Consumer online software sampling: a multilevel analysis.

• Author: Lee, Young Jin
• Position: Report

1. INTRODUCTION

   As an integral part of marketing effort, firms widely use product sampling as a promotion tool. In 1995, 85% of manufacturers of packaged goods engaged in product sampling and sampling accounted for 10% of theirs consumer promotion budget (Shermach, 1995). Strategically, product sampling has been described as an excellent way to generate word of mouth (Holmes and Lett, 1977), and build a consumer franchise quickly (Meyer, 1982).

   Besides of the time of the entry, preemption, and other entrant strategies, product sampling is also described as an excellent way to introduce new and unusual products in new or existing markets (Freedman, 1986). Much of the research on strategic entry has been undertaken as theoretically derived models of potential behavior. However, many analyses are developed with each different assumptions and focus. Also, sampling has not been extensively researched. Most of sampling research has focused on the trial rate and adoption rates (Hauser, 2006). Hence, empirical research that seeks generalizations of strategic behaviors of firms is one of opportunities in entry strategy research in terms of sampling. As Hauser et al. (2006) point out, what technologies and strategies firms actually use for entry is still challenging and also understanding the impact of technologies on successful entry is not clear.

   In spite of these positive aspects of sampling, it is an expensive strategy to pursue and it typically does not have the reinforcing effects of multiple advertising exposures, as consumers may be exposed to the sampling experience only once (Marks et al., 1988). In contrast to this, software vendors can implement easily sampling strategy by distributing the copy of freeware or trial of the focal product over the internet. Also, consumers sampling experience could be multiple in the much longer duration with zero marginal cost of sampling over the internet. In sampling strategy as an actual implemental entry strategy, freeware and trial of the focal software product is common practice in software markets. Also, software market is consisting of many categories according to functionality. This may suggest firms to consider different sampling strategy across categories as well.

   Considering software sampling as a positive catalyst to the sales and the variety of software product category, we raise interesting questions. First, software market is highly fragmented into sub-markets. Each market has different characteristics due to its functional difference to others and competition among categories. From this, how are they different with each other in terms of sampling? Second, what kind of free trial packages actually does increase consumer sampling? Freeware and trial version of a focal software product give consumers an opportunity to use a limited functionality of the focal product permanently or try full functionalities in a restricted period. By tailoring sampling program, a firm can not only penetrate the market effectively but also allocate efficiently sampling resource (Shermach, 1995).

   Therefore, we investigate whether the heterogeneity of sampling are significant among software categories. Also, in the presence of the heterogeneity, we examine that sampling programs such as trialware or freeware may affect differently across categories. In Section 2, we describe the model to analyze the sampling heterogeneity and strategy. In Section 3, we explain what data and study variables are used. Fitting the model on data in variety of ways, we illustrate the results in Section 4. Section 5 shows our research implications and future research.

2. THE MODEL

   The magnitude effects of sampling strategy on a product's performance may vary by software product category...