Featured Research

from universities, journals, and other organizations

Online buzz forecasts new product performance months before product release

Date:
May 12, 2014
Source:
Institute for Operations Research and the Management Sciences
Summary:
Companies can significantly improve the forecasting accuracy of forthcoming products' performance by mining online consumer buzz prior to product release, according to a new study. Social media attention to a firm's forthcoming products also influences its stock price, the study shows.

Companies can significantly improve the forecasting accuracy of forthcoming products' performance by mining online consumer buzz prior to product release, according to a study being published by Marketing Science, a journal of the Institute for Operations Research and the Management Sciences (INFORMS).

Social media attention to a firm's forthcoming products also influences its stock price, the study shows.

Pre-Release Buzz Evolution Patterns and New Product Performance is by Guiyang Xiong and Sundar Bharadwaj, professors at Terry College of Business at the University of Georgia.

Sales forecasting before product release has been an important but challenging task, especially for new products without prior sales history.

Pre-release buzz refers to consumers' online conversations (e.g., in blogs and online forums) about a new product before its release. "Online buzz is frequent, curated, and can be conveniently tracked. With increasing consumer chatter and declining computing and storage costs, such buzz can be mined for evolving patterns over time," said Xiong. These patterns reflect changes in consumer interest, vary by product, and can predict new product performance.

For example, the game Alan Wake gained increasing buzz over time before its release, making it one of the most anticipated and successful games released in 2010.

"Amazingly, the partial pattern of buzz evolution months before product release can forecast new product sales more accurately than the cumulative buzz until the day of product release," said Xiong. Such accurate forecasts of a new product's sales well before its release allow sufficient time for managers to make critical changes to the product's design or marketing. In contrast, traditional forecasting relies on past sales to predict future sales, which is not useful for pre-release strategies.

In addition, the research finds a key link between pre-release consumer buzz and firm stock prices: Stock prices react immediately and positively to increases in buzz volume before product release. This means that firms do not have to wait until product release to capitalize on the new product.

"Firms may consider communicating early to investors about pre-release buzz to increase investor awareness of the buzz," Bharadwaj said.

For their study, the authors examined over 800,000 blog and forum postings of more than 600 new video games released in 2009 and 2010. Building on recent advances in statistics and math modeling, they employed Functional Data Analysis.

By analyzing the shapes of pre-release buzz evolution, this statistical model reduces forecasting error by 15-40% compared to the model based on product characteristics alone.

The authors also examined the factors that influence pre-release buzz, such as advertising and new product alliances, thus providing firms with guidance on how to manage the dynamics of pre-release buzz to enhance new product performance.


Story Source:

The above story is based on materials provided by Institute for Operations Research and the Management Sciences. Note: Materials may be edited for content and length.


Journal Reference:

  1. Guiyang Xiong, Sundar Bharadwaj. Prerelease Buzz Evolution Patterns and New Product Performance. Marketing Science, 2014; 140210080801000 DOI: 10.1287/mksc.2013.0828

Cite This Page:

Institute for Operations Research and the Management Sciences. "Online buzz forecasts new product performance months before product release." ScienceDaily. ScienceDaily, 12 May 2014. <www.sciencedaily.com/releases/2014/05/140512155311.htm>.
Institute for Operations Research and the Management Sciences. (2014, May 12). Online buzz forecasts new product performance months before product release. ScienceDaily. Retrieved July 22, 2014 from www.sciencedaily.com/releases/2014/05/140512155311.htm
Institute for Operations Research and the Management Sciences. "Online buzz forecasts new product performance months before product release." ScienceDaily. www.sciencedaily.com/releases/2014/05/140512155311.htm (accessed July 22, 2014).

Share This




More Science & Society News

Tuesday, July 22, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Courts Conflicted Over Healthcare Law

Courts Conflicted Over Healthcare Law

AP (July 22, 2014) Two federal appeals courts issued conflicting rulings Tuesday on the legality of the federally-run healthcare exchange that operates in 36 states. (July 22) Video provided by AP
Powered by NewsLook.com
What Self-Made Women Need to Know Financially Before Getting Hitched

What Self-Made Women Need to Know Financially Before Getting Hitched

TheStreet (July 21, 2014) Halle Berry was recently ordered to pay her ex-boyfriend Gabriel Aubry $16,000 a month in child support by a California judge for their daughter Nahla. As women make strides in the workforce, they are increasingly left holding the bag when relationships end regardless of marital status. 'What Monied Women Need to Know Before Getting Married or Cohabitating' discusses information such as debt incurred during the marriage is both spouse's responsibility at divorce, whether after ten years of marriage spouses are entitled to half of everything and why property acquired within the marriage is fair game without a pre-nup. Video provided by TheStreet
Powered by NewsLook.com
$23.6 Billion Awarded To Widow In Smoking Lawsuit

$23.6 Billion Awarded To Widow In Smoking Lawsuit

Newsy (July 20, 2014) Cynthia Robinson claims R.J. Reynolds Tobacco Company hid the health and addiction risks of its products, leading to the death of her husband in 1996. Video provided by Newsy
Powered by NewsLook.com
Clock Ticks Down on Internet Speed Debate

Clock Ticks Down on Internet Speed Debate

Reuters - US Online Video (July 18, 2014) The FCC received more than 800,000 comments on whether and how internet speeds should be regulated, even crashing its system. Lily Jamali reports. Video provided by Reuters
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins