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Title
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Advertising and quality-dependent word-of-mouth in a contagion sales model
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Author
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Abstract
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| In the literature on marketing models, the assumption of mixed word-of-mouth has been limited to the Bass diffusion model. Yet explicit leveraging of the originating factors of such assumption is lacking. Apart from that example, mixed word-of-mouth has been disregarded in contagion sales models. This paper bridges the gap by suggesting a sales model, where both positive and negative word-of-mouth affect the attraction rate of new customers, along with advertising. The difference between positive and negative word-of-mouth is based on the distinction between satisfied and dissatisfied current customers, which is supposed to depend on conformance quality. A primary issue in this paper is to determine how a firm should determine the optimal intertemporal trade-off between investing in advertising-dependent word-of-mouth and quality-dependent word-of-mouth. To address this issue, a contagion sales model is suggested where mixed autonomous word-of-mouth alone can lead to either commercial success or failure of a given brand. |
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Language
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English
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Source (journal)
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Journal of optimization theory and applications. - New York, N.Y., 1967, currens
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Publication
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New York, N.Y.
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2016
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ISSN
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0022-3239
[print]
1573-2878
[online]
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DOI
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10.1007/S10957-015-0855-0
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Volume/pages
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170
:1
(2016)
, p. 323-342
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ISI
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000378842100019
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Full text (Publisher's DOI)
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Full text (publisher's version - intranet only)
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