Emergence of the Leader-Follower Structure Among Consumers: What Type of Consumers Would Be the Most Influential in the Marketplace?

Abstract

In the fashion or entertainment market, for example, consumers often prefer buying potentially popular products before other consumers do so. For this, they can rely more or less on information obtained from their own reference group in making a more correct prediction on whether or not a product will become a success. We formulate these behaviors as a process of dynamically reconstructing reference groups to improve predictive performance, resulting in the evolution of a social network between consumers. Our simulation reveals the following: (1) The leader-follower structure would emerge in the network. (2) In cases where consumers maintain broad reference groups and are permissive toward others’ fail-ures, the network would be denser, and the leaders proliferated. (3) By accepting others’ opinion more easily and not expecting them to be highly reliable, consumers are more likely to become leaders. Lastly, we discuss the implications and further development of this study.