Viral marketing strategies with dual incentives

Abstract

Incentives for adopters and senders increase rates of product adoption and message forwarding respectively. In this paper, a dual incentives strategy is investigated to determine the optimized incentive combination in the new customer acquisition stage for minimizing cost and in the repeated purchase stage for maximizing long-term profit. We construct a two-stage N-intertwined model, i.e., the SANB model to describe these two processes. Because of the advantage of the N-intertwined model in expressing the individual-level state transition process, heterogeneous incentives are also investigated. Results of homogeneous incentives show a more important role of promotion incentives. While results of heterogeneous incentives show different peculiarities between adoption and promotion incentives without the constraint of the total cost. Besides, a dataset from an online food delivery service platform is applied in an empirical study to verify the influence of incentives on exposure and purchase.