The Concept of Chasing the Long Tail in Marketing

Different concepts are emerging every now and then in the marketing domain because of the globalization of businesses. Marketers have to understand how consumers are behaving, why they are behaving in such a manner, and what companies can do to alter their behavior in favor of the company. Chasing the long tail is one such attempt to understand the revenue breakdown. Chasing the long tail in Marketing was written by Chris Anderson.

Chris Anderson is the editor-in-chief of Wired magazine. Through chasing the long tail, Chris Anderson wants to convey how the shifting paradigm from offline marketing to online marketing has affected the business and its working. The focus of chasing the long-tail marketing approach is to shed some light on how the consumer buying pattern has shifted because of online purchases and how that is affecting the revenue breakdown of the company.

In this article, we will be diving deep into the concept of chasing the long tail marketing by Chris Anderson, the assumptions for the theory, and its impact on different industries.

Chasing the long tail in marketing

Chasing the long tail is the graphical representation of the 80-20 rule. The 80-20 rule, or Pareto principle, states that 80% of the revenue of the company comes from the top 20% of the goods sold by the company. The other 80% of the goods are only contributing to 20% of the revenue. These top goods are the hit goods for the company.

These are the goods that are famous in the market, and the consumer relies heavily on them. Now an individual might think, why not discard the other 80% of the goods, which are only earning 20% of the revenue to the company? Well, this also has a logical reason. The company needs to keep coming up with new goods and services to stay relevant in the market, and if the varieties offered by the company are reduced in this world of unlimited choice, the company will start fading away for future generations.

When graphically drawn, the top 20% of the goods are known as the head of the chasing the long tail in marketing by Chris, and the other 80% of the goods contributing to the 20% of the revenue are shown as a gradual dip in the curve. Here, the line is near zero but not meeting the X-axis. For better understanding, we are adding a graph below for reference.

Chris Anderson’s Chasing the Long Tail is based on three important assumptions, and they are:

  • Physical distribution of products − With online marketing in place, the heavy cost involved as well as the data required for distribution has reduced drastically. Now companies can sell at a lower cost, and the need and cost for predicting demand in different regions and seasons have also reduced. Companies can have a warehouse where they store all their products and dispatch them as per the order. This has also reduced the need for opening up shops in different regions for market expansion.

  • Variety of products being offered − The variety of products available for sale has also increased. Now companies can easily target or tap the niche and the latent demands, which were untapped through traditional marketing channels. The time required as well as the cost involved in knowing about niche products today are near zero. With the tap of a finger, an individual can find out what the various authentic items of various nations are and from where they can make a purchase online.

  • Development of the niche market − There are chances that with more and more niche demand served by the companies to their customers if the company aggregates the total niche demand, it will result in a big new market altogether.

There is another argument, made by Chris Anderson himself, that the internet has provided consumers with multiple choices. Choices include hit as well as niche products, and because of this, the curve now looks 50-50. This means that 50% of the sales are contributed by the hit products, and the rest of the 50% is contributed by the niche products or the other 50% of the products. The Internet is giving consumers the freedom to choose as well as the right to information, and this is helping them make choices that will better satisfy their hunger or demand.

The movie industry is an exception to chasing the long tail in marketing

Just like how Amazon, Flipkart, and Spotify are providing customers with multiple choices, enhancing recommendations, and hence increasing the demand for their niche products, we can also see something similar happening in the entertainment or movie industries. The OTT platforms like Netflix, Amazon Prime, Zee5, Hotstar, and others provide viewers with unlimited content on a subscription basis, and hence the demand for niche content has also increased. But we see that the demand for hit content is increasing more and more than the demand for niche products.

In the moving industry, as claimed and argued by Harvard’s Anita Elberse, we see the chasing of the long tail of marketing. For claiming this, she has used data from Nilsen Sounscan and the online music service Rhapsody. According to Anita, this is the trend that has been observed in the movie industry in both the online and offline markets. Companies should focus on keeping the cost at the lower end when it comes to niche products to create value because it has been observed that because of the social nature of human beings, there is a need to have shared experiences through hits.

Chasing the long tail in marketing started off as a graphical representation of the 80-20 rule, but we also see that because of the various dominant factors in the market, the curve can be converted into a 50-50 rule graph in some industries. Companies need to read about these findings and parameters in different business magazines because this is going to provide them with insights into their customers. This also helps the business understand what the future holds for the industry and the market as a whole.

Updated on: 12-Apr-2023


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