Business Commons^™

An Experimental Investigation Of Product Competition And Marketing In Social Networks, Cen Chen, Zhiling Guo, Shih-Fen Cheng, Hoong Chuin Lau

Research Collection School Of Computing and Information Systems

We conduct computational experiment using Facebook data to evaluate competing firms’ initial market seeding and subsequent targeted marketing strategies that influence consumers’ new product adoption decisions. We find that firms generally overspend their advertising budget in the market seeding phase. In the subsequent market advertising phase, a coupon strategy (equivalent to price discount) generally yields higher market share than the strategy of distributing free product samples. The effect is more significant when both price and product quality are low. We offer managerial insights into firms’ effective competition strategies for new product introduction in the presence of consumers’ word of mouth …