Abstract
When launching a new product, firms often give away free samples to seed the market. This paper aims to identify the optimal seeding targets, such as early adopters, social hubs, or randomly chosen consumers while considering the presence of negative word-of-mouth (WOM). Using agent-based modeling, it was found that seeding early adopters can generate the highest profit and the largest market penetration, followed by the social hubs and random consumers. Moreover, the results show that seeding early adopters can be more beneficial for a low-quality product, wherein adopters are more likely to spread negative WOM. These findings challenge a widely accepted notion in the related research that social hubs are often the most promising targets for seeding programs.
Highlights
Seeding is the giving away of a new product to a part of consumers before launching and is a common approach to promote the diffusion process in various industries, such as software, electronic and automakers
With the presence of negative WOM, large-scale agent-based simulations are conducted to seek the optimal seeding targets on average and in a reasonable market scenario, which is Seeding strategies for new product launch determined by a set of values of three selected factors
From both the short-term and longterm perspectives, the results confirm that seeding programs can significantly enhance the net present values (NPV) and the market penetration
Summary
Seeding is the giving away of a new product to a part of consumers (the “seeds”) before launching and is a common approach to promote the diffusion process in various industries, such as software, electronic and automakers. Ford selected 100 Ford Fiesta’s target consumers from the bloggers, and let them make car reviews in the forum [3]. Marketers place focus on influential people with deep social connections (referred to as social hubs) and utilize their wide-ranging influence to ignite the market, as seen in the case of Ford, who used prominent bloggers [3]. Another option is the early adopters, who have high intention to purchase the firm’s product, typically loyal customers, as Sony did for the launch of PlayStation[2]. The current study primarily focuses on three options, namely, the social hubs, early adopters, and random consumers
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