The Effects of Shared Consumption on Product Life Cycles and Advertising Effectiveness: The Case of the Motion Picture Market
Authored by Sebastiano A Delre, Thijs L J Broekhuizen, Tammo H A Bijmolt
Date Published: 2016
DOI: 10.1509/jmr.14.0097
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Platforms:
MATLAB
Model Documentation:
Other Narrative
Pseudocode
Mathematical description
Model Code URLs:
http://journals.ama.org/doi/suppl/10.1509/jmr.14.0097
Abstract
Consumers frequently consume hedonic products together with other
consumers and derive value from this shared experience. This article
investigates the impact of shared consumption, a type of social
influence that determines the enjoyment of joint experiences, in the
context of a typical hedonic product: movies. The authors argue that
this type of influence has important consequences for the diffusion
curves of hedonic goods that are consumed together and the effectiveness
of advertising in generating launch and postlaunch sales. An empirically
validated agent-based model simulates the U.S. motion picture market, with new movies launching, competing, and exiting. The agent-based model
serves as a means to demonstrate the essential role of shared
consumption for explaining movie life cycles and tests how advertising
expenditures accelerate and/or acquire movies' demand in markets with
varying levels of shared consumption. The results provide key
theoretical insights for the new product diffusion of hedonic products
and help managers predict the financial consequences of their strategic
decisions.
Tags
Dynamics
networks
Word-of-mouth
diffusion
Social interactions
Sales
Industry
Demand
Box-office performance
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