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

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.Durante años, los profesionales y académicos dedicados al marketing han identificado la estrategia del marketing boca a boca (denotada por el acrónimo anglosajón WOM por Word-of Mouth) como una fuerza impulsora clave para el éxito empresarial. Los gerentes de marketing deben tener en cuenta la presencia y el impacto del marketing boca-de-boca para las empresas y cómo las empresas pueden aprovechar mejor los efectos de esta. Esta tesis se compone de tres ensayos sobre el marketing boca a boca en un contexto dinámico que evalúa cómo una empresa puede beneficiarse de esta estrategia puesto que tiene un efecto de aceleración de sus ventas y si las estrategias de WOM de comunicación, como el marketing de afiliados, resultan estrategias atractivas para la empresa. Las principales contribuciones de esta tesis pueden resumirse así: los inventores pueden comercializar ellos mismos productos innovadores y simultáneamente conceder licencias sobre la tecnología a otras firmas. El licenciatario o licenciado (o entidad que adquiere la licencia) puede canibalizar las ventas del licenciador (o titular de una licencia) pero este efecto puede verse compensado por las ganancias provenientes de las regalías o canon por disfrute de los derechos de la licencia. En el primer ensayo mostramos cómo se pueden usar estratégicamente las licencias para comercialización de nuevos productos para acelerar su proceso de difusión en dos tipos de mercado: (i) un mercado donde los derechos de propiedad intelectual están fuertemente protegidos, y (ii) un mercado con derechos de propiedad donde éstos no están tan protegidos y empresas rivales comercializan versiones piratas. Los resultados obtenidos muestran que, en presencia de mercados fuertemente protegidos, la concesión de licencias es una estrategia conveniente para un licenciador (que se beneficia de los cánones por cesión, la inversión en publicidad y el efecto positivo del boca a boca entre los licenciatarios). Comparado este resultado con el obtenido en un mercado menos protegido, observamos que observando que la piratería acelera la difusión de los productos pero el licenciante sufre una pérdida de ventas que no se ve compensada de ninguna forma ya queen general los piratas no están interesados en el acuerdo de licencia y no se paga ningún canon. El estudio finaliza con un análisis de estática comparativa basado en simulaciones numéricas, y un estudio empírico del modelo de licencias en la industria de lamparas incandescentes en Reino Unido. Cuando se introducen nuevas generaciones de un producto duradero, la superposición de ventas de cada una de ellas recuerdan una secuencia de olas. En este capítulo se considera una estrategia para la dirección de marketing ante las distintas oleadas de nuevas, motivando a los clientes de las primeras generaciones para que se pasen a las de nueva generación. Este trasvase implica mayores beneficios para la empresa y una mejora de la satisfacción de los clientes de productos de vieja generación. En concreto, se estudia cómo las promociones de canje por cambio de generación pueden usarse para convencer a los consumidores de versiones antiguas del producto pasarse a versiones más actualizadas y, de paso, acelerar las ventas de productos más actuales. Para ello, primero construimos un modelo general de difusión para generaciones sucesivas de productos. Después, estudiamos el com- portamiento de decisión óptimo de la empresa controlando por los precios y las promociones asociadas a la actualización de productos. Con el fin de cuantificar el efecto de las promociones (descuentos en la actualización del producto), construimos diversos modelos que representan distintas situaciones del mercado, y los resolvemos numéricamente para ciertos valores de los parámetros. Demostramos que los descuentos por actualización de la generación del producto aceleran la difusión de las últimas generaciones pero presentan el efecto contrario en la difusión de los productos de la vieja generación. El tamaño de la ganancia porcentual en los beneficios depende de varias condiciones, presentándose un aumento entre el 2 y el 5% en total de los beneficios descontados. Además, mostramos la aplicabilidad del modelo propuesto en la industria de autómobiles en España en el periodo de 1970 a 2000. El tercer capítulo de la tesis se centra en el estudio del marketing de a liados. Muchos de los clientes virtuales que visitan la página web de un minorista a través de compañías a liadas probablemente volverán al minorista para realizar una compra subsecuente a través de otras fuentes de trá co en línea. Estos clientes pueden referenciar a otros compradores virtuales por medio del boca a boca. Por otra parte, las compañías a liadas pueden canibalizar el resto del esfuerzo de marketing del minorista. En el tercer ensayo estudiamos el efecto dinámico del marketing por afiliación en el tráffico, las ventas y los ingresos del anunciante. Puesto que los affiliados diffieren en el volumen de operaciones, en la contribución a las ventas en línea, en sus herramientas y estrategias de marketing, su efecto en las ventas y los ingresos del anunciante probablemente es heterogéneo. Dado el gran número de afiliados, la estimación usando modelos VAR o VEC es un problema intratable debido a las dimensiones involucradas. En su lugar, usamos la teoría GVAR propuesto por Pe- seran et al (2004). Presentamos una aplicación empírica basada en un minorista de joyería on-line. Nuestros resultados muestran en detalle las fuerzas dinámicas que dan forma a la industria del marketing por afiliación. Los resultados del análisis basados en la función de impulso-respuesta muestran que el efecto de largo plazo del marketing por afiliación es significativo y difiere claramente entre afiliado

Licensing radical product innovations to speed up the diffusion

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. We show in this paper 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.Product diffusion models, Licensing, Optimal control and differential games

Licensing radical product innovations to speed up the diffusion

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. We show in this paper 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.Research funded by two research projects, by the Comunidad de Madrid and the Spanish Governmen

Riding successive product diffusion waves : building a tsunami via upgrade-rebate programs

We discuss how trade-in rebates can be used to manage product multigenerational innovation diffusion waves, and study the optimal behavior of the firm controlling the prices and rebates associated to product upgrades. We show how this strategy accelerates the diffusion and can lead to profit increments of about 5%. The strategy is profitable even when the rebate subsidizes the upgrades entirely.Research funded by two research projects, by the Comunidad de Madrid and the Spanish Governmen

Financial projections in innovation selection: the role of scenario presentation, expertise, and risk

Innovation project selection is a decision of major relevance to firms. Errors in this decisionmay have serious consequences for firms, especially as many firms struggle with optimiz-ing innovation project selection decisions. In their pitches to innovation decision-makers,project teams invariably present financial projections on their innovation projects, whichoften include best- and worst-case scenario presentation. Despite the potential influencethe presentation of such financial projections has on firms’ innovation project selectiondecisions, this topic has not received sufficient attention in the literature. This study exam-ines the role of scenario presentation on financial projections in innovation project selec-tion by conducting two conjoint experiments among 2,425 managers and 11 follow-upinterviews with senior executives. First, the findings of this study suggest that firms shouldhelp project teams present small- rather than large-range scenarios. This is important for atleast the 57% of firms surveyed in this study where project teams are reported to present‘too wide’ and ‘too extreme’ scenarios. Second, firms seeking to promote transformationalinnovation in their innovation pipeline should make the presentation of small-range sce-narios required for an innovation proposal to be presented to a project selection commit-tee. This is relevant for 79% of surveyed firms that would like to select moretransformational than core innovation projects and especially for the half of which thatcurrently do not require scenario presentation. Third, project teams with less expertiseshould develop scenarios analytically rather than intuitively and convey the project’sstrategic merit to decision-makers to help increase innovation project selection likelihoo

Factors associated with unfavourable treatment outcomes in people with HIV-associated tuberculosis in Armenia, 2015 to 2019.

To evaluate factors associated with tuberculosis (TB) treatment outcomes in human Immunodeficiency Virus-Associated (HIV) TB patients in Armenia, we conducted a nation-wide cohort study using routine programmatic data of all HIV-associated TB patients receiving TB treatment with first- or second-line drugs from 2015 to 2019. Data were obtained from the TB and HIV electronic databases. We analysed occurrence of the combined unfavourable outcome (failure, lost to follow-up, death and not evaluated) and death separately, and factors associated with both outcomes using Cox regression. There were 320 HIV-associated TB patients who contributed a total of 351 episodes of TB treatment. An unfavourable TB treatment outcome was registered in 155 (44.2%) episodes, including 85 (24.2%) due to death, 38 (10.8%) lost to follow up, 13 (3.7%) failure and 19 (5.4%) not evaluated. Multivariable analysis showed that receipt of Antiretroviral Treatment (ART) [ART start before TB treatment: adjusted hazard ratio (aHR)=0.3, 95% confidence interval (CI): 0.2-0.5, aHR=, 95% CI:, 95% CI:, 95% CI:TB meningitis (aHR=4.4, 95% CI: 1.6-11.9) increased the risk. The risk of death was affected by the same factors as above in addition to the low BMI (aHR=2.5, 95% CI: 1.3-4.5) and drug resistance (aHR=2.3, 95% CI: 1.0-5.4). In the subsample of episodes receiving ART, history of interruption of ART during TB treatment increased the risk of unfavourable outcome (aHR=2.1 95% CI: 1.2-3.9), while ART start during TB treatment was associated with lower risk of both unfavourable outcome (within first 8 weeks: aHR: 0.5, 95% CI: 0.3-0.9; after 8 weeks: aHR: 0.4, 95% CI: 0.2-1.0) and death (within first 8 weeks: aHR: 0.2, 95% CI: 0.1-0.4; after 8 weeks: aHR: 0.1, 95% CI: 0.01-0.3). The rates of unfavourable TB treatment outcomes, and death in particular, among HIV-associated TB patients in Armenia are high. Our findings emphasize the protective effect of ART and the importance of proper management of cases complicated by drug resistance or meningitis

Development of technology for brazing and diffusion welding of copper accelerating structures

This work presents technologies of copper accelerating structure diffusion joints. The formation conditions of copper diffusion joint with the minimal residual plastic strain are determined experimentally

Licensing radical product innovations to speed up the diffusion

We present a differential game to study how companies can simultaneously license their innovations to other firms when launching a new product. The licensee may cannibalize licensor’s sales, albeit this can be compensated by gains from royalties. Nonetheless, patent royalties are generally so low that licensing is not an attractive strategy. In this paper we consider the role of licensing to speed up the product diffusion. Word of mouth by licensee’s customers and licensee’s advertising indirectly push forward sales of the licensing company, accelerating new product diffusion. We find evidence that licensing can be a potentially profitable strategy. However, we also find that a weak Intellectual Property Right (IPR) protection can easily diminish the financial attractiveness of licensing