Advertising and quality-dependent word-of-mouth in a contagion sales model
El Ouardighi,Fouad Feichtinger,G. Grass,D. Hartl,R.F. Kort,Peter M.
El Ouardighi,Fouad
Feichtinger,G.
Grass,D.
Hartl,R.F.
Kort,Peter M.
Abstract
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.
Description
Date
2016-07
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
Organizational Units
Journal Issue
Keywords
Sales, Word-of-mouth, Advertising effort, Conformance quality
Citation
El Ouardighi, F, Feichtinger, G, Grass, D, Hartl, R F & Kort, P M 2016, 'Advertising and quality-dependent word-of-mouth in a contagion sales model', Journal of Optimization Theory and Applications, vol. 170, no. 1, pp. 323-342. https://doi.org/10.1007/s10957-015-0855-0