Optimal promotion planning for a product launch in the presence of word-of-mouth

Marketing managers concern that Word-of-Mouth (WOM) can affect the efficiency of sales promotion policy. Sales promotion might also amplify the strength of WOM which further complicates decision-making. In this study, we deploy an agent-based simulation optimization framework to find an efficient sa...

Full description

Saved in:

Bibliographic Details
Published in:	Journal of retailing and consumer services Vol. 64; p. 102821
Main Authors:	Bigdellou, Saeide, Aslani, Shirin, Modarres, Mohammad
Format:	Journal Article
Language:	English
Published:	Elsevier Ltd 01.01.2022
Subjects:	Agent-based modeling and simulation Sales promotion optimization Word-of -mouth Agent-based modeling and simulation Sales promotion optimization Word-of -mouth
ISSN:	0969-6989, 1873-1384
Online Access:	Get full text
Tags:	Add Tag No Tags, Be the first to tag this record!

Description
Summary:	Marketing managers concern that Word-of-Mouth (WOM) can affect the efficiency of sales promotion policy. Sales promotion might also amplify the strength of WOM which further complicates decision-making. In this study, we deploy an agent-based simulation optimization framework to find an efficient sales promotion plan in the presence of WOM for launching re-purchasable products. In this model, consumers' purchase decisions are influenced by price history, availability and satisfaction of the consumers, and positive/negative WOM. We show that taking WOM on board while determining the promotion plan can significantly increase the net present value. However, amplifying WOM might damage the firm's profit for some product categories.
ISSN:	0969-6989 1873-1384
DOI:	10.1016/j.jretconser.2021.102821