Recommended for you: The effect of word of mouth on sales concentration

Hervas-Drane, A. (2015). Recommended for you: The effect of word of mouth on sales concentration. International Journal of Research in Marketing, 32(2), pp. 207-218. doi: 10.1016/j.ijresmar.2015.02.005

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I examine the role of word of mouth in consumer's product discovery process and its implications for the firm. A monopolist supplies an assortment of horizontally differentiated products and consumers search for a product that matches their taste by sampling products from the assortment or by seeking product recommendations from other consumers. I analyze the underlying consumer interactions that lead to the emergence of word of mouth, examine the optimal pricing and assortment strategy of the firm, and explain the impact of word of mouth on the concentration of sales within the assortment. The model provides a rationale for the long tail phenomenon, explains recent empirical findings in online retail, and is well suited for product categories such as music, film, books, and video game entertainment.

Item Type: Article
Additional Information: © Elsevier.2015. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International
Uncontrolled Keywords: Search; Product discovery; Product recommendations; Recommender systems; Long tail
Subjects: H Social Sciences > HF Commerce
Divisions: Cass Business School > Faculty of Management

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