Ruxian Wang Study Offers Method For Measuring Appeal Of Commercial Products

Main navigation Johns Hopkins Legacy Online packages Faculty Directory Experiential studying Career assets Alumni mentoring program Util Nav CTA CTA Breadcrumb Ruxian Wang Study Offers Method for Measuring Appeal of Commercial Products Whether buying shampoo, cars, or clothes, shoppers ponder more than price and usefulness when deciding tips on how to spend their cash. So-referred to as “network effects” also come into play. This is the term for the value derived from the product’s recognition within a big group of users. Think, for instance, of a web-based online game in which many players share data that makes the expertise extra rewarding. Now a Johns Hopkins University business professor presents a computational mannequin that measures consumer choices in terms not only of worth and usefulness but additionally of community results. The new study’s findings might be useful to producers and retailers in search of to boost gross sales and market shares. “Suppose you’re planning to buy a pc. You’ll think about a price range that you simply’re comfortable with, and you’ll take a look at all of the attributes of the computer â€" the screen, keyboard, reminiscence, CPU, and so forth,” says Ruxian W ang, an assistant professor at the Johns Hopkins Carey Business School and the paper’s lead writer. “But you can additionally contemplate the network effects. Specifically, is this a well-liked product that makes you are feeling joyful to be among the people buying and utilizing it? The mannequin described on this paper computes knowledge in a method that exhibits the extent of the network effects, and it could possibly accurately predict the long run sales of a product based mostly on how robust or weak its community impact is, along with its options or value promotion.” A group of fortunately related computer users is just one example of a constructive network impact. So is the cool factor related to a style pattern or a ticket toHamilton, Broadway’s hottest show. But, Wang (left) warns, this phenomenon cuts each ways: When so many people are shopping for the current stylish footwear or costume design that it begins to look moveé, a adverse network impact might come up. T he similar would apply to a commuter route that appeals to so many drivers that it leads to snarled traffic. Knowing the network results of products may help firms determine how many of these items it should make, says Wang. Instead of offering an array of comparable merchandise â€" say, a line of computers or vehicles which might be more alike than totally different â€" an organization may use Wang’s algorithm to seek out which of the merchandise had strongly positive community results and then consider selling these. Wang cites the instance of Apple and its comparatively limited but highly successful line of expertise products. “In the previous, promoting a variety of items was often the best way corporations approached their work. But that can be very costly for them. There’s actually no cause to supply many different versions of a specific product if the company finds that one or two of them have sturdy community impact. They may even decrease the value of that product som ewhat and expertise a rise in gross sales and a larger share of the market,” explains Wang, who earned his PhD in operations research from Columbia University. Streamlined product strains can also cut back the confusion that potential clients generally really feel when confronted with numerous similar objects, based on Wang. The study, titled“Consumer Choice Models with Endogenous Network Effects”and co-authored by Zizhuo Wang, assistant professor at the University of Minnesota, is forthcoming in Management Science. The computational mannequin developed by the 2 authors was based mostly on knowledge from downloads, player ratings, and different user data from the Google platform for video video games. Wang factors out that this research was concerned with a single agency and the way it might market a number of merchandise. He and his colleague plan in future research to contemplate how community effects affect the methods of competing manufacturers and retailers. Posted a hundred International Drive