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A dynamic discount pricing strategy for viral marketing

Author

Listed:
  • Xiang Zhong
  • Juan Zhao
  • Lu-Xing Yang
  • Xiaofan Yang
  • Yingbo Wu
  • Yuan Yan Tang

Abstract

Viral marketing has been one of the main marketing modes. However, theoretical study of viral marketing is still lacking. This paper focuses on the problem of developing a cost-effective dynamic discount pricing strategy for a viral marketing campaign. First, based on a novel word-of-mouth propagation model, we model the original problem as an optimal control problem. Second, we show that the optimal control problem admits an optimal control and present the optimality system for solving the optimal control problem. Next, we solve some optimal control models to get their respective optimal dynamic discount pricing strategies. Finally, we examine the effect of some factors on the maximum marketing profit. These results contribute to gaining insight into viral marketing.

Suggested Citation

  • Xiang Zhong & Juan Zhao & Lu-Xing Yang & Xiaofan Yang & Yingbo Wu & Yuan Yan Tang, 2018. "A dynamic discount pricing strategy for viral marketing," PLOS ONE, Public Library of Science, vol. 13(12), pages 1-19, December.
    • Handle: RePEc:plo:pone00:0208738
    DOI: 10.1371/journal.pone.0208738
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    References listed on IDEAS

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    1. Phelps, Joseph E. & Lewis, Regina & Mobilio, Lynne & Perry, David & Raman, Niranjan, 2004. "Viral Marketing or Electronic Word-of-Mouth Advertising: Examining Consumer Responses and Motivations to Pass Along Email," Journal of Advertising Research, Cambridge University Press, vol. 44(4), pages 333-348, December.
    2. Shuping Li & Zhen Jin, 2013. "Global Dynamics Analysis of Homogeneous New Products Diffusion Model," Discrete Dynamics in Nature and Society, Hindawi, vol. 2013, pages 1-6, November.
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    Cited by:

    1. Tavasoli, Ali & Fazli, Mehrdad & Ardjmand, Ehsan & Young, William A. & Shakeri, Heman, 2023. "Competitive pricing under local network effects," European Journal of Operational Research, Elsevier, vol. 311(2), pages 545-566.
    2. Chen, Jian & Yang, Lu-Xing & Yang, Xiaofan & Tang, Yuan Yan, 2020. "Cost-effective anti-rumor message-pushing schemes," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 540(C).
    3. Dawood Yahyavi & Ata Allah Taleizadeh & Park Thaichon, 2024. "National brands versus store brands: retailer fight against national brands to improve store brands via a dynamic discount pricing strategy," Operational Research, Springer, vol. 24(4), pages 1-36, December.

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