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A discount strategy in word-of-mouth marketing
journal contributionposted on 2019-07-30, 00:00 authored by T Zhang, P Li, Luxing YangLuxing Yang, X Yang, Y Y Tang, Y Wu
This paper addresses the issue of discount pricing in word-of-mouth (WOM) marketing. First, we propose a novel discount strategy we refer to as the Influence-Based Discount (IBD) strategy, in which each buyer would enjoy a discount that is linearly proportional to his/her influence in the WOM network. For the purpose of evaluating the performance of an IBD strategy, we model the associated WOM spreading process as a higher-dimensional nonlinear differential dynamical system we refer to as the Dormant-Potential-Adopting (DPA) model. Next, we examine the dynamics of a DPA model through computer experiments. Thereby, we estimate the expected net profit of an IBD strategy and inspect how different factors influence this profit through numerical experiments. On this basis, we suggest some feasible promotional measures.
JournalCommunications in nonlinear science and numerical simulation
Pagination167 - 179
LocationAmsterdam, The Netherlands
Publication classificationC1 Refereed article in a scholarly journal
Copyright notice2019, Elsevier B.V.
CategoriesNo categories selected
WOM marketingDiscount pricingWOM spreading modelMarketing profitScience & TechnologyPhysical SciencesTechnologyMathematics, AppliedMathematics, Interdisciplinary ApplicationsMechanicsPhysics, Fluids & PlasmasPhysics, MathematicalMathematicsPhysicsSPREADING PROCESSESINFLUENTIAL NODESDIFFUSION-MODELPRICING MODELVIRUSNETWORKS