Analyze word - of - mouth effect in terms of macro - behavior : The herd behavior in Chinese market

Though world-of-mouth (WOM) communications is a pervasive and intriguing phenomenon, little is known on its effect in terms of macro-behavior. The purpose of this study is to investigate the WOM effect on macro-level marketing to explain the herd behavior of Chinese consumers. To achieve our goal, the system dynamics was applied build a simulation model for a popular herd behavior happening in Macao, Hong Kong, and Taiwan, i.e., buying Portuguese custard tarts. Both micro-behavior and macro-behavior were considered in this model and the linkage between micro-behavior and macro-behavior was specially emphasized. The results showed that the market of Portuguese custard tarts would crash quickly under fast distribution of WOM and herd behavior while considering the limitation of capacity.