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

Authored by Hai-hua Hu, Jun Lin, Yanjun Qian, Jian Sun

Date Published: 2018

DOI: 10.1016/j.jbusres.2017.10.010

Sponsors: No sponsors listed

Platforms: No platforms listed

Model Documentation: Other Narrative

Model Code URLs: Model code not found

Abstract

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.

Tags

Simulation Social networks Word-of-mouth new product diffusion Innovation Diffusion threshold models Peer effects targeting strategies technology influentials opinion leaders Communities Acceleration Agent-based modeling and simulation (abms) New product promotion