simple microscopic buy and sell operations macroscopic'' economic phenomena

1

• - simple microscopic buy and sell operations ?
  macroscopic'' economic
  phenomena

• -      Sudden death - total, immediate product
  disappearance
• -      Wave-fronts - the geographical spreading
  of new products
• -      The larger profit /survival rate of the
  second producer

2
lattices real "geographic" space or a network
of interacting markets or individuals.
reactants the product itself, the instruments
to buy it or the knowledge on the product
existence, etc. reactions economic processes
in which valuables are transformed, lost or
created. diffusion the transfer of these
valuables from one location or business entity to
another.
3
"Tamagotchi '' story Washington Post (Sullivan
1997) TOKYO, Jan. 24 -- By dawn today, a line
of almost 2,000 people stretched a quarter of a
mile through the Ginza shopping district.
Hundreds of them had spent the night camped out
on the sidewalk in the numbing midwinter cold.
When you want a toy chicken badly enough, you
will endure anything. (Ohbuchi 1999) TOKYO -
Bandai Co. Ltd. said Thursday that it will post a
16 billion yen special loss for 1998/99 due to
operations restructuring. The company also
revised its parent net forecast to a loss of 14.5
billion yen (about US 121.4 million) from an
expected profit of 3.5 billion yen (about 29
million). This is partly due to losses caused by
excessive inventory of unsold Tamagotchi, which
can now be found for 10 in US toy stores. So
much for the US virtual-pet craze, eh?
4
"Tamagotchi '' (egg watch in Japanese) 1997 a
very abrupt wave of Tamagotchi sales swept across
most of the world and died within months.
Millions were touched at one time by the "
Tamagotchi mania". Various countries were
reached by the wave at slightly different times,
but overall duration of the sales at each
location did not exceed a few months.
5

• The tulip mania 1637
• tulip bulb price house
• X 20 within a month,
• back within the next 3 months.
• South Sea Co. 1720 at the London Stock, Sir
  Isaac Newton
• "I can calculate the motions of the heavenly
  bodies,
• but not the madness of people."

6
Tamagotchi story laboratory for marketing
models The microscopic properties at the
product level are
-nobody really needs a Tamagotchi . -     
people want a Tamagotchi only upon actually
seeing one. -      the price is relatively
small/ readily affordable. -      usually
people are satisfied with only one Tamagotchi.
-      in fact people get bored with it after a
while. -  the cost of transporting a Tamagotchi
between production and selling locations is
small. -      The product is always with the
individual owning it.
7
diffusion market theory

•  -  In reality the situation is very different
•           sharp boundaries.
•           front advances proportional to time.
•           selling rate falls fast.

•        diffuse boundaries.
•           the expansion with the square root of
  time.
•           a long lasting dominance of the
  product in an area.

8

• elementary microscopic objects
• -  A's which represent sold product units
  (Tamagotchi).
• -  B's representing the knowledge or conceptual
  awareness of the product.
• - C's representing the a priori availability of
  money to be allocated for the purpose of buying
  A's.

9
A (product) B (awareness) and C (money)
are placed on a lattice sites represent
spatial locations/ customers.

• elementary reactions
•       B C ? B A (buy)
•      A ? A B (see)
• A ? . (discard)
• B ? . (forget)
• . ? C (gain money)
• C ? . (spend money)
• B can diffuse (spread awareness)

10
Tamagotchi Selling Waves --dynamical
explanation auto-catalytic character of the
sales
positive feedback loop Sales of Tamaguchi -gt
Visibility -gt Awareness -gt Demand -gt Sales -gt
self-organizing waves.
11
snapshot of A, B and C fronts

• the front of Tamagotchi sales
• - region of high awareness
• region of depleted resources

A
B
C
12
(No Transcript)
13
(No Transcript)
14
(No Transcript)
15
- Statistical marketing methods (polls
conducted on the ground) are sensitive to
macroscopic amounts of sales and awareness
(B), while - Real dynamics is triggered at
the level of the first
individual sales and the first
individuals in that area aware of the product.
16
product propagation --- in waves ---
linear in time rather than
--- normal diffusion --- square root of time
different time scales for emergence and decline
of markets gt planning marketing campaigns
production and
investment. avoid over-stocking and/or
to exploit in time the imminent emergence of
market demands. By the time the polls discover
it, it is too late
17

• optimal place and time for starting a marketing
  campaign,
• be the first or to wait for the competition to
  create market awareness
• Study evolution of past sales to establish
• the connectivity
• C distribution.
• market conditions, receptivity and capacity.
• Use for new future situations
• - effect of a second product (pre-existing or
  newly introduced),
• effect of introducing a cheaper/ more flashy
  product, or
• effect of an economic/political crisis