An Experimental Investigation of Product Competition and Marketing in Social Networks

An Experimental Investigation of Product Competition and Marketing in Social Networks

We conduct computational experiment using Facebook data to evaluate competing firms’ initial market seeding and subsequent targeted marketing strategies that influence consumers’ new product adoption decisions. We find that firms generally overspend their advertising budget in the market seeding pha...

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Bibliographic Details
Main Authors: CHEN, Cen, Zhiling GUO, CHENG, Shih-Fen, LAU, Hoong Chuin
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2016
Subjects:
Computational Experiment
Price Competition
Word of Mouth
Targeted Marketing
Social Network
Databases and Information Systems
Marketing
Numerical Analysis and Scientific Computing
Online Access:https://ink.library.smu.edu.sg/sis_research/3427
https://ink.library.smu.edu.sg/context/sis_research/article/4428/viewcontent/ExptInvProdtCompetitionMktSocNetworks_CSWIM2016.pdf
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Institution: Singapore Management University
Language: English
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Summary:We conduct computational experiment using Facebook data to evaluate competing firms’ initial market seeding and subsequent targeted marketing strategies that influence consumers’ new product adoption decisions. We find that firms generally overspend their advertising budget in the market seeding phase. In the subsequent market advertising phase, a coupon strategy (equivalent to price discount) generally yields higher market share than the strategy of distributing free product samples. The effect is more significant when both price and product quality are low. We offer managerial insights into firms’ effective competition strategies for new product introduction in the presence of consumers’ word of mouth effects in social networks.

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