Online Word of Mouth and the Performance of New Products

81 Pages Posted: 29 Sep 2022

See all articles by Lachlan Deer

Lachlan Deer

Tilburg University - Department of Marketing

Pradeep K. Chintagunta

University of Chicago

Gregory S. Crawford

University of Zurich - Department of Economics

Date Written: September 12, 2022

Abstract

We investigate the effects of online word of mouth on the demand for new products using Twitter data. Twitter can both generate buzz & awareness as well as provide information on product quality that can readily diffuse through the population. Leveraging comprehensive data from the US movie industry and Twitter, we estimate a structural model of consumer demand for attending theatrical releases in 2014-2015 that incorporates both information channels. The results show that both channels are important, but differ across types of movies. We find pre-release tweet volume is the most important channel for large franchise movies, generating buzz that influences box office earnings on the opening weekend. Demand for mid tier movies responds to increasing awareness driven by the volume of tweets posted after a movie is released. In contrast, the sentiment expressed in online WoM after a movie’s release influences box office demand in subsequent weekends for smaller movies.

Keywords: Online Word of Mouth, Twitter, New Products, Demand Estimation, Movies

Suggested Citation

Deer, Lachlan and Chintagunta, Pradeep K. and Crawford, Gregory S., Online Word of Mouth and the Performance of New Products (September 12, 2022). Available at SSRN: https://ssrn.com/abstract=4227912 or http://dx.doi.org/10.2139/ssrn.4227912

Lachlan Deer (Contact Author)

Tilburg University - Department of Marketing ( email )

Tilburg, 5000 LE
Netherlands

Pradeep K. Chintagunta

University of Chicago ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-8015 (Phone)
773-702-0458 (Fax)

Gregory S. Crawford

University of Zurich - Department of Economics ( email )

Schönberggasse 1
Zürich, CH-8001
Switzerland

HOME PAGE: http://www.econ.uzh.ch/faculty/groupcrawford.html

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