Measuring Contagion in the Diffusion of Consumer Packaged Goods

Journal of Marketing Research, 2011

20 Pages Posted: 9 Feb 2014 Last revised: 11 Feb 2014

See all articles by Rex Yuxing Du

Rex Yuxing Du

University of Houston - C.T. Bauer College of Business

Wagner A. Kamakura

Rice University

Date Written: February 1, 2011

Abstract

This study measures the degree of contagion or interpersonal influence in the diffusion of new consumer packaged goods (CPGs). The authors demonstrate that when an individual-level trial hazard model is properly specified to account for potential sources of biases, substantial contagion effects may be detected in the diffusion of many CPGs. Using longitudinal panel data on individual-level trial and repeat purchases of 67 newly introduced CPGs, they show that standard diffusion models fail to detect contagion. However, after extending the model to allow for spatial and temporal heterogeneity in contagion and controlling for various crosssectional and temporal confounds, they find statistically significant contagion effects in 33 to 40 of the 67 sample products. The empirical evidence of contagion in the diffusion of many CPGs has important implications because most new product trial models for CPGs have assumed a priori that there is no contagion in the diffusion of these products. Moreover, the individual-level simultaneous analysis of the diffusion of 67 newly introduced CPGs provides useful insights into the unobservable network of influences among consumers. Such analysis allows a vendor to identify the most influential early adopters among its customers, who could help diffuse a new product more effectively in the market.

Keywords: consumer packaged goods, diffusion model, contagion, new product launch, temporal heterogeneity, spatial heterogeneity

Suggested Citation

Du, Rex Yuxing and Kamakura, Wagner A., Measuring Contagion in the Diffusion of Consumer Packaged Goods (February 1, 2011). Journal of Marketing Research, 2011, Available at SSRN: https://ssrn.com/abstract=2392560

Rex Yuxing Du

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States

Wagner A. Kamakura (Contact Author)

Rice University ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States
(713) 348-6307 (Phone)

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