Information Cascades and the Marketing Tipping Points
The article suggests that information cascades could show the validity of the domino-effect or tipping point idea in marketing. The tipping point is an idea that “small action, such as nudging a domino, causes a large chain reaction.” The concept was developed by Malcolm Gladwell. He believes that the chain reaction can result in the vast promotion of the product in marketing. One survey done by Pollara suggested that there is no tipping point since people “do not make decisions based on a small number of powerful influencers” Its survey shows that most people were likely to be influenced by their real world friends and family but not so much from well know bloggers. But the article suggests that the survey fails to understand the mechanism of social influence, information cascade.
The article gives the same example for information cascade with the example we went through in class. Informational cascade could be explained by a simple example. Suppose there are two restaurants and people are deciding which one to go. People with higher precision will decide first and everyone can see what other people choose. If other know that the one who lined up first has information, people will follow them. Basically, people who line up first are sending signal to the rest of group about which one to choose. Informational cascades are easily found in real world. For example, stock market and voting patters to the fashion industry shows informational cascade in their trends. Such behavior of humans could be explained by evolution. Humans learn from trial and error and recognized that it’s safe to let others figure out and then to imitate them.
Informational cascades show that other people’s decision and actions could influence our own actions so it could be proved that if the size of the participating population increases, the tipping points in marketing exists.
Main Article – http://danzarrella.com/informational-cascades.html
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