The Network Value of Products
Venue
Journal of Marketing, vol. 77(3) (2013), pp. 1-14
Publication Year
2013
Authors
Gal Oestreicher-Singer, Barak Libai, Liron Sivan, Eyal Carmi, Ohad Yassin
BibTeX
Abstract
Traditionally, the value of a product has been assessed according to the direct
revenues the product creates. However, products do not exist in isolation but
rather influence one another’s sales. Such influence is especially evident in
e-commerce environments, in which products are often presented as a collection of
web pages linked by recommendation hyperlinks, creating a large-scale product
network. The authors present a systematic approach to estimate products’ true value
to a firm in such a product network. Their approach, which is in the spirit of the
PageRank algorithm, uses available data from large-scale e-commerce sites and
separates a product’s value into its own intrinsic value, the value it receives
from the network, and the value it contributes to the network. The authors
demonstrate their approach using data collected from the product network of books
on Amazon.com. Specifically, they show that the value of low sellers may be
underestimated, whereas the value of best sellers may be overestimated. The authors
explore the sources of this discrepancy and discuss the implications for managing
products in the growing environment of product networks.
