The effect of online and offline word-of-mouth on new product diffusion

Abstract

This study investigates how the online and offline communication channels jointly influence a firm's new product diffusion. Considering the online and offline word-of-mouth effect, we compare three strategies through which a firm diffuses its product, i.e. offline diffusion strategy, online diffusion strategy and both offline and online diffusion strategy. The findings indicate that product peak sales rate and cumulative sales at peak time would be highest when managers market their products only through the online channel. However, product peak adopting time is not determined by the strategy which the manager takes, but is contingent on the relationship among the online/offline innovation effect, online/offline imitation effect and the proportion of offline consumers. Further parameter analysis provides several managerial insights.