Targeting and timing promotional activities: An agent-based model for the takeoff of new products

Many marketing efforts focus on promotional activities that support the launch of new products. Promotional strategies may play a crucial role in the early stages of the product life cycle, and determine to a large extent the diffusion of a new product. This paper proposes an agent-based model to simulate the efficacy of different promotional strategies that support the launch of a product. The article in particular concentrates on the targeting and the timing of the promotions. The results of the simulation experiments indicate that promotional activities highly affect diffusion dynamics. The findings indicate that: (1) the absence of promotional support and/or a wrong timing of the promotions may lead to a failure of product diffusion; (2) the optimal targeting strategy is to address distant, small and cohesive groups of consumers; and (3) the optimal timing of a promotion differs between durable categories (white goods, such as kitchens and laundry machines, versus brown goods, such as TVs and CDs players). These results contribute to the planning and the management of promotional strategies supporting new product launches. (C) 2007 Elsevier Inc. All rights reserved.