MSCM Professors and Doctoral Graduate Published in the Journal of Retailing
For release: December 8, 2014
Drs. Mehdi Amini and Emin Babakus, professors of Marketing, have a forthcoming article entitled, “Success Factors in Product Seeding: The Role of Homophily,” that will be published in the Journal of Retailing. This article was co-authored by Dr. Mohammad G. Nejad, assistant professor of Marketing at Fordham University and doctoral Marketing graduate of Fogelman College.
This article explores the profit impact of seeding, or free giveaways, given their overall cost; the most promising group to target; and the optimal size of giveaways (as a percentage of the market). The degree of homophily, or ‘the degree to which two or more individuals who interact are similar in certain attributes,’ was also considered in the study as an important factor that retail managers should consider in their seeding programs. The results show that the degree of homophily negatively affects the profit impact of seeding early adopters. However, the relationship between the degree of homophily and the profit impact of random seeding and seeding social hubs exhibits a U-shaped function. The results also indicate that, on average, seeding 1% of the market (which happens to be practitioners’ rule of thumb) increases firm profits. Finally, the profit impact of a seeding program depends on several factors such as the variable cost of giveaways and the designated seeding targets. When the variable cost of seeding is high, the promising approach is seeding a small percentage (typically .5% or less) of the market comprising social hubs—the most connected consumers.