Harness the power of viral marketing in hotel industry: a network discount strategy

Abstract

Purpose

The purpose of this paper is to focus on the pricing strategy for viral marketing in the context of the hotel industry and propose three typical price‐network size schedules to be tested. The paper further proposes controlled experiments in hotel industry context to examine the performance of those schedules.

Design/methodology/approach

A simulated hotel booking web site with basic reservation functions will be constructed. Participants should be randomly drawn and asked to encourage their friends from social networks to book with the participant to achieve a better price. Each participant will be given a special promotion code embedded with different pricing information. The number of customers attracted, total revenue and time to achieve a sell‐out was collected after the experiments.

Findings

These were the expected performance differences associated with different network pricing strategies in the viral marketing campaigns.

Research limitations/implications

Since participants do not need to pay for the booking, it is difficult to control their intentions. Also, in the quantity discount scenario, individual preference may not be met.

Practical implications

First, this paper proposed the possible pricing strategy to promote the effectiveness of viral marketing in hotel industry. Second, by initiating business with customers directly through viral marketing, hotels can have more control over the inventory and product prices.

Originality/value

Through a better understanding in viral marketing from the perspective of network discount strategies, the marketing opportunities enabled by social networks can be extended. This paper suggests that employing a price‐network size schedule that offers deduction in price as network size increases may be an effective tool in attracting potential customers to make purchases in a timely manner. This paper further suggests experiments to test typical pricing schedules that could be utilized in practices. The proposed experiments can provide a deeper insight into the implementation of viral marketing for hotel managers.

Citation

Xiong, L. and Hu, C. (2010), "Harness the power of viral marketing in hotel industry: a network discount strategy", Journal of Hospitality and Tourism Technology, Vol. 1 No. 3, pp. 234-244. https://doi.org/10.1108/17579881011078368