The potential of viral marketing campaigns have been enhanced by the rapid development of online social networks. Viral marketing is a strategy that uses peer-to-peer communication to increase product or service awareness and adoptions throughout a widespread network of buyers. Bampo et al. (2008) identified three major components of viral marketing as:
(1) the social structure in which the messages spread;
(2) behaviors displayed by the members; and
(3) the seeding viral strategy.
Since marketers are less competent to control customer’s social network structure and their reactions to marketing campaigns, the authors focused on developing an effective viral strategy regarding the hotel room sales. It is believed that this price-network size schedule can effectively motivate the members in the social networks to make the purchase decision as well as to share the message with other members. However, since it is difficult to predict members’ reactions to different pricing strategies through mathematical approximation in a social networking scenario, the authors proposed three typical schedules based on the price deduction regarding network size growing and suggested investigating their performance in a simulated hotel reservation experiment. A proper price-network size schedule that can be applied as incentives in viral marketing would then be determined. If the experiment result indicates that pricing schedule S3 (a deeper price decrease according to group size change) can attract customers to book rooms in the shortest time frame, then for managers who make decisions with major time concerns, S3 is more applicable. For managers with revenue concerns, they may refer to the schedule that delivers the most profit from the experiment. For managers with publicity concerns, the schedule which attracted the most consumers will be the ideal choice. It is also possible that all concerns can be address by the same schedule. 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 study 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 research also provides a new perspective in examining viral marketing seeding strategies where pricing could be applied as effective viral messages in practice. Besides, this study offers insights in implementing viral marketing campaigns for practitioners in that viral marketing with network discount may contribute to stimulating more potential customers and to offering direct interactions with customers. Especially in the context of hotel industry, this study provides a possibly better approach to sell the products directly to a larger group of customers and offered an opportunity for hoteliers to gradually balance the “power” with the third-party distributors and take back control in inventory and price management.