Selection And Simulation Analysis Of Production-Sales Strategy During Diffusion Process Of Innovative Product

In the diffusion process of innovative products, word-of–mouth and social networkstructure exert dual influence on the production and sales of the products. As negativeword-of-mouth restricts the diffusion of innovative products and the networkclustering coefficient affects the diffusion speed of innovative products in socialnetwork, the paper considers both the influence of word-of-mouth and networkclustering coefficient on the sales strategy of innovative products. The paper is ofgreat research significance as it studies the choice of production-sales strategies in thediffusion process of innovative products based on computer simulation modelingmethods.Firstly, the paper reviews the research in the fields of innovation diffusion and theproduction-sales of innovative products respectively, states the basic theory ofinnovative products diffusion and the relationship between small world network andinnovative product diffusion, compares the modeling methods of innovative productdiffusion and synthesizes theories and methods related to innovative productdiffusion.Secondly, the paper builds an innovation diffusion model based on small worldnetwork. The model describes in details the diffusion mechanism of innovativeproducts, interaction among individuals and the decision-making process ofconsumers. The consumers are divided into two categories: the existing consumerswho are main suppliers of word-of-mouth and potential consumers who aredemanders of word-of mouth. The two groups of consumers build word-of-mouththrough social network. When potential customers gain word-of-mouth, they willformulate the overall effects of innovative products according to other informationcollected. At the same time, consumers will form cost threshold based on their personalfactors such as income and family background. When the overall utility cost is lowerthan the threshold value of innovative products, consumers will decide to buy.Otherwise, they will make the decision of not buying. Finally, the paper conducts the simulation analysis of choice among theproduction-sales strategies of innovative products. Based on the previous study, thepaper proposes three production-sales strategies: myopic strategy, build-up strategyand build-up strategy with delay. The paper analyses the features and implementationmeans of the three strategies. By doing so, the paper seeks to build an innovativeproduct supply chain including manufacturers, wholesalers, retailer, and ultimateconsumers and formulate the inventory strategies and order-decision systems in eachstage. With the integration of multi-agent modeling and system dynamics simulation,the influence of word-of–mouth and network clustering coefficient on the salesstrategy of innovative products is analyzed with simulation. The result shows thatnegative word-of-mouth plays an important role in the formulation ofproduction-sales strategy. The social network structure will influence the spread ofword-of-mouth. The inattention to the effect of social network structure will result inimprecise assessment of negative word-of–mouth, which will lead firms choosewrong production-sales strategy.The paper provides simulation analysis and reference to the scientific and reasonablechoice of production-sales strategies in the diffusion process of innovative products.