TAILIEUCHUNG - Sampling of Information Goods

Most marketers are familiar with the problem of click fraud—the use of automated scripts, computer programs or paid individuals to imitate legitimate clicks from users—and are taking steps to combat it. But the problem of PPC scams has a more dramatic impact on marketers. Pay per click scams occur when a brand is used without permission, within a paid search scenario to drive web traffic to a competitive or illicit site. Search engines do allow this practice in some instances. However, it is when this form of web traffic diversion aims to generate revenue at the expense of legitimate brands—using their. | Sampling of Information Goods Chong Alex Wang and Xiaoquan Michael Zhang Abstract With the development of information technology and the emergence of electronic market places great business opportunities are created with reduced spatial restraints lowered search costs and increased diversity. As one of the most commonly utilized marketing tools free sampling also has its online presence especially for information goods that can be digitized with ease. In this article we provide an analytical model to study the economic rationale behind free online samples. We argue that with the development of computer technologies even a less sophisticated Internet user can be an information provider. As a result a free sample is less and less under control of the seller. With our analytical framework we find that this trend does not always hurt the seller. On the contrary under certain circumstances the monopolistic seller can be better off with the presence of the free samples provided by third parties. We further include advertising into our model. Based on our analysis we argue that the decreasing search costs for free samples threaten the effectiveness of advertising. Keywords advertising digital information goods free sample information technology 1 Introduction Consumers face uncertainty about a product s value if they have not used it before. Free samples are the most direct way to reduce consumers uncertainty about a product by enabling them to have a personal experience with it. Free samples have long been widely used as an effective product promotional tool especially for new products. As recorded by Bawa and Robert 7 a 1997 poll in the United Kingdom indicated that 84 of the adults had experienced some form of free sampling in Hong Kong University of Science and Technology. Email alexwch zhang @. We thank Chris Dellarocas Jungpil Hahn Karl Lang Tom Lee Eric Walden Chuck Wood three anonymous referees and participants of the International Conference on Electronic .

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