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Creating a mathematical method to understand consumer behavior in a digital world
Sunil Gupta, Edward W. Carter Professor of Business Administration, focuses on understanding customers and how they make decisions in a digital world. Gupta has tackled one of the most vexing questions in studies of consumer behavior: What is the role of the social influence of peers versus homophily—the “birds-of-a-feather” tendencies of like-minded people? Only by understanding the relative impacts of these factors can companies develop effective marketing strategies.
Studying the adoption of a mobile app in Japan, Gupta and colleagues devised a mathematical method to assess social influence by controlling for those “birds-of-a-feather” tendencies. The findings show that social influence accounts for more than 25 percent of all mobile app adoptions. The research also highlights an important risk: If homophily is not removed as a factor, it can inflate the perceived effect of social influence by 40 percent on average, and up to 100 percent.
(Published April 2014)
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