Track: Operations Management

Abstract

There are several marketing strategies known in literature, such as advertising, display in a shop, distribution channels, promotion, etc. Current form of marketing strategy include the use of information technology, such as website and social media. Related to the later, other specific methods, such as word of mouth (WOM) and celebrity endorsment are becoming popular. The WOM communications is considered to be have advantages such as significantly lower cost and much faster propagation of the messages. In this paper we will present a mathematical model for word of mouth marketing strategy by considering proportional recruitment. We divide a population under consideration into four subpopulations: susceptible – those who are the target market or potential buyers (S), infected – those who are already active as buyers (I), positive – former buyers which have positive comments on the item they purchased (P)  and negative – former buyers which have negative comments on the item they purchased (N). We assume that the rate of new individuals who enter the target market is proportional to the number of each subpopulations, i. e. S, I, P, and N. They have either a positive or negative contribution to the number of new entry to the susceptible class or the potential buyer. We analyzed the model and found the condition for the equilibrium coexistence solution to exist in the long-term.

Keywords

Marketing Strategy, Word-of-Mouth, Mathematical Model, Dynamical System, Equilibrium Coexistence Solution.