How advertising strategies affects the diffusion of information in markets

TL;DR

This paper introduces a novel agent-based model that simultaneously considers social influence, advertising, and product novelty to analyze their combined effects on market diffusion, highlighting non-linear dynamics in consumer behavior.

Contribution

It is the first to incorporate advertising, social influence, and product novelty together in an agent-based model for market diffusion analysis.

Findings

Advertising has a stronger impact than social influence in early stages.

Non-linear effects of advertising and social influence vary over time.

Fashion product diffusion is affected by changing consumer preferences.

Abstract

Consumer behavior under social influence is a well-known phenomenon and computer scientists and economists are prevalently trying to analyze the dynamics behind decision making during the consumption process through agent-based modeling (ABM). Some articles tried to explain market inequality because of the social influencing, but the impact of advertising is underestimated and not included as a parameter in the ABM simulations. In the first part of the work we give a background about related works, afterwards, we explain our model with newly introduced advertisement and penalty parameters. To best our knowledge our work will be the first paper that will consider the effects of social influencing, advertisement, and the novelty of the product at the same time. The type of interactions is defined as advertisement and social influencing. We are interested in showing the effects of advertisement and social interactions in different time intervals. The influencing takes time by its nature, however, advertisement is a stronger approach to introduce new products to consumers. These effects are not linearly positive for the fashion products, since the fashion changes over time and consumed items get old-fashioned and ordinary for users. Our Sigmoid penalty function adds non-linearity to the model to show the time and popularity effects against the advertisement and social interactions.