Using Online Search Data to Forecast New Product Sales
Search engines are rapidly emerging to be the “go-to” sites for consumers to learn more about a product, concept or a term of interest, irrespective of the initial channel in which the interest originated — text, radio, TV, multi-media channels, word of mouth, etc. In this paper we argue that data on the search terms used by consumers can provide valuable measures and indicators of consumer interest in a product, concept or a term. Such data can be particularly valuable to managers in gauging potential product interest in a new product launch context or consumption interest in the post-release context. Based on this premise, we develop a model of pre-launch search activity and link the pre-launch search behavior and product characteristics to early sales of the product, thus providing a useful forecasting tool. Applying the model in the context of motion pictures, we find that search term usage follows rather predictable patterns in the pre-launch and post-launch periods and the model provides significant power in forecasting release week sales as a function of pre-release search activity. With advertising data included in the model, we find that the pre-release search data offers additional explanatory and forecasting power, thus highlighting the ability of the search data to capture other factors, such as possibly word-of-mouth, in impacting early sales. We offer specific insights into how managers can use search volume data and the model to plan their new product release.
Full Citation: Kulkarni, Gauri, P.K. Kannan and Wendy Moe (2012), "Using Online Search Data to Forecast New Product Sales," Decision Support Systems, 52 (3), 604-611.
Paper available: http://www.sciencedirect.com/science/article/pii/S0167923611001977
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