New Product Diffusion: A Dual Word-Of-Mouth Perspective

Word-of-Mouth plays its great important role on the base of social network in affecting consumers’ shopping behaviour. However, it is little known how firms make a self-suitable marketing strategy according to both online and offline WOM effect in their product diffusion. This article investigates a new product diffusion process taking both offline WOM and online WOM effect into consideration. Specifically, we compare three marketing strategies by predicting product diffusion level during its product life cycle and assist managers to improve cost efficiency. The findings indicate that product peak sales rate and cumulative sales at peak time would be highest when managers market their products only through the Internet. However, product peak adopting time is not determined by the strategy which the manager takes but impacted by the relationship between coefficients. Parameter analysis is further provided to extract more managerial insights.