Reconciling WTP to actual adoption of green energy tariffs: A diffusion model of an induced environmental marke

This paper develops a formal model that links the willingness to pay (WTP) literature with the established innovation diffusion literature. This concern arises from an attempt to reconcile the large disparities that have been observed between actual adoption of green energy tariffs and WTP for such tariffs. These disparities have often been attributed to upward response bias and the free rider problem. However, empirical research indicates that other factors have hindered the development of green energy markets, including supply side problems and poor regulation. Using an epidemic diffusion framework our model shows how increasing consumer environmental concern driven by word of mouth and mass media communication channels results in a growing number of people who state they are WTP for green energy. The presence of upward response bias and the free rider problem result in 'feasible adoption' being below stated WTP. Feasible adoption is, in turn, differentiated from actual adoption by the extent of market imperfections. It is concluded that; (1) the potential of such markets may take time to reap and that the low penetration rates of today may reflect a conventional diffusion trajectory and (2); low and stable energy prices appear to be a precondition if consumers are to contribute substantively to the funding of renewables investments through green tariffs.Willingness-to-pay, innovation diffusion, green energy, environmental valuation

Marketing higher education in Africa : challenges and opportunities

This chapter examines the global marketing environment of today’s higher education institutions (HEIs). (Semi) Autonomous HEIs and business schools are increasingly behaving like for-profit organisations as they seek new opportunities and resources to prioritise revenue creation. Therefore, they are diversifying the portfolio of their student populations by recruiting domestic and international students. In this light, this contribution deliberates on contemporary integrated marketing communications that are intended to support HEIs to promote their quality, student-centred education as well as their high-impact and meaningful research in global markets. Moreover, it reports on how HEIs’ marketing endeavours will be able to forge fruitful and collaborative relationships with industry stakeholders; foster student mobility and engagement in exchange programmes, as they can create partnership agreements with other institutions, among other strategic avenues. These issues imply that tomorrow’s educational institutions will have to keep investing in adequate resources, competences and capabilities to leverage themselves amid intensifying competition in challenging socio-economic environments.peer-reviewe

Private Regulation by Platform Operators – Implications for Usage Intensity

Platforms operators act as private regulators to increase usage and maximize profits. Their goals depend on the development of the platform: overcoming the chicken-egg problem early on requires attracting platform participants while quality becomes more important later on. Private regulators influence third-party business models, entry barriers, and usage intensity. We analyze how drivers of usage intensity on Facebook’s application platform were affected by a policy change that increased quality incentives for applications. This change led to the number of installations of each application becoming less important, applications in more concentrated sub-markets achieving higher usage, and applications staying attractive for longer

The Sales Effect of Word of Mouth: A Model for Creative Goods and Estimates for Novels

Weekly sales of creative goods - like music records, movies or books - usually peak shortly after release and then decline quickly. In many cases, however, they follow a hump-shaped pattern where sales increase for some time. A popular explanation for this phenomenon is word of mouth among a population of heterogeneous buyers, but previous studies typically assume buyer homogeneity or neglect word of mouth altogether. In this paper, I study a model of new-product diffusion with heterogeneous buyers that allows for a quantification of the sales effect of word of mouth. The model includes Christmas sales as a special case. All parameters have an intuitive interpretation. Simulation results suggest that the parameters are estimable for data that are not too volatile and that cover a sufficiently large part of a title’s life cycle. I estimate the model for four exemplary novels using scanner data on weekly sales. ZUSAMMENFASSUNG - (Die Verkaufswirkung von Mundpropaganda: ein Modell für kreative Produkte und Schätzwerte für Romane) Meistens erreichen die wöchentlichen Verkäufe von kreativen Produkten wie Musikalben, Kinofilmen oder Büchern kurz nach Veröffentlichung ihren Höhepunkt und nehmen dann schnell ab. In einigen Fällen jedoch zeigen sie einen buckelartigen Verlauf mit zunächst ansteigenden Verkäufen. Eine populäre Erklärung für dieses Phänomen beruht auf der Existenz von Mundpropaganda unter heterogenen Käufern, doch bisherige Studien gehen typischerweise von der Annahme homogener Käufer aus oder vernachlässigen Mundpropaganda gänzlich. Dieses Papier betrachtet ein Modell der Verbreitung neuer Produkte unter heterogenen Käufern, welches eine Quantifizierung der Verkaufswirkung von Mundpropaganda ermöglicht. Das Modell beinhaltet Weihnachtsverkäufe als Spezialfall. Alle Modellparameter haben eine intuitive Bedeutung. Ergebnisse einer Simulation zeigen, dass die Parameter empirisch geschätzt werden können, wenn die Daten einen hinreichend großen Teil des Verkaufszyklus eines Titels abdecken und nicht zu volatil sind. Das Modell wird auf Scannerdaten für vier exemplarische Romane angewendet.new-product diffusion; word of mouth; creative industries

A Theory of Strategic Diffusion

The important role of friends, neighbors and colleagues in shaping individual choices has been brought out in a number of studies over the years. The presence of significant ‘local’ influence in shaping individual behavior suggests that firms, governments and developmental agencies should explicitly incorporate it in the design of their marketing and developmental strategies. This paper develops a framework for the study of optimal strategies in the presence of social interaction. We focus on the case of a single player who exerts costly effort to get a set of individuals – engaged in social interaction – to choose a certain action. Our formulation allows for different types of social interaction (ranging from sharing of information to direct adoption externalities) and also allows for the player to have incomplete information concerning the connections among individuals. The analysis starts by showing that incorporating information on social interaction can have large effects on the profits of a player. We then show that an increase in the level and dispersion of social interaction can raise or lower the optimal strategy and profits of the player, depending on the content of the interaction. We then study the value of social network information for the player and find that it depends on the dispersion in social connections. The economic interest of these results is illustrated via a discussion of two economic applications: advertising in the presence of word of mouth communication and seeding a network.Social Interaction, Seeding the Network, Word of Mouth Communication, Diffusion Strategy

Diderot´s rule

Like many new products, newly released creative goods such as books, music records and movies are sometimes ‘surprise’ hits but often flops. Experimental and empirical research suggests that it is hard to predict the demand for a new creative good, and therefore its success, even for industry experts. Rules of thumb on the quantitative properties of demand uncertainty exist for various creative industries – including a rule by Denis Diderot (1763) according to which one out of ten published books is a commercial success. Yet, representative evidence on any industry’s new-product success rate is scarce. This paper studies new-product success in a random sample of novels. Its empirical strategy to identify success – a simple characterization of author-publisher bargaining combined with a parsimonious model of new-product diffusion – is based on the common observation that word-of-mouth is a crucial success factor in creative industries. Parametric and semi-parametric estimation results corroborate Diderot’s rule: between 10 and 15% of novels enjoy significantly positive effects of word-of-mouth. -- Neu veröffentlichte Kreativgüter wie Bücher, Musikalben und Filme sind, ähnlich anderen neuen Produkten, zwar manchmal "Überraschungserfolge", meistens jedoch Flops. Laut experimentellem und empirischem Forschungsstand ist es selbst für Branchenexperten schwierig, die Nachfrage nach einem neuen Kreativgut, und damit seinen kommerziellen Erfolg, vorherzusagen. Daumenregeln zu den quantitativen Eigenschaften dieser Nachfrageunsicherheit existieren in einigen kreativen Branchen – unter anderem eine Regel von Denis Diderot (1763), wonach eines von zehn veröffentlichten Büchern ein kommerzieller Erfolg ist. Allerdings mangelt es an repräsentativer Evidenz zu der Erfolgsrate neuer Produkte, gleich in welcher Branche. Dieses Papier untersucht den Erfolg neuer Produkte in einer zufälligen Stichprobe von Romanen. Die verwendete empirische Strategie zur Identifikation von Erfolg - eine einfache Charakterisierung der Verhandlungen zwischen Autor und Verlag, kombiniert mit einem überschaubaren Modell der Diffusion neuer Produkte - basiert auf der verbreiteten Beobachtung, dass Mundpropaganda ein entscheidender Erfolgsfaktor in kreativen Branchen ist. Parametrische und semiparametrische Schätzergebnisse bestätigen Diderot's Daumenregel: zwischen 10 und 15% der Romane profitieren von einem signifikant positiven Einfluß von Mundpropaganda.new-product success rate,demand uncertainty,word-of-mouth,creative industries

Negotiation, bargaining, and discounts:generating WoM and local tourism development at the Tabriz bazaar, Iran

This paper examines the effects of negotiation intention, bargaining propensity, and discount satisfaction on word-of-mouth (WoM) behaviours for tourists visiting Tabriz bazaar, Iran. Data from 615-survey respondents highlight that tourists are motivated to conduct WoM behaviour when they are experientially satisfied with the opportunity to negotiate and bargain, and when they are satisfied with the discount they receive. This paper makes theoretical contributions to social exchange theory and presents managerial implications for policy-makers to generate tourism development

Private Regulation by Platform Operators – Implications for Usage Intensity

Platforms operators act as private regulators to increase usage and maximize profits. Their goals depend on the development of the platform: overcoming the chicken-egg problem early on requires attracting platform participants while quality becomes more important later on. Private regulators influence third-party business models, entry barriers, and usage intensity. We analyze how drivers of usage intensity on Facebook’s application platform were affected by a policy change that increased quality incentives for applications. This change led to the number of installations of each application becoming less important, applications in more concentrated sub-markets achieving higher usage, and applications staying attractive for longer.private regulation multi-sided platforms usage intensity

Peer Influence in Network Markets: An Empirical Investigation

We analyze the effect of peer influence on the diffusion of an innovative network good. We argue that the adopters of a network good have an incentive to convince others to purchase the same product because their utility depends on the number of other users. This peer-effect influences individuals’ adoption decisions alongside the more familiar installed-base-effect, based on the individual’s own insight that a larger number of installed units increases his/her benefit of adopting. We test empirically which effect dominates with Instant Messaging, an innovative network good. We arrive at surprising results with far-reaching implications for research and management. The diffusion of Instant Messaging was to a large extent driven by the peer-effect, but the installed-base-effect seemed to play no role. We perform our estimation with a discrete time hazard rate model that controls for unobserved heterogeneity.Hazard Rate Model;Innovation Diffusion;Instant Messaging;Network Markets;Peer Influence