Customer Inﬂuence Value and Purchase Acceleration in New Product Diﬀusion
Marketing Science, Vol. 31, No. 2, March-April 2012, pp. 236-256
52 Pages Posted: 4 Apr 2019
Date Written: 2012
As social inﬂuence plays a key role in the diﬀusion of new product, a customer’s value goes beyond her own product purchase. Building on the two-segment Inﬂuential-Imitator asymmetric inﬂuence model by Van den Bulte and Joshi (2007), our model posits that a customer’s value (CV) comes not only from her purchase value (PV) but also from her inﬂuence value (IV) (i.e., CV = PV+IV). Therefore, a customer’s value can be far greater than her purchase value if she exerts considerable inﬂuence on others as an early adopter. Using the CV = PV + IV framework, our model provides microscopic insights into individual customer values. Speciﬁcally, we develop closed-form expressions for PV, IV, and CV by customer segment and by time of adoption, and examine their comparative statics with respect to the diffusion parameters. Our framework allows us to investigate how a ﬁrm might implement purchase acceleration to maximize its proﬁt by speeding up the diﬀusion process via introductory discount oﬀers. Our results suggest that the ﬁrm often gains more from increased IV of early adopters than it loses from their PV due to the discounts. Depending on the diﬀusion parameters, the ﬁrm may invite either segment to give discount oﬀers.
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