TITLE

ADVERTISING AND THE DIFFUSION OF NEW PRODUCTS

AUTHOR(S)
Horsky, Dan; Simon, Leonard S.
PUB. DATE
January 1983
SOURCE
Marketing Science;Winter83, Vol. 2 Issue 1, p1
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This paper examines the effects of advertising on the sales growth of new, infrequently purchased products. It is assumed that producer originated advertising serves to inform innovators of the existence and value of the new product while word-of-mouth communication by previous adopters affects imitators. Such a diffusion process is modeled and tested for the case of telephonic banking. It is shown that advertising accelerates the diffusion process of the new product. The implications for a firm introducing a new product and wishing to maximize its discounted profits over the product's life cycle are discussed. In particular, it is demonstrated that the optimal advertising policy is to advertise heavily when the product is introduced and to reduce the level of advertising as sales increase and the product moves through its life cycle. Evidence that such a strategy is commonly practiced by firms is cited. (Diffusion of Innovations; New Products; Optimal Advertising)
ACCESSION #
4475342

 

Related Articles

  • INTRODUCTION STRATEGY FOR NEW PRODUCTS WITH POSITIVE AND NEGATIVE WORD-OF-MOUTH. Mahajan, Vijay; Muller, Eitan; Kerin, Roger A. // Management Science;Dec1984, Vol. 30 Issue 12, p1389 

    Existing innovation diffusion models assume that individual experience with the product is always communicated positively through word-of-mouth. For certain innovations, however, this assumption is tenuous since communicators of the product experience may transfer favorable, unfavorable, or...

  • Word-of-mouth Communication by the Innovator. Engle, James F.; Kegerreis, Robert J.; Blackwell, Roger D. // Journal of Marketing;Jul1969, Vol. 33 Issue 3, p15 

    The article reports on the effectiveness of word-of-mouth advertising and its implications for product development in the U.S. It is proposed that a corporation's customers are its most influential sales people in that, if satisfied with their purchase, they will convey that satisfaction to...

  • Which way forward? Bashford, Suzy // Marketing (00253650);12/20/2006 Marketing Manual Supplem, p12 

    This article presents information on difference between an experiential marketing agency and a traditional field marketing shop. Experiential is less about the number of people that a campaign reaches and more about the depth of experience. It is the creation of a campaign, delivered face to...

  • Buzz. Austin, Nancy K.; Hofman, Mike // Inc.;May98, Vol. 20 Issue 6, p44 

    Focuses on the term Buzz, the tornado alley of communication. Information on the use of buzz by owners of growing companies; What aided the popularity of buzz; Information on the use of buzz from the 1960s to the 1990s; Detailed information on buzz.

  • Implementing "Extreme" Customer Service. Heilman, Terry // EE: Evaluation Engineering;Nov2009, Vol. 48 Issue 11, p14 

    The article focuses on the optimum level of customer services provided by Sunstone Circuits. The company's customer-centric philosophy resulted to many new customers, positive word-of-mouth, and average sales growth of 20%. Strategies for developing extreme customer services are discussed which...

  • Why Concept and Product Tests Fail to Predict New Product Results. Tauber, Edward M. // Journal of Marketing;19Oct75, Vol. 39 Issue 4, p69 

    The article reports on possible reasons that concept testing, product testing, and other market screening techniques for new products turn out to be inaccurate and, therefore, inefficient. The author focuses on diagnostic and predictive research methods that can aid marketing personnel in sales...

  • ANALYSIS OF NEW PRODUCT DIFFUSION USING A FOUR-SEGMENT TRIAL-REPEAT MODEL. Hahn, Minhi; Park, Sehoon; Krishnamurthi, Lakshman; Zoltners, Andris A. // Marketing Science;Summer94, Vol. 13 Issue 3, p224 

    A four segment trial-repeat model is developed to model sales of a frequently purchased product in the early stage of the product's life cycle. The model can be calibrated using aggregate data alone. Two versions of the model, one emphasizing the competitive aspect of marketing communications...

  • Negative Word-of-Mouth by Dissatisfied Consumers: A Pilot Study. Richins, Marsha L. // Journal of Marketing;Winter83, Vol. 47 Issue 1, p68 

    While marketing scholars have emphasized the importance of customer satisfaction, few studies have examined in detail consumers' responses to dissatisfaction. This study examines correlates of one possible response--telling others about the dissatisfaction--and identifies variables that...

  • Face value. McLuhan, Robert // Marketing (00253650);12/20/2006 Marketing Manual Supplem, p9 

    This article discusses various issues related to the significance of field marketing. Field marketers interact with staff and customers to raise a brand's profile and win sales. It is highlighted that the face-to-face element makes it a powerful medium and the word-of-mouth publicity is arguably...

Share

Read the Article

Courtesy of THE LIBRARY OF VIRGINIA

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics