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This paper addresses the discount pricing in word-of-mouth (WOM) marketing. Anew discount strategy known as the Infection-Based Discount (IBD) strategy isproposed. The basic idea of the IBD strategy lies in that each customer enjoysa discount that is linearly proportional to his/her influence in the WOMnetwork. To evaluate the performance of the IBD strategy, the WOM spreadingprocess is modeled as a dynamic model known as the DPA model, and theperformance of the IBD strategy is modeled as a function of the basic discount.Next, the influence of different factors, including the basic discount and theWOM network, on the dynamics of the DPA model is revealed experimentally.Finally, the influence of different factors on the performance of the IBDstrategy is uncovered experimentally. On this basis, some promotional measuresare recommended.

A discount strategy in word-of-mouth marketing and its assessment