The Impact of Free Sampling of Information Goods on the Dynamics of Online Word-of-Mouth and Retail Sales

Free sampling of information goods has become a common business practice in expectation of reducing consumers’ uncertainty of product quality and helping product diffusion, yet receiving limited investigation of how consumers process free sampling and online word-of-mouth (WOM) and its consequences on retail sales. In this research, we examine the impact of free sampling of information goods on the dynamics of online WOM and retail sales by analyzing a simultaneous equation system in a Bayesian hierarchical framework in online software market. We find that free sampling of information goods asymmetrically moderates the positive feedback mechanism between online WOM and retail sales. More adoptions of free trial not only directly lead to more retail sales but also enhance online WOM effect. Nevertheless, more adoptions of free trial generate fewer WOM and weaken the impact of past sales on WOM, which could potentially have a negative impact on future sales.

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