Quality, advertisement and social influences in cultural market : the case of motion picture

In the motion picture industry the winner takes it all. Every year a few blockbuster movies such as Avatar, Pirates of the Caribbean, and Toy Story gather most of the Box Office sales while many other movies obtain very low sales. Why do movie goers cluster so much on the same movies? In this paper we propose an agent-based model in which the movie goer's decision-making depends on external influence such as advertisement, internal influence such as imitation, shared consumption influence such as the desire of visiting a movie with someone else and movies' quality. We study how the movie goer's decision-making determines Box Office sales. We find that the average importance consumers attach to movies' quality is low, much lower than the importance consumers attach to external, internal and shared consumption influences. Moreover, we find that the dispersion of Box Office sales is mainly determined by the internal and external forces of the market. Finally we find that additional investments in ad expenditure budgets are particularly beneficial for high budget movies of high quality whereas low budget movies and movies of poor quality do not substantially benefit from additional advertising

Competitive strategies in the motion picture industry: An ABM to study investment decisions

We study a parsimonious competition setting whereby two studio producers launch their movies simultaneously. They compete deciding about the positioning of their movies, as they can position close to or far from the mainstream, and investing in advertising and in quality. We study our competitive setting with an analytical model and solve it using a standard game-theoretical technique. Next, we use an agent-based model (ABM) to relax several assumptions of the analytical model and investigate more realistic market situations, such as symmetric as well as asymmetric positioning, competitions among big and/or small studios, settings with more than two competitors, and studios that use weighted and evolving decision rules. Our results explain interesting dynamics behind the scenes of the competition. They indicate the drivers of studios' behaviors and shed light on some important aspects of their strategic competition. In this sense, our results offer relevant theoretical and practical implications

Effects of social networks on innovation diffusion and marketing dynamics

The main goal of this thesis is to incorporate part of the flourishing literature on network structures in a marketing context. Most of the results we have obtained and presented generate several implications. First of all we hope that the reader, after going through these chapters is convinced that often networks do play a role, that they can explain different market dynamics and that studying networks can be used to develop marketing strategies. Most of the theoretical implications derive from the following metaphor: a new product that diffuses into a society of consumers is like an epidemic that spreads into a population of susceptible individuals. Inspired by this metaphor, we believe that marketing can gain useful insights studying, adjusting and adopting epidemic models. This is what we explicitly do in chapters 2, 3 and 4. We build different network structures of consumers with their preferences and their attributes and we study how the diffusion dynamics of different products vary. Although we believe that the diffusion of a new product might look like the spread of an epidemic, we are also aware that these two processes are not completely the same. A substantial part of the work presented here consists of adapting the epidemic models to a marketing framework that can include product characteristics, personal preferences and social influence.

Quality, advertisement and social influences in cultural market : the case of motion picture

In the motion picture industry the winner takes it all. Every year a few blockbuster movies such as Avatar, Pirates of the Caribbean, and Toy Story gather most of the Box Office sales while many other movies obtain very low sales. Why do movie goers cluster so much on the same movies? In this paper we propose an agent-based model in which the movie goer's decision-making depends on external influence such as advertisement, internal influence such as imitation, shared consumption influence such as the desire of visiting a movie with someone else and movies' quality. We study how the movie goer's decision-making determines Box Office sales. We find that the average importance consumers attach to movies' quality is low, much lower than the importance consumers attach to external, internal and shared consumption influences. Moreover, we find that the dispersion of Box Office sales is mainly determined by the internal and external forces of the market. Finally we find that additional investments in ad expenditure budgets are particularly beneficial for high budget movies of high quality whereas low budget movies and movies of poor quality do not substantially benefit from additional advertising