Should u invest in long tail?

PRESENTATIONPRESENTATION

PRESENTED BY:PRESENTED BY:JASPINDER SINGH SIDHUJASPINDER SINGH SIDHU

Should You Invest Should You Invest in the Long Tail? in the Long Tail?

by Anita Elberse by Anita Elberse

CONTENTSCONTENTS

1. Should you invest in the long tail?1. Should you invest in the long tail?

2. Theory of anderson2. Theory of anderson

3. Investigation 3. Investigation

4. Mcphee theory 4. Mcphee theory

5.Advice to producers5.Advice to producers

6.Advice to retailers6.Advice to retailers

7.conclusion7.conclusion

THE LONG TAIL THEORY IN SHORTTHE LONG TAIL THEORY IN SHORT

EDITOR OF WIRED MAGAZINE:EDITOR OF WIRED MAGAZINE:

chris andersonchris anderson

Chris anderson puts 42 distinct but Chris anderson puts 42 distinct but related ideas.related ideas.

1. The merchandise assortments are growing.1. The merchandise assortments are growing.

2. Online channels actually change the shape of the 2. Online channels actually change the shape of the demand curvedemand curve

INVESTIGATIONINVESTIGATION

Chris investigated sales patterns in the music and home-Chris investigated sales patterns in the music and home-video industries –two markets that anderson and others video industries –two markets that anderson and others frequently hod up as examples of the long tail theory in frequently hod up as examples of the long tail theory in action.action.

He reviewed sales data obtained from nielsen videoscan He reviewed sales data obtained from nielsen videoscan and nielsen soundscan,which monitor weekly purchases and nielsen soundscan,which monitor weekly purchases of videos and music through online and offline retailers:of videos and music through online and offline retailers:

Quickflix and from rhapsody ……Quickflix and from rhapsody ……

Results of investigation Results of investigation

McPhee’s theory of exposureMcPhee’s theory of exposure

Sociologist william mcphee –theory of exposureSociologist william mcphee –theory of exposure

Mcphee describes two phenomenon of distribution ;Mcphee describes two phenomenon of distribution ; 1.natural monopoly 2. double jeopardy1.natural monopoly 2. double jeopardy

Natural monopoly: light users of a product category are a Natural monopoly: light users of a product category are a relatively large proportion of those customers interested relatively large proportion of those customers interested in the popular products.in the popular products.

Because it seems that hit products “monopolize” light Because it seems that hit products “monopolize” light consumers ,he called the natural monopoly.consumers ,he called the natural monopoly.

DOUBLE JEOPARDYDOUBLE JEOPARDY

Mcphee noted that “the larger the proportion of the Mcphee noted that “the larger the proportion of the people with a given alternative …the less likely are those people with a given alternative …the less likely are those who are familiar with it to like it especially”who are familiar with it to like it especially”

The people who choose obscure products tend to be The people who choose obscure products tend to be familiar with many alternatives and to stick with popular familiar with many alternatives and to stick with popular products.products.

Mcphee described this concept because niche products Mcphee described this concept because niche products have a double advantage :first they are not well knownhave a double advantage :first they are not well known

Secondly: when they become known it is by the people Secondly: when they become known it is by the people who “know better”.who “know better”.

Quickflix data Quickflix data

ADVICE TO PRODUCERSADVICE TO PRODUCERS

Donot radically alter blockbuster resource-allocation or Donot radically alter blockbuster resource-allocation or product portfolio management strategies.product portfolio management strategies.

When producing niche goods for the long tail end of the When producing niche goods for the long tail end of the distribution, keep cost as low as possible.distribution, keep cost as low as possible.

When trying to strengthen your presence in digital When trying to strengthen your presence in digital channels, focus on marketing.channels, focus on marketing.

Leverage your scale to improve online exposure and Leverage your scale to improve online exposure and demand for products . demand for products .

ADVICE TO RETAILERSADVICE TO RETAILERS

If the goal is to cater to your heavy customers, broaden If the goal is to cater to your heavy customers, broaden your assortment with more niche products.your assortment with more niche products.

Strictly manage the costs of offering products that will Strictly manage the costs of offering products that will rarely sell .if possible, use online networks to construct rarely sell .if possible, use online networks to construct creative models .creative models .

Acquire and manage customers by using your most Acquire and manage customers by using your most popular products.popular products.

Even though obscure products may have a higher profit Even though obscure products may have a higher profit margin.margin.