Seeding strategies for new product launch: The role of negative word-of-mouth.

Abstract

When launching a new product, firms often give away free samples to seed the market. This paper aims to identify the optimal seeding targets, such as early adopters, social hubs, or randomly chosen consumers while considering the presence of negative word-of-mouth (WOM). Using agent-based modeling, it was found that seeding early adopters can generate the highest profit and the largest market penetration, followed by the social hubs and random consumers. Moreover, the results show that seeding early adopters can be more beneficial for a low-quality product, wherein adopters are more likely to spread negative WOM. These findings challenge a widely accepted notion in the related research that social hubs are often the most promising targets for seeding programs.