Browsing by Subject "Marketing"

Television (TV) is the predominant advertising medium, and recent technological advances such as digital video recorders (DVRs) and set-top boxes (STBs) have the potential to transform this industry by enabling household-specific advertising. Since exposure to TV represents a substantial share of consumer time and attention, this potential to micro-target communications represents an enormous opportunity for the TV advertising market.

This paper outlines an approach to facilitate the micro-targeting of TV advertising. We employ a unique dataset, integrating TV program and advertisement viewing at the household level with purchase data, to address the question of how advertisers can achieve better advertising targeting in the digital context. Based on this dataset, we first develop a model of household TV viewing behavior. The viewing model comprises three integrated components: TV show sampling and watching, TV show recording, and advertising viewing. All three components are motivated by the theoretical concept of flow utility, that is, the moment-by-moment enjoyment a household derives from different activities: watching a TV show, watching a TV advertisement, and other non-TV activities. This model has decent out-of-sample prediction power on show choices and time spent on each selected show. We then link household advertising exposure with purchase. Finally, the viewing model and identified advertising-sales relationship are utilized to conduct counterfactual policy experiments on advertising targeting. We consider several household-level targeting scenarios by manipulating: 1) whether the advertising purchase is made in advance; and 2) whether the objective function is to minimize costs for a given set of exposures or to maximize revenues from advertising. Results indicate micro-targeting can lower advertising costs and raise incremental revenue.

The key contributions of this paper are as follows. Theoretically, we develop an integrated model on TV show viewing, TV advertising viewing, purchasing and advertising targeting. Methodologically, we propose a new modeling framework on media consumption by explicitly accounting for the role of uncertainty, and propose targeting strategies leveraging household-level data. Substantively, we offer policy recommendations to advertisers on micro-targeting which can be of great potential.

While consumer research has long explored social influences in consumer phenomena, the literature rarely considers the implications of different dynamics in relationships. In this dissertation, I take a multi-dimensional perspective on social relationships in consumer behavior. In Chapter 1, I develop a conceptual framework of social relationships that situates different types of relationships along three theoretically orthogonal and consumer-relevant relational dimensions: closeness, competitiveness, and power. I argue that these key relational dimensions jointly shape consumer phenomena in important ways. Then, in Chapter 2, I provide an empirical demonstration of this framework in the context of a novel source of social influence: the effect of making consumption choices for different types of others. I focus on two theoretically relevant relational dimensions, closeness and competitiveness, and show across eight experiments that making goal-related consumption choices for others can influence subsequent goal-related choices for the self, depending on the type of relationship with the other. I conclude by considering the practical and theoretical implications of taking a multi-dimensional approach to consumer behavior.

Although people frequently pursue multiple goals simultaneously, these goals often conflict with each other. For instance, consumers may have both a healthy eating goal and a goal to have an enjoyable eating experience. In this dissertation, I focus on two sources of enjoyment in eating experiences that may conflict with healthy eating: consuming tasty food (Essay 1) and affiliating with indulging dining companions (Essay 2). In both essays, I examine solutions and strategies that decrease the conflict between healthy eating and these aspects of enjoyment in the eating experience, thereby enabling consumers to resolve such goal conflicts.

Essay 1 focuses on the well-established conflict between having healthy food and having tasty food and introduces a novel product offering (“vice-virtue bundles”) that can help consumers simultaneously address both health and taste goals. Through several experiments, I demonstrate that consumers often choose vice-virtue bundles with small proportions (¼) of vice and that they view such bundles as healthier than but equally tasty as bundles with larger vice proportions, indicating that “healthier” does not always have to equal “less tasty.”

Essay 2 focuses on a conflict between healthy eating and affiliation with indulging dining companions. The first set of experiments provides evidence of this conflict and examine why it arises (Studies 1 to 3). Based on this conflict’s origins, the second set of experiments tests strategies that consumers can use to decrease the conflict between healthy eating and affiliation with an indulging dining companion (Studies 4 and 5), such that they can make healthy food choices while still being liked by an indulging dining companion. Thus, Essay 2 broadens the existing picture of goals that conflict with the healthy eating goal and, together with Essay 1, identifies solutions to such goal conflicts.

Social media and mobile technology now provide consumers with the opportunity to continuously document or reflect on their moment-to-moment internal and external experiences. For instance, "tweets" are often written while one is consuming some experience, just as other forms of social media may be used in their respective ways for documentation or reflection while an experience is unfolding. But what effect does verbal documentation or reflection have on consumers' enjoyment of their time? The authors propose that when consumers can verbally document or reflect about topics other than the current experience, increased mind wandering can occur, which can help lead to reduced enjoyment. Testing the theoretical model through five experiments, the authors show that verbal documentation or reflection during an experience can reduce enjoyment, regardless of whether that experience is generally enjoyable or generally unenjoyable. However, the same effect does not occur when consumers are specifically asked to verbally document or reflect only about the experience they are taking part in. Verbal documentation or reflection right after an experience ends, which does not increase mind wandering during the experience, can lead to increased enjoyment when consumers are specifically asked to verbally document or reflect only about the experience they just took part in. Implications for the use of social media for verbal documentation and reflection by consumers and marketing managers are discussed.

Consumers value and seek authenticity in the marketplace, including in their products, themselves, and others. Due to its appeal to consumers, the study of authenticity in the marketplace has recently accelerated in consumer research. Adding to this research, in this work I explore antecedents and consequences of perceived authenticity related to both consumers and market offerings.

Essay 1 (“Goldilocks Signaling: How the Number of Signaling Items in an Ensemble Affects Perceptions of Consumer Authenticity”) explores how multi-product signals—consumption ensembles—are perceived by observers. Specifically, this research explores how the number of identity-signaling items (e.g., Nike items) a consumer includes in their ensemble affects observer perceptions of the consumer’s identity-specific authenticity (e.g., authenticity as an athlete). If consumers wish to be seen as authentic, essay 1 demonstrates that they have to balance self-presentation with the perception that they are trying too hard to signal. Accordingly, I find that consumers with ensembles featuring a moderate or “just right” number of signaling items are generally (with some boundaries) perceived as most authentic in relation to the identity they are signaling—a “Goldilocks signaling” effect. I demonstrate that consumers make these inferences both spontaneously, without direct prompting regarding authenticity from experimenters, and reflecting the choice patterns of more versus less authentic consumers. Furthermore, such perceptions are important to consumers’ social relationships; I demonstrate that perceived authenticity can affect how much observers like the identity-signaling consumer and how confident they are in the consumer’s identity-relevant skill. This research is one of very few experimental papers in consumer behavior to consider ensemble signaling and provides new insights into the psychological processes underlying judgments of consumers’ authenticity.

Essay 2 (“True to the Original or to the Creator? How Consumers Navigate the Tension Between Iconic and Expressive Authenticity in Evaluations of Creative Adaptations”) explores the role of authenticity in consumers’ evaluations of creative adaptations by leveraging the context of cover songs. I demonstrate that consumers’ evaluations of cover songs are driven by the relative value they place on the cover’s iconic—truth to the original—and expressive—truth to the cover artist—authenticity. Greater difference from the original causes consumers to perceive the cover song as more expressively authentic but less iconically authentic. Consumers often value both these types of authenticity, hence causing them to prefer cover songs that are moderately versus more or less different from their original. Consumers who are highly attached to the original, however, place increased value on iconic authenticity and hence prefer cover songs that are less different from their beloved original. In addition to showing support for this theory, I cast doubt on other, more general theories that could drive this effect. My findings provide a first detailed view of how multiple different types of authenticity affect consumer evaluations.

Together, these essays advance understanding of antecedents and consequences of multiple types of authenticity for both consumers (essay 1) and consumption objects (essay 2) in the marketplace.

Consumers have relationships with other people, and they have relationships with brands similar to the ones they have with other people. Yet, very little is known about how brand and interpersonal relationships relate to one another. Even less is known about how they jointly affect consumer well-being. The goal of this research, therefore, is to examine how brand and interpersonal relationships influence and are influenced by consumer well-being. Essay 1 uses both empirical methods and surveys from individuals and couples to investigate how consumer preferences in romantic couples, namely brand compatibility, influences life satisfaction. Using traditional statistical techniques and multilevel modeling, I find that the effect of brand compatibility, or the extent to which individuals have similar brand preferences, on life satisfaction depends upon power in the relationship. For high power partners, brand compatibility has no effect on life satisfaction. On the other hand, for low power partners, low brand compatibility is associated with decreased life satisfaction. I find that conflict mediates the link between brand compatibility and power on life satisfaction. In Essay 2 I again use empirical methods and surveys to investigate how resources, which can be considered a form of consumer well-being, influence brand and interpersonal relations. Although social connections have long been considered a fundamental human motivation and deemed necessary for well-being (Baumeister and Leary 1995), recent research has demonstrated that having greater resources is associated with weaker social connections. In the current research I posit that individuals with greater resources still have a need to connect and are using other sources for connection, namely brands. Across several studies I test and find support for my theory that resource level shifts the preference of social connection from people to brands. Specifically, I find that individuals with greater resources have stronger brand relationships, as measured by self-brand connection, brand satisfaction, purchase intentions and willingness to pay with both existing brand relationships and with new brands. This suggests that individuals with greater resources place more emphasis on these relationships. Furthermore, I find that resource level influences the stated importance of brand and interpersonal relationships, and that having or perceiving greater resources is associated with an increased preference to engage with brands over people. This research demonstrates that there are times when people prefer and seek out connections with brands over other people, and highlights the ways in which our brand and interpersonal relationships influence one another.

Understanding consumer behavior is critical for firms' decision making. How consumers make decisions about what they want and buy directly affect the profits of firms. Therefore, it is important to consider consumer behaviors and incorporate them into the model when studying the optimal strategy of firms and competition between firms. In this dissertation, I study rich and interesting consumer behaviors and their impact on firms' strategy in two essays. The first essay considers consumers' shopping cost which leads to their preference for one-stop shopping. I examine how store visit costs and consumer knowledge about a product affect the strategic store choice of consumers and, in turn, the pricing, customer service and advertising decisions of competing retailers. My analysis offers insights on how specialty stores can compete with big-box retailers. In the second essay, I focus on a well-established psychology phenomenon, cognitive dissonance. I incorporate the idea of cognitive dissonance into a model of spatial competition and examine its implications for selling strategy. I provide new insight on the profitability of advance selling and spot selling as well as the pricing of bundle and its components. Collectively, two essays in this dissertation introduce novel ways to model consumer behaviors and help to understand the impact of consumer behaviors on firm profitability and strategy.

Consumers frequently encounter obstacles and failures in their pursuit of valued goals. For example, while pursuing the important goal of living a healthy lifestyle, central to their current and future well-being, consumers might encounter multiple obstacles, conflicts, and setbacks. These challenges are costly for industries whose product offerings support these goals and are detrimental to consumers’ well-being. This dissertation addresses two critical questions. First, given that obstacles, conflicts, and failure are so prevalent, what influences whether consumers expect them to occur? Second, once setbacks or failures have occurred, how do consumers respond?The first essay in this dissertation addresses the first question, investigating how past experiences of conflict with a goal inform expectations about future goal pursuit. Specifically, I examine how the perceived relationship among past conflicts with a focal goal—particularly, perceived variety—shapes expectations. Perceived variety refers to the holistic assessment of differentiation (vs. similarity) among items in an assortment. Six studies demonstrate that perceiving greater variety among past conflicts with a focal goal decreases expectations of encountering conflict in the future. This occurs because perceiving greater variety makes the causes of past events seem collectively unstable (i.e., more temporary and one-off). The second essay addresses the second question, investigating how the way consumers talk about setbacks and failure—specifically, as “not making” versus “not having” time— can shape their subsequent motivation and likelihood to re-engage with their goals. First, a multimethod examination, including the analysis of social media and mass media datasets, illustrates that consumers prefer to say they didn’t “have” (vs. “make”) time for a goal because doing so makes them feel better about what occurred. Second, the results of five experiments, including two field experiments, show how prompting consumers to say they didn’t “make” time instead, increases subsequent motivation to adhere to a goal. This occurs because doing so increases perceptions of personal control. Overall, this dissertation's findings contribute to our understanding of goal conflict, forecasting in goal pursuit, and how language influences recovery after goal failure.

In this dissertation, I explore the relational consequences of humor in brand-to-consumer and consumer-to-consumer relationships. In the first essay, I demonstrate that the cleverness of a brand’s humor attempts affects consumers’ brand attitudes and engagement with the brand. This effect is mediated by perceptions of brand warmth and competence and moderated by consumers’ need for cognition. I demonstrate this effect in six studies including a field study (using data scraped from Twitter) and several lab experiments. In the second essay, I explore ways to make solitude feel less socially disconnecting. Across four studies, I show that people who experience solitary amusement feel less socially disconnected than people who experience solitary happiness. This effect is mediated by other-focus such that people who are amused (vs. happy) think more of others. Together, these two essays demonstrate that humor can be an effective way to foster both consumer-brand and consumer-consumer relationships.

Positive social interactions and relationships are a fundamental human need, but it is not always easy to initiate conversations with potential relationship partners. Seven studies show the role that conversation pieces, or products that elicit questions and comments from others, can play in helping consumers to achieve their social goals. Studies 1 and 2 explore what makes a product a conversation piece and how different types of conversation pieces differentially affect social interactions. Studies 3-7 examine how observers (consumers who see another person displaying a conversation piece) use conversation pieces to facilitate social interactions. Studies 3 and 4 show that observers are more likely to approach people displaying conversation pieces than those who are not, as long as these products increase observers’ predictions of conversation quality. Study 5 demonstrates that observers generate better opening lines when they start a conversation with someone wearing a conversation piece than with someone who is not. Study 6 provides field experiment evidence that starting a conversation by asking about a conversation piece increases self-disclosure and improves perceived conversation quality, and study 7 explores the role of self-disclosure in conversations in more depth.

Patients with early stage prostate cancer face a difficult preference-sensitive decision. There are multiple treatment options, each of which is associated with a unique set of benefits and risks. For example, surgery may cure the cancer but also come with the risk of serious side effects, such as impotence and incontinence. Alternatively, active surveillance avoids those side effects but requires patients to live with an untreated cancer inside their body. The optimal treatment for each patient will thus depend not only on his medical characteristics but also on how he personally values those risks and benefits. Ideally, patients and their physicians would partner together in a process of shared decision making (SDM) to ensure that patients receive treatments that reflect their personal preferences (i.e., preference-concordant treatments). In this dissertation, I use both qualitative and quantitative methods to examine patients’ decision-making processes in the context of early stage prostate cancer, focusing on if and how patients and physicians work together in the decision-making process to incorporate patients’ preferences into their treatment choices.

Essay 1 examines patients’ decision making processes within the context of a larger trial that was designed to assess the impact of a novel patient-centered (vs. standard) decision aid (DA) on patients’ decision making processes. The patient-centered DA increased patients’ desire to participate in the decision-making process and interest in active surveillance (Fagerlin et al., unpublished). However, regardless of which DA patients received, their treatment choices were primarily driven by physicians’ recommendation which, in turn, were driven by patients’ medical characteristics (e.g., cancer severity) and not their personal preferences (e.g., interest in sexual activity). Qualitative analyses of clinical appointments revealed relatively passive patients regardless of condition, suggesting that patients may not have known how to participate in clinical appointments and would benefit from pre-appointment communication skills training.

Essay 2 examines the effect of a novel patient communication skills intervention plus a patient-centered DA (vs. a patient-centered DA only) on several measures of patient empowerment using a randomized controlled trial. The intervention was a video (DVD) that modeled specific communication skills patients could use to participate in their upcoming appointments. The intervention increased patients’ intentions to use four process skills (e.g., taking notes) and sense of self-efficacy regarding their ability to ask for referrals and express personal concerns during their upcoming clinical appointments. It did not increase patients’ sense of self-efficacy regarding their ability to seek information or make assertive utterances.

Essay 3 examines focuses on a specific moment in clinical appointments: patients’ requests for treatment recommendations (data from Essay 1). Patient requests for recommendations are a pivotal and powerful moment in clinical appointments, yet no existing studies have examined how patients actually request recommendations nor what patient characteristics are associated with requests for recommendations. Patients or their companions requested recommendations in approximately 20% of appointments. Patients who requested recommendations had higher prostate cancer anxiety, placed increased importance on sex in their lives, preferred shared (vs. patient-led) decision making, and were more likely to prefer active treatment prior to appointments. When requesting recommendations, patients discussed physicians’ expertise and the role of their recommendations, asked physicians to engage in self-disclosure (e.g., “What would you do?”) and repeated their requests.

Truly empowering patients as decision makers in the context of early stage prostate cancer is difficult, and both patients and physicians may be uncertain how to behave in this new paradigm of patient empowerment. Patient communication skills interventions show promise, but continued research is needed to truly transform clinical medicine into a domain in which patients are empowered to fully participate in the medical decision-making process.

This dissertation contributes to the rapidly growing empirical research area in the field of operations management. It contains two essays, tackling two different sets of operations management questions which are motivated by and built on field data sets from two very different industries --- air cargo logistics and retailing.

The first essay, based on the data set obtained from a world leading third-party logistics company, develops a novel and general Bayesian hierarchical learning framework for estimating customers' spillover learning, that is, customers' learning about the quality of a service (or product) from their previous experiences with similar yet not identical services. We then apply our model to the data set to study how customers' experiences from shipping on a particular route affect their future decisions about shipping not only on that route, but also on other routes serviced by the same logistics company. We find that customers indeed borrow experiences from similar but different services to update their quality beliefs that determine future purchase decisions. Also, service quality beliefs have a significant impact on their future purchasing decisions. Moreover, customers are risk averse; they are averse to not only experience variability but also belief uncertainty (i.e., customer's uncertainty about their beliefs). Finally, belief uncertainty affects customers' utilities more compared to experience variability.

The second essay is based on a data set obtained from a large Chinese supermarket chain, which contains sales as well as both wholesale and retail prices of un-packaged perishable vegetables. Recognizing the special characteristics of this particularly product category, we develop a structural estimation model in a discrete-continuous choice model framework. Building on this framework, we then study an optimization model for joint pricing and inventory management strategies of multiple products, which aims at improving the company's profit from direct sales and at the same time reducing food waste and thus improving social welfare.

Collectively, the studies in this dissertation provide useful modeling ideas, decision tools, insights, and guidance for firms to utilize vast sales and operations data to devise more effective business strategies.

The dissertation consists of three chapters relating to pricing strategies. Chapter 1 studies coupons for prescription drugs and their impacts on consumer welfare, firm profits, and insurance payments. Chapter 2 examines consumer brand loyalty and learning in pharmaceutical demand and discusses implications for marketing and health care policy. Chapter 3 develops a framework for estimating demand and supply in an online market with many competing sellers and frequent price changes and proposes optimal pricing strategies for a large seller.

The first chapter studies an innovative price strategy in pharmaceuticals. Branded drug manufacturers have recently started to issue copay coupons as part of their strategy to compete with generics when their branded drugs are coming off patent. To explore the welfare implications of copay coupons, I estimate a model of demand and supply using pharmaceutical data on sales, prices, advertising, and copayments for cholesterol-lowering drugs and perform a counterfactual analysis where a branded manufacturer introduces coupons. The model allows flexible substitution patterns and consumer heterogeneity in price sensitivities and preferences for branded drugs. The counterfactuals quantify the effects of copay coupons for different assumptions about the take-up of coupons and the ability of the branded manufacturer to direct them to the most price-sensitive types of consumers. The results show that the agency problem between insurers and patients gives a branded manufacturer a strong incentive to issue copay coupons. Introducing copay coupons benefits the coupon issuer and consumers but raises insurance payments. In equilibrium, insurer spending can increase by as much as 25% even when just 5% of consumers have a coupon, with social welfare falling significantly.

Medicines for chronic conditions like high cholesterol, heart disease, and diabetes are repeatedly used for a long period of time. Consumer dynamics thus plays an important role in the demand for those drugs. In the second chapter, I estimate a demand model with brand loyalty and learning using micro-level data from cholesterol lowering drug markets in the United States. The estimates suggest high switching costs and strong learning effects at the molecule level in the markets. Switching costs raise the predicted probability of choosing the same drugs in a row and learning largely increases patient stickiness to a molecule in the long run. I discuss pricing implications of the estimation results for drug manufacturers, insurance companies, and policy makers.

The last chapter, coauthored with Dr. Andrew Sweeting and Dr. James W. Roberts, looks at pricing in a different context. We estimate a model of entry, exit and pricing decisions in an online market for event tickets where there are many competing sellers and prices change frequently. We use the estimates from our model to analyze the optimality of the pricing policy used by the largest seller (broker) in the market. We show that the broker's pricing policies substantially affect the prices set by his competitors. When we compare the broker's pricing policy with the prices that our model predicts are optimal we find that the broker sets approximately correct prices close to the game, when his pricing problem resembles a static one, but that he might be able to gain from using different pricing rules and updating prices more frequently further from the game.

The dissertation consists of three chapters relating to drug development and marketing strategies. Chapter 1 studies strategic direct-to-consumer and direct-to-physician advertising in the pharmaceutical industry. Chapter 2 examines the strategic interaction between government agencies in funding support for medical research. Chapter 3 investigates how pharmaceutical companies make R&D decisions for neglected diseases.

The first chapter studies how pharmaceutical companies make marketing strategies. It is well known that drug manufacturers invest heavily in advertising prescription drugs, but little is known about synergies between different advertising types. Furthermore, little is known about how patients and physicians respond differentially to advertising. Estimating causal relationship is challenging because advertising is not randomly assigned. Because the segmentation of television and radio markets are discrete and exogenous, comparing advertising efforts and demand across borders helps identify causal effects. Using data from 2008-2009 on anti-cholesterol markets and the border strategy, I find that a 10% increase in direct-to-consumer advertising per capita induces 0.3%-0.4% more detailing visits or 1% more detailing time for a given product in a given market. By further constructing and estimating a demand model that separately models physicians' and patients' decisions, I find that advertising to consumers induces more doctor visits. In addition, conditioning on visiting a doctor, advertising to consumers increases the number of requests for the advertised brand from patients with private insurance plans. Finally, after controlling for the patient request, direct-to-physician advertising increases the number of prescriptions for the promoted product.

How do governments respond to other governments when providing a global public good? Using data from 2007-2014 on medical research funding for infectious and parasitic diseases, we examine how governments and foundations in 41 countries respond to funding changes by the US government (which accounts for half of the funding for these diseases). Because funding across governments might be positively correlated due to unobserved drivers they have in common, we use variation in the representation of research-intensive universities on US Congressional appropriations committees as an instrument for US funding. We find that a 10 percent increase in US government funding for a disease is associated with a 2 to 3 percent reduction in funding for that disease by another government in the following year.

Companies increasingly engage in corporate social initiatives, but little is known about who cares and why. We measure corporate social initiatives as developing drugs for neglected diseases endemic in poor countries and charging low prices for all drugs (including heart disease and diabetes) for people in poor countries. These activities are costly, unlikely to be directly profitable, and can help millions of people. We find that companies most amenable to social initiatives are those with connections to the patients or the disease areas. We find that a company develops more treatments for neglected diseases if its headquarters is in a country with former colonies where the diseases create the largest burden. For example, Belgium, Britain, and France have former colonies in which diseases of poverty are prevalent, and companies based in Belgium, Britain, and France conduct more clinical trials for those diseases. Furthermore, companies based in countries with stronger colonial ties charge lower prices for all of their drugs in developing countries, including drugs for heart disease and diabetes. Finally, we show that these initiatives are unprofitable, unlike other forms of corporate social responsibility, such as environmental efforts, that can reduce costs and improve efficiency.

With the current digital age and the rise of social media, consumers are privy to a wide variety of content from brands and media figures (e.g., celebrities, content creators, athletes, influencers). I focus on investigating the effects of observing positive interactions between brands or human brands on consumer perceptions. In the first essay, across six studies, I showcase that praising one’s competitor—via “brand-to-brand praise”—often heightens preference for the praiser more so than other common forms of communication, such as self-promotion or benevolent information. This is because brand-to-brand praise increases perceptions of brand warmth, which leads to enhanced brand evaluations and choice. In my second essay, across seven studies, I demonstrate how consumers enjoy viewing positive interactions between media figures and that viewing these interactions increase interest in and attitudes towards the focal media figure. This effect is driven by the humanization of the media figure, such that these positive interactions allow the media figure to seem more human to the consumer. Together, these essays showcase how the public display of positive exchanges can help brands by enhancing consumer perceptions.

In the rapidly digital era, the generation and market penetration of innovation are critical for economic and societal advancement. The rise of social media and two-sided e-commerce marketplaces has transformed the communication, distribution, and adoption of innovations, raising significant questions for producers, investors, adopters, and digital platforms. These challenges include deciphering the impact of information on innovation adoption, strategizing the optimal matching of innovations with potential adopters in digital channels, and understanding how distribution mechanisms like recommendation systems influence producers’ innovation generation decisions. This thesis addresses these issues to illuminate the dynamics of innovation in the digital era and its implications for management and policy.

Chapter 2 examines the role of social media publicity in the early adoption of new products by local businesses, with a case study on Impossible Meat. It introduces a novel adoption metric based on social media announcements to track local business decisions and employs Natural Language Processing to analyze marketing communication. By exploiting the quasi-random variations of county-quarter-level news production for different topics, this chapter establishes a causal relationshipbetween social media exposure and product adoption. Findings demonstrate that local social media news coverage on innovation significantly boosts the adoption of impossible meat products by local entrepreneurs, especially the news content about producer financials. Furthermore, this chapter outlines the implications for content marketing strategy, drawing on the rich heterogeneity patterns by topic, geographical location, and timing.

Chapter 3 contributes to solving challenges on the scalable distribution of innovation in online two-sided markets. In many digital contexts such as online news and e-tailing with many new users and items, recommendation systems face severalchallenges: i) how to make initial recommendations to users with little or no response history (i.e., cold-start problem), ii) how to learn user preferences on items (test and learn), and iii) how to scale across many users and items with myriad demographics and attributes. While many recommendation systems accommodate aspects of these challenges, few if any address all. This paper introduces a Collaborative Filtering (CF) Multi-armed Bandit (B) with Attributes (A) recommendation system (CFB-A) to jointly accommodate all of these considerations. Empirical applications including an offline test on MovieLens data, synthetic data simulations, and an online grocery experiment indicate the CFB-A leads to substantial improvement in cumulative average rewards (e.g., total money or time spent, clicks, purchased quantities, average ratings, etc.) relative to the most powerful extant baseline methods.

Chapter 4 proposes future research on how recommendation systems affect content creation on social media. It explores how these systems influence creators’ genre choices. It outlines a model and experiments to optimize recommendation policiesfor platform monetization and user engagement, highlighting the interplay between content creation and distribution.

Together, these chapters explore key aspects of innovation dynamics in the digital age, offering insights into how digital platforms can influence and enhance the adoption and distribution of new products and services.