Social Networks in Marketing: A Simulation Tool
Ken Karakotsios


     An extremely valuable application of social interaction is understanding how word-of-mouth (a.k.a. "Buzz") contributes to the stunning success (Palm Pilot) and equally stunning failure (Olestra) of consumer products. Classical marketing teaches the "four P's" - Product, Price, Place and Promotion.  But have no doubt that buzz is the fifth force in the marketing cosmos-immensely powerful but as elusive as neutrinos.
     Several notable efforts have been made into the diffusion of ideas in markets, starting with Frank Bass's work in 1969, right through the best-selling books "Crossing the Chasm" and "The Tipping Point".  There have also been real-world applications of buzz (almost always accidental), affectionately known as "viral marketing" (HotMail).
     Buzz is simply chatting among individuals.  But the emergent patterns generated in social networks of consumers, stimulated by the awareness and availability of new products, have the power to create or destroy vast corporate fortunes.
     Towards the creating fortunes side, our company has developed a simulation tool for consumer markets that is used by major "Dow 30" corporations.  It is the only commercially available individual-based marketing simulator that we know of, and it does a pretty good job of predicting how new products will sell.  In this presentation we will share with you a bit of what we've done, what we've learned, and what we'd like to do better.
     And we hope to get you to tell your friends about us.