Imperial College London
Alternate

DrJiahuaWu

Business School

Associate Professor of Operations
 
 
 
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Contact

 

+44 (0)20 7594 9851j.wu CV

 
 
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Location

 

386ABusiness School BuildingSouth Kensington Campus

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Summary

 

Publications

Citation

BibTex format

@article{Hu:2016:10.1287/mnsc.2015.2160,
author = {Hu, M and Milner, J and Wu, J},
doi = {10.1287/mnsc.2015.2160},
journal = {Management Science},
pages = {867--879},
title = {Liking and following and the newsvendor: Operations and marketing policies under social influence},
url = {http://dx.doi.org/10.1287/mnsc.2015.2160},
volume = {62},
year = {2016}
}
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RIS format (EndNote, RefMan)

TY  - JOUR
AB  - We consider a monopolistic firm selling two substitutable products to a stream of sequential arrivals whose purchase decisions can be influenced by earlier purchases. Before demand realizes, the firm faces a newsvendor problem for the two products with economies of scale in production for each. When consumers are responsive to others’ decisions, social influence amplifies demand uncertainty, leading to a lower profit for the firm. We propose three solutions for the firm to better cope with or even benefit from social influence: influencer recruitment and a reduced product assortment either before demand realization (ex ante) or under production postponement (ex post). First, the firm can offer promotional incentives to recruit consumers as influencers. We reveal an operational benefit of influencer marketing that a very small fraction of such influencers is sufficient to diminish sales’ unpredictability. Second, as the potential substitutability between products increases due to social influence, the firm may leverage the increased substitutability and enjoy lower cost in production by reducing product assortment before demand realization. Last, under production postponement, the firm can take advantage of the way that social influence results in demand herding and reduce product varieties by reacting to preorder information.
AU  - Hu,M
AU  - Milner,J
AU  - Wu,J
DO  - 10.1287/mnsc.2015.2160
EP  - 879
PY  - 2016///
SN  - 0025-1909
SP  - 867
TI  - Liking and following and the newsvendor: Operations and marketing policies under social influence
T2  - Management Science
UR  - http://dx.doi.org/10.1287/mnsc.2015.2160
UR  - http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000372118300014&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=1ba7043ffcc86c417c072aa74d649202
UR  - https://pubsonline.informs.org/doi/10.1287/mnsc.2015.2160
VL  - 62
ER  -
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