Stochastic diffusion models with advertising and word-of-mouth effects

This paper presents a stochastic diffusion model which incorporates advertising word-of-mouth effects. The model defines a 3 variate stochastic process based on explicit assumptions regarding consumer behavior and consumers' response to advertising. The model generalizes a wide variety of advertising models and in addition includes several classes of consumers, interaction effects between these consumers and, of course, a stochastic framework that may be used for assessing the risk implications of advertising policies and for empirical analyses purposes.