark. Sci..

[11]  E. Babakus,et al.  Success Factors in Product Seeding: The Role of Homophily , 2014 .

[12]  Kenneth Gillingham,et al.  Peer Effects in the Diffusion of Solar Photovoltaic Panels , 2012, Mark. Sci..

[13]  Yansong Hu,et al.  Nonmonotonic Status Effects in New Product Adoption , 2014, Mark. Sci..

[14]  Tammo H. A. Bijmolt,et al.  Targeting and timing promotional activities : An agent-based model for the takeoff of new products , 2007 .

[15]  Barak Libai,et al.  Targeting Revenue Leaders for a New Product , 2013 .

[16]  P. Leeflang,et al.  Opinion Leaders' Role in Innovation Diffusion: A Simulation Study , 2011 .

[17]  Vijay Mahajan,et al.  When is it Worthwhile Targeting the Majority Instead of the Innovators in a New Product Launch , 1998 .

[18]  Sinan Aral,et al.  Identifying Social Influence: A Comment on Opinion Leadership and Social Contagion in New Product Diffusion , 2010, Mark. Sci..

[19]  S. Fournier,et al.  Paradoxes of Technology: Consumer Cognizance, Emotions, and Coping Strategies , 1998 .

[20]  Harikesh S. Nair,et al.  Asymmetric Social Interactions in Physician Prescription Behavior: The Role of Opinion Leaders , 2008 .

[21]  Mohammad G. Nejad.  On the contributions and the validation of an agent-based simulation model of innovation diffusion , 2016 .

[22]  J. Goldenberg,et al.  The Role of Hubs in the Adoption Process , 2009 .

[23]  Michael Trusov,et al.  Determining Influential Users in Internet Social Networks , 2010 .

[24]  Sarah J. S. Wilner,et al.  Networked Narratives: Understanding Word-of-Mouth Marketing in Online Communities , 2009 .

[25]  Jacob Goldenberg,et al.  Improving Penetration Forecasts Using Social Interactions Data , 2014, Manag. Sci..

[26]  Jan U. Becker,et al.  Seeding Strategies for Viral Marketing: An Empirical Comparison , 2011 .

[27]  E. Moretti.  Social Learning and Peer Effects in Consumption: Evidence from Movie Sales , 2008 .

[28]  Vijay Mahajan,et al.  Determination of Adopter Categories by Using Innovation Diffusion Models , 1990 .

[29]  Tammo H. A. Bijmolt,et al.  Will It Spread or Not? The Effects of Social Influences and Network Topology on Innovation Diffusion , 2010 .

[30]  Tammo H. A. Bijmolt,et al.  The Effects of Shared Consumption on Product Life Cycles and Advertising Effectiveness: The Case of the Motion Picture Market , 2016 .

[31]  Zuo-Jun Max Shen,et al.  Customer Influence Value and Purchase Acceleration in New Product Diffusion , 2012, Mark. Sci..

[32]  Martin Bichler,et al.  Identification of influencers - Measuring influence in customer networks , 2008, Decis. Support Syst..

[33]  William Rand,et al.  Agent-Based Modeling in Marketing: Guidelines for Rigor , 2011 .

[34]  William Rand,et al.  Improving Prelaunch Diffusion Forecasts: Using Synthetic Networks as Simulated Priors , 2013 .

[35]  Richard Gruner,et al.  Firm-hosted online brand communities and new product success , 2014 .

[36]  J. Kirby,et al.  Connected Marketing: The Viral, Buzz And Word Of Mouth Revolution , 2007 .

[37]  Duncan J. Watts,et al.  Collective dynamics of ‘small-world’ networks , 1998, Nature.

[38]  David Obstfeld.  Social Networks, the Tertius Iungens Orientation, and Involvement in Innovation , 2005 .

[39]  Elmar Kiesling,et al.  Agent-based simulation of innovation diffusion: a review , 2011, Central European Journal of Operations Research.

[40]  Vijay Mahajan,et al.  An Approach for Determining Optimal Product Sampling for the Diffusion of a New Product , 1995 .

[41]  Yingjiu Li,et al.  Information Technology Diffusion with Influentials, Imitators, and Opponents , 2010, J. Manag. Inf. Syst..

[42]  M. McPherson,et al.  Birds of a Feather: Homophily in Social Networks , 2001 .

[43]  Haihua Hu,et al.  Intervention Strategies and the Diffusion of Collective Behavior , 2015, J. Artif. Soc. Soc. Simul..

[44]  Jacob Goldenberg,et al.  Talk of the Network: A Complex Systems Look at the Underlying Process of Word-of-Mouth , 2001 .

[45]  M. Macy,et al.  Complex Contagions and the Weakness of Long Ties1 , 2007, American Journal of Sociology.

[46]  E. Rogers.  Diffusion of Innovations , 1962 .

[47]  G. Tellis,et al.  Research on Innovation: A Review and Agenda for Marketing Science , 2006 .

[48]  Mark S. Granovetter.  Threshold Models of Collective Behavior , 1978, American Journal of Sociology.