Abstract
Purpose – The purpose of this paper is to focus on the pricing strategy for viral marketing in the
context of the hotel industry and propose three typical price-network size schedules to be tested.
The paper further proposes controlled experiments in hotel industry context to examine the
performance of those schedules.
Design/methodology/approach – A simulated hotel booking web site with basic reservation
functions will be constructed. Participants should be randomly drawn and asked to encourage their
friends from social networks to book with the participant to achieve a better price. Each participant
will be given a special promotion code embedded with different pricing information. The number of
customers attracted, total revenue and time to achieve a sell-out was collected after the experiments.
Findings – These were the expected performance differences associated with different network
pricing strategies in the viral marketing campaigns.
Research limitations/implications – Since participants do not need to pay for the booking, it is
difficult to control their intentions. Also, in the quantity discount scenario, individual preference may
not be met.
Practical implications – First, this paper proposed the possible pricing strategy to promote the
effectiveness of viral marketing in hotel industry. Second, by initiating business with customers
directly through viral marketing, hotels can have more control over the inventory and product prices.
Originality/value – 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 paper 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 paper further suggests experiments to test typical pricing schedules that could
be utilized in practices. The proposed experiments can provide a deeper insight into the
implementation of viral marketing for hotel managers.
Keywords Hotel and catering industry, Social networks, Marketing strategy, Internet, Discounts
Paper type Conceptual paper