Marketing strategies for enhancing word of mouth: sales acceleration and affiliate programs

• Autores: Vardan Avagyan
• Directores de la Tesis: Mercedes Esteban Bravo (dir. tes.), José Manuel Vidal Sanz (dir. tes.)
• Lectura: En la Universidad Carlos III de Madrid ( España ) en 2012
• Idioma: inglés
• Tribunal Calificador de la Tesis: Nora Lado Cousté (presid.), Guilherme (Gui) Liberali (secret.), Stefan Stremersch (voc.)
• Materias:
  • Ciencias económicas
    • Organización y dirección de empresas
      • Marketing (comercialización)
• Enlaces
  • Tesis en acceso abierto en: e-Archivo
• Resumen

  • For years, marketing practitioners and scholars have acknowledged consumers Word Of Mouth (WOM) as a key driving force behind the success of new products and technological innovations, and more generally for an effective firm communication over time. Marketing managers have developed WOM-marketing tools to take better advantage of buzz. This thesis is comprised of three essays on WOM marketing in a dynamic context that consider several strategies that a company can use to enhance WOM and to accelerate the diffusion of new products from a managerial perspective. We also discuss relatively recent WOM online communication tools, such as affiliate marketing, their effectiveness and dynamic effects. The main contributions of this thesis can be summarized as follows: Inventors can commercialize innovative products by themselves and simultaneously license the technology to other firms. The licensee may cannibalize sales of the licensor, but this can be compensated by gains from royalties. In the first essay of this thesis, we show how licenses can be used strategically to speed up the new product diffusion process in two instances of markets: (i) a market with strong Intellectual Property Rights (IPR), and (ii) a market with weak IPR holder and pirate rivals. The main findings suggest that licensing is a beneficial strategy for a licensor in the context of strong IPR, because licensor benefits from the royalties, the advertising investment and positive word-of-mouth effects by licensees. We compare this result with a weak IPR context, where piracy speeds up the product diffusion but this does not compensate IPR holder for the sales loss effect who is willing to license to get some royalties. However, pirates do not generally find interesting the licensing agreement. We present a comparative statics analysis based on numerical simulation. We illustrate the application of the proposed licensing model to incandescent light bulbs industry in the United Kingdom. Managing diffusion waves for successive product generations implies that marketing managers should try persuade some customers to swim over the successive generation waves optimally for the company profits, as well as to lessen the regret of old-generation product buyers. In the second essay we discuss how trade-in rebates can be used to reintegrate owners of old versions of the product to the market and therefore accelerate current sales. We rst build a general diffusion model for successive product generations. We study the optimal behavior of the firm controlling the prices and rebates associated to product upgrades. In order to quantify the effect of upgrade-rebate strategy, we particularize the general model for some concrete examples and numerically solve them for certain sets of parameter values. We demonstrate that the trade-in program accelerates the diffusion of the later generations but has the reverse effect for the diffusion of the old generation product. The size of the percentage gain in profits varies depending on several conditions, providing a 2-5% increase in total discounted profits. We illustrate the applicability of the model for automobile industry in Spain for the period from 1970 to 2000. In the third essay of the thesis, we focus on the analysis of the effectiveness of affiliate marketing. Many online customers who visit a retailer's website through affiliate companies may later return to the retailer for a subsequent purchase through other web traffic sources. These customers might refer other potential online shoppers through word of mouth effect. On the other hand, affiliate companies might cannibalize the retailer's other marketing effort. In the third essay we study the dynamic effect of affiliate marketing on the advertiser's traffic, sales and revenues. Because affiliates vary in the volume of their operations, contribution to the advertiser's online sales, in their marketing tools and strategies, the effect of affiliates on advertiser's sales and revenues is likely to be heterogeneous across affiliates. Given the large number of affiliates, estimation using standard VAR or VEC Models is challenging because of large dimensions involved. Instead, we employ GVAR analysis introduced by Pesaran et al (2004). We present an empirical application based on data from an online retailer of jewelry. Our findings reflect in detail the dynamic forces shaping the affiliate marketing industry. The results of Impulse Response Function analysis show signifficant long term effect of affiliate marketing that clearly differs across affiliates.