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Abstract Details
Activity Number:
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145
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Type:
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Invited
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Date/Time:
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Monday, August 1, 2011 : 10:30 AM to 12:20 PM
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Sponsor:
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Section on Statistics and Marketing
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Abstract - #300114 |
Title:
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Repeat Purchasing in a Social Network Setting
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Author(s):
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Peter Fader*+ and Eric Schwartz and Renana Peres
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Companies:
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University of Pennsylvania and University of Pennsylvania and Hebrew University
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Address:
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771 Jon M. Huntsman Hall, Philadelphia, PA, 19104,
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Keywords:
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social network ;
agent-based modeling ;
stochastic models ;
repeat purchasing ;
customer attrition ;
diffusion models
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Abstract:
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We study this link between repeat purchasing, customer attrition, and social network structure/activity. Using an agent-based model, we simulate the initial diffusion, ongoing repeat usage, and ultimate customer attrition for a new product in a social network setting. The adoption, repeat purchasing and attrition decisions of individuals in the network depend on the communication dynamics within the social network, and are described using a well-established "buy till you die" probability model that has been augmented to account for network characteristics. To obtain the parameters used in the agent-based model (and to establish the overall validity of our proposed approach), we first estimate this type of model using actual data from a new application on Facebook. We then expand upon this empirical model using agent-based techniques, in order to explore how the overall long term profitability of the network depends on the repeat-purchasing/attrition parameters, and the sensitivity of repeat purchasing/attrition to the network characteristics. We also demonstrate the biases created when using a plain repeat-purchase model that ignores the social network characteristics.
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