An agent-based model with social interactions for scalable probabilistic prediction of performance of a new product

Abstract

Understanding the spreading process of new products provides valuable knowledge that can be used for effective marketing. The ability to make early prediction of success or failure is a great advantage in innovation processes. Extending current literature in a novel way, we propose a data-driven agent-based methodology that accomplishes this task. Inference and predictions are based on short-time observations of the product adoption history and knowledge of the social network of consumers. We model and predict adoptions at the agent level as driven by unobserved peer-to-peer influence and external factors such as marketing. The method compares interaction between consumers and general campaigns, and quantifies the importance of characteristics of customers and their social relations. Our computationally efficient method is demonstrated by analyzing real data, predicting the process far into the future using data from a short period after launch, and validated by simulation experiments on a true full-scale communication network.