Social Promotion: A Creative Promotional Framework on Consumers’ Social Network Value

Haibing Gao, Huazhong Zhao*, Yinliang Tan, Lisa Ya LIN, Lai Wei

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Red packets have symbolized happiness and good luck in Asian culture for centuries. An emerging number of online merchants in Asia are adopting social red packets as a promotion strategy. Social red packets not only digitalize traditional coupons to be readily transferred within consumer social networks but also can reallocate the promotional rewards based on consumers’ social network value rather than their personal value to the firm. In this study, we conceptualize social red packets as an implementation of the social promotion framework, where consumers with higher social network value receive better promotional rewards. Leveraging a unique dataset from an online retailing platform, our vector auto-regression (VAR) analysis reveals that: (1) under the social red packet design, consumers with higher social network value (who are connected to more new consumers or frequent consumers) will enjoy better promotional rewards; and (2) in order to receive better promotion rewards, consumers under the social red packet design are encouraged to voluntarily enhance their social network value (e.g., by recruiting more new customers or cultivating more frequent consumers). Moreover, we identify several critical characteristics of focal consumers and their social networks that can moderate the effectiveness of social red packets. Our findings provide important managerial insights for online retailing platforms on how to design effective social promotion strategies.

Original languageEnglish
Pages (from-to)2661-2678
Number of pages18
JournalProduction and Operations Management
Volume29
Issue number12
DOIs
Publication statusPublished - Dec 2020

Scopus Subject Areas

  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Management of Technology and Innovation

User-Defined Keywords

  • platform design
  • social commerce
  • social promotion
  • social red packet

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