Low engagement rates and high attrition rates have been formidable challenges to mobile apps and their long-term success. To date, little is known about how companies can scientifically detect user engagement stages and optimize corresponding personalized-targeting promotion strategies to improve business revenues. This paper proposes a new structural forward-looking hidden Markov model as combined with a randomized field experiment on app notification promotions. Our model can recover consumer latent engagement stages by accounting for both the time-varying nature of users’ engagement and their forward-looking consumption behavior. The structural estimates from the FHMM with the field-experimental data enable us to identify heterogeneity in the treatment effects. Additionally, we simulate and optimize the revenues of different personalized-targeting promotion strategies with the structural estimates. Personalized dynamic engagement-based targeting based on the FHMM can generate substantially higher revenues than the experience-based targeting strategy applied by current industry practices and targeting strategies based on alternative customer segmentation models. Overall, the novel feature of our paper is its proposal of a new personalized-targeting approach combining the FHMM with a field experiment to tackle the challenge of low engagement with mobile apps.

Message framing plays an important role in advertising strategies and has been studied from various perspectives in different behavioral researches. In this study Event Rated Potentials technique helped to examine the neural mechanism of message framing effect on self-conscious emotions of pride and guilt regarding consumer purchase intention in the context of green marketing. Behavioral results showed that participants ranked higher on positive framing compared to negative framing. ERP results declared that N1 component was elicited by positive framed message with emotion of pride and guilt, reflecting use of attentional resources to acquire potential benefits at first stage of processing emotional information. At the second stage P2 was higher for negative framing containing pride and guilt slogan, showing more attention towards processing emotional information about potential loss. At the third stage LPP component portray that both positive and negative framing is supported by guilt emotion when processing emotional information in decision making. Our results delivered strong evidence that how purchase intention can be mediated by message framing under the pride and guilt emotions in the context of green marketing.

Targeted promotions based on individual purchase history can increase sales. However, the opportunity costs of targeting to optimize promoted product sales are poorly understood. A series of randomized field experiments with a large e-book platform shows that although targeted promotions increase promoted product sales and purchases of similar products, they can crowd out purchases of dissimilar products (i.e., e-books from nontargeted genres) by decreasing search activities of nontargeted goods on the same platform. The effects on total sales are heterogeneous, ranging from net decreases to insignificant drops, motivating a targeting exercise comparing strategies that optimize promoted product sales versus total sales. Targeting for promoted product sales tends to assign promotions to customers who purchased similar products, whereas targeting for total sales assigns promotions on the basis of other user characteristics. Targeting for promoted product sales generated incremental total sales that amounted to approximately 29% of the optimal incremental total sales when targeting for total sales (an opportunity cost of 71%). The optimal targeting exercise highlights how maximizing promotional lift can incur opportunity costs in terms of other forgone sales.

Message framing plays an important role in advertising strategies and has been studied from various perspectives in different behavioral studies. This study employs the event-related potential technique to examine attentional and emotional brain processing as influenced by message framing in the context of green marketing. The behavioral results demonstrated that purchase preference was higher under positive framing compared to negative and neutral framing. As per the event-related potential results, negative framing elicited a larger P1 component, which reveals that in the first stage of processing information, threatening information attracted more attention. In the second and third stage, N170 and P3, respectively, were higher for positive framing, demonstrating that there was more attention toward the processing of non-threatening emotional information. Comparison with existing method: Message Framing has been previously examined with behavioral methods. We for the first time examined it with a neuroscientific method like Event Related Brain Potential technique in a green marketing context. Our results compared to behavioral studies provide stronger evidence from underlying neural perspective for how message framing can be affected by attentional and emotional brain responses in the context of green marketing.