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, 12 (7), e0180040
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Transient Dynamics in Trial-Offer Markets With Social Influence: Trade-offs Between Appeal and Quality

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Transient Dynamics in Trial-Offer Markets With Social Influence: Trade-offs Between Appeal and Quality

Edgar Altszyler et al. PLoS One.

Abstract

We study a trial-offer market where consumers may purchase one of two competing products. Consumer preferences are affected by the products quality, their appeal, and their popularity. While the asymptotic convergence or stationary states of these, and related dynamical systems, has been vastly studied, the literature regarding the transitory dynamics remains surprisingly sparse. To fill this gap, we derive a system of Ordinary Differential Equations, which is solved exactly to gain insight into the roles played by product qualities and appeals in the market behavior. We observe a logarithmic tradeoff between quality and appeal for medium and long-term marketing strategies: The expected market shares remain constant if a decrease in quality is followed by an exponential increase in the product appeal. However, for short time horizons, the trade-off is linear. Finally, we study the variability of the dynamics through Monte Carlo simulations and discover that low appeals may result in high levels of variability. The model results suggest effective marketing strategies for short and long time horizons and emphasize the significance of advertising early in the market life to increase sales and predictability.

Conflict of interest statement

Competing Interests: The authors have declared that no competing interests exist.

Figures

Fig 1
Fig 1. Market share of product 2 (MS2) as a function of Q2 and A2, for different values of A1 and dTt, assuming q1 = 1.
Fig 2
Fig 2. Monte Carlo simulations and ODE solutions of the market shares for symmetric appeals.
The Monte Carlo simulations involved 104 realizations of the system for nine different set of parameters (grey lines). In all cases we used q1 = 1, the appeal used for both products were the same (A1 = A2) and both products start with zero purchases, d1(t = 0) = d2(t = 0) = 0. Although the Monte Carlo simulations produce discrete dots in the (dT, MS2) space, we plot each simulation with straight lines that link consecutive dots to follow trajectories easily.
Fig 3
Fig 3. Monte carlo simulations and ODE solutions of the market shares for asymetric appeals.
The Monte Carlo simulations involved 104 realizations of the system for nine different sets of parameters (grey lines). In all cases, q1 = 1 and both products start with zero purchases, i.e., d1(t = 0) = d2(t = 0) = 0. Although Monte Carlo simulations produce discrete dots in the (dT, MS2) space, we plot each simulation with straight lines that link consecutive dots to follow trajectories easily.

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Grant support

The author(s) received no specific funding for this work.
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