Network Marketing on a Small-World Network

We investigate a dynamic model of network marketing in a small-world network structure artificially constructed similarly to the Watts-Strogatz network model. Different from the traditional marketing, consumers can also play the role of the manufacturer's selling agents in network marketing, which is stimulated by the referral fee the manufacturer offers. As the wiring probability $\alpha$ is increased from zero to unity, the network changes from the one-dimensional regular directed network to the star network where all but one player are connected to one consumer. The price $p$ of the product and the referral fee $r$ are used as free parameters to maximize the profit of the manufacturer. It is observed that at $\alpha=0$ the maximized profit is constant independent of the network size $N$ while at $\alpha \neq 0$, it increases linearly with $N$. This is in parallel to the small-world transition. It is also revealed that while the optimal value of $p$ stays at an almost constant level in a broad range of $\alpha$, that of $r$ is sensitive to a change in the network structure. The consumer surplus is also studied and discussed.Comment: 12 pages, to appear in Physica

The Dynamics of Viral Marketing

We present an analysis of a person-to-person recommendation network, consisting of 4 million people who made 16 million recommendations on half a million products. We observe the propagation of recommendations and the cascade sizes, which we explain by a simple stochastic model. We analyze how user behavior varies within user communities defined by a recommendation network. Product purchases follow a 'long tail' where a significant share of purchases belongs to rarely sold items. We establish how the recommendation network grows over time and how effective it is from the viewpoint of the sender and receiver of the recommendations. While on average recommendations are not very effective at inducing purchases and do not spread very far, we present a model that successfully identifies communities, product and pricing categories for which viral marketing seems to be very effective

Predicting mobile advertising response using consumer colocation networks

Building on results from economics and consumer behavior, the authors theorize that consumers' movement patterns are informative of their product preferences, and this study proposes that marketers monetize this information using dynamic networks that capture colocation events (when consumers appear at the same place at approximately the same time). To support this theory, the authors study mobile advertising response in a panel of 217 subscribers. The data set spans three months during which participants were sent mobile coupons from retailers in various product categories through a smartphone application. The data contain coupon conversions, demographic and psychographic information, and information on the hourly GPS location of participants and on their social ties in the form of referrals. The authors find a significant positive relationship between colocated consumers' response to coupons in the same product category. In addition, they show that incorporating consumers' location information can increase the accuracy of predicting the most likely conversions by 19%. These findings have important practical implications for marketers engaging in the fast-growing location-based mobile advertising industry

eWOM & Referrals in Social Network Services

If a few decades ago the development of the Internet was instrumental in the interconnection between markets, nowadays the services provided by Web 2.0, such as social network sites (SNS) are the cutting edge. A proof of this trend is the exponential growth of social network users. The main objective of this work is to explore the mechanisms that promote the transmission and reception (WOM and referrals) of online opinions, in the context of the SNS, by buyers of travel services. The research includes some research lines: technology acceptance model (TAM), Social Identification Theory and Word-of-Mouth communication in virtual environment (eWOM). Based on these theories an explicative model has been proposed applying SEM analysis to a sample of SNS users’ of tourist service buyers. The results support the majority of the hypotheses and some relevant practical and theoretical implications have been pointed out for tourist managers

Attention on Weak Ties in Social and Communication Networks

Granovetter's weak tie theory of social networks is built around two central hypotheses. The first states that strong social ties carry the large majority of interaction events; the second maintains that weak social ties, although less active, are often relevant for the exchange of especially important information (e.g., about potential new jobs in Granovetter's work). While several empirical studies have provided support for the first hypothesis, the second has been the object of far less scrutiny. A possible reason is that it involves notions relative to the nature and importance of the information that are hard to quantify and measure, especially in large scale studies. Here, we search for empirical validation of both Granovetter's hypotheses. We find clear empirical support for the first. We also provide empirical evidence and a quantitative interpretation for the second. We show that attention, measured as the fraction of interactions devoted to a particular social connection, is high on weak ties --- possibly reflecting the postulated informational purposes of such ties --- but also on very strong ties. Data from online social media and mobile communication reveal network-dependent mixtures of these two effects on the basis of a platform's typical usage. Our results establish a clear relationships between attention, importance, and strength of social links, and could lead to improved algorithms to prioritize social media content

The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World

Critics of the U.S. health care system frequently point to other countries as models for reform. They point out that many countries spend far less on health care than the United States yet seem to enjoy better health outcomes. The United States should follow the lead of those countries, the critics say, and adopt a government- run, national health care system. However, a closer look shows that nearly all health care systems worldwide are wrestling with problems of rising costs and lack of access to care. There is no single international model for national health care, of course. Countries vary dramatically in the degree of central control, regulation, and cost sharing they impose, and in the role of private insurance. Still, overall trends from national health care systems around the world suggest the following: Health insurance does not mean universal access to health care. In practice, many countries promise universal coverage but ration care or have long waiting lists for treatment. Rising health care costs are not a uniquely American phenomenon. Although other countries spend considerably less than the United States on health care, both as a percentage of GDP and per capita, costs are rising almost everywhere, leading to budget deficits, tax increases, and benefit reductions. In countries weighted heavily toward government control, people are most likely to face waiting lists, rationing, restrictions on physician choice, and other obstacles to care. Countries with more effective national health care systems are successful to the degree that they incorporate market mechanisms such as competition, cost sharing, market prices, and consumer choice, and eschew centralized government control. Although no country with a national health care system is contemplating abandoning universal coverage, the broad and growing trend is to move away from centralized government control and to introduce more market-oriented features. The answer then to America's health care problems lies not in heading down the road to national health care but in learning from the experiences of other countries, which demonstrate the failure of centralized command and control and the benefits of increasing consumer incentives and choice