Social Networks and their Economics. Influencing Consumer Choice. Daniel Birke

Transcription

1 Social Networks and their Economics Influencing Consumer Choice Daniel Birke Visiting Researcher, Aston Business School, Birmingham, and works in a leading international management consultancy in Germany. WILEY

2 Contents List of figures List of tables Preface Acknowledgements ix xi xv xvii 1 Consumer choice in social networks Motivation Using mobile telecommunications to illustrate the economics of social networks Structure of the book Why you should read this book 6 References 9 2 Research into social networks in economics, sociology and physics Introduction The economics of networks: Key findings from economics and marketing Introduction Definition of network effects Direct network effects Indirect network effects Implications for company strategies Social network analysis: Key findings from sociology A short history Network analysis basics Design of social network studies Key findings from physics research into complex networks Empirical research on social networks and network effects Introduction Big data: Massive electronic social networks 32

3 vi CONTENTS Challenges when identifying causal relationships in social networks Empirical strategies to identifying causal effects in social networks Empirical challenges and advances in the economics of network literature Summary 40 References 40 3 Marketing in social networks: The iphone Executive summary Case study 1: Social network and viral marketing Case study 2: Social advertising on Facebook Introduction to the empirical study Product diffusion in social networks Modelling diffusion in social networks Model estimation Description of the data used: Very large-scale mobile network Description of the statistical method used: Survival analysis Model results Non-parametric tests Variable definitions Model results: Impact of the social network on iphone adoption iphone virality over time Discussion 67 References 68 4 Switching and churn in social networks Executive summary Case study: Customer retention in social networks Introduction to the empirical study Key findings from the switching cost literature Modelling concept Description of the data used: Another large-scale mobile» network Model results Non-parametric tests Variable definitions Model results: Impact of the social network on customer churn Robustness tests Discussion 86 References 88

4 CONTENTS 5 How social networks influence consumer choice of mobile phone carriers in the UK, Europe and Asia Executive summary Case study: Using homophily for social network marketing Mobile phone carriers Online retailers Online social networks Introduction to the empirical study Methodology Design of the social network survey Description of the statistical approach used: Quadratic assignment procedure Understanding the properties of the social networks Descriptive social network statistics Graphical analysis of a social network The impact of friendship on operator choice Robustness of results Non-respondents QAP and multicollinearity Ethnicity Are stronger relationships more influential? Friendship networks and choice of handset brand Multi-country case study of operator choice in social networks Malaysia The Netherlands Italy Cross-country comparison Discussion 133 References Coordination of mobile operator choice within households Executive summary Case study: Social network marketing to communities International communities Families Introduction to the empirical study 142 v 6.4 Data Descriptive statistics The model Multinomial logit model Model parameters Base model Relationship types within households Multinomial probit model Independence of irrelevant alternatives 153

5 viii CONTENTS Multinomial probit motivation Estimation results Discussion 158 References How pricing strategy influences consumer behaviour in social networks Executive summary Case study: Pricing digital products with network effects Facebook Linkedln Introduction to the empirical study The mobile telecommunications industry in the UK The model: Price discrimination between on-and off-net calls Estimation results: Adapting consumption choice to price signals Discussion 175 References Conclusions Main results Implications of interdependent consumer choice For marketing practitioners For academic researchers For regulatory policy Looking ahead: How social network analysis is changing research. and marketing practice 180 References 181 Appendix A Success factors for viral marketing campaigns 183 A. 1 Proposition excellence 185 A.2 Observability of the product or its use 186 A.3 Design the campaign around a good understanding of the specific role of word-of-mouth in propagating your product 187 A.4 Word-of-mouth for economic benefit 187 A.5 Exploit storytelling and tap into the Zeitgeist. 188 A. ;6 Exploit influential expert users 189 A.7 Appeal to communities of interest 189 A.8 Conclusion 190 References 191 Appendix B Student questionnaire 193 Index 197