Long tail Rambles – part 1

So as I mentioned in an earlier post, I picked up the “Long Tail” as part of our assigned group project this semester. The basic premise of the project is to determine what is the evidence? What are the contributing factors? What are some good practices you can find?
What are the implications of your findings from researching this topic? What should you keep in mind as a manager?

We are actually being graded not so much on whether we think the Long Tail is a good strategy or not, but based on our research abilities and presentation to go over our findings. Essentially, we are acting as research consultants.

Just so you are up to speed, the Long Tail is the idea that the cummulative effect of selling to niches can actually be as valuable as the effect of selling the ‘hit’ products. In retail, stores are constantly trying to make sure that things on their shelves are selling. If they aren’t part of the top tier of revenue, than they take them off the shelf and fill it with something they think will sell better. It is the old 80/20 rule adage, in which 80% of your revenue is coming from 20% of your products or customers.

One of the effects of limited shelf space and limited geographic audience is that retailers tend to limit choices available to customers and cater to the lowest common denominator. But there is still demand for some of these ‘non-hit’ products, just not that in the immediate area. People have a lot of different tastes, but how do you sell to them?

That is in theory where a long-tail concept comes into play. By offering more choices and a way to filter those choices you have a way to tap into those niches that aren’t being met by the 80/20 rules employed at your local retailer. Companies like Amazon, Apple’s iTunes, and Google are all examples of this, where they can offer tons more products whether its books, music, or advertising than previously possible because they have virtually unlimited shelf space and no geographic restrictions.

So this sounds like the greatest thing ever right? Offer unlimited choice, and bingo…instant millions of dollars, right? Well, not so fast. In some of our preliminary research, we’ve found tons of criticism on this business model and on Chris Anderson’s data used in the book. We are going about the research in a neutral fashion to look at both sides of the argument and looking at the economic & social factors of Long Tail. I am tasked with the Social aspects. This basically means I am going to be reading a lot of psychology and consumer behavior journals for the next few weeks.

One of the key things I am looking for is the part about choice. As I’ve mentioned before, I am also in the midst of reading Barry Schwartz’s “The Paradox of Choice: Why More is Less”. Schwartz argues with more choice, you get more confusion, frustration, and even depression with the decision making process, because you get overwhelmed with the sheer volume of choice. This view is sort of in opposition of the Long Tail view, which of course is arguing the customers want more choices. Filters are going to be the key aspect of having success with Long Tail. If you have a website or store without a way to filter the choices, you are going to frustrated or depressed. But part of my research will be, “do we really want more choice?” and look for evidence.

The other interesting social aspect of Long Tail I plan on looking at is around the peer recommendations and community effects of helping drive people into niches. This obiviously gets into the blogistan, forums, myspace, facebook, etc. Could be fun stuff to look at. I wish I had a lot more time to do this, instead of 5 weeks.

So I only gave you the tip of the iceberg, but many folks have been asking me what I am up to…and this is a big part of it. more to come…


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