The Long Tail
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| Image URL: http://domaingang.com/wp-content/uploads/2010/04/long-tail.jpg |
How long is the tail?
Definitely NOT!
So, what is long tail?
The Long Tail is a Business Model defied by Chris Anderson.
Let's watch this video,
Identifying "The Long Tail" - Chris Anderson
Video URL: http://www.youtube.com/watch?v=0Yku0GTrcuw
If you are like me, you not use to hear his pronunciation, some more you never study in business & economic before. Don't worry, spend a little time with me. Let's figure out how's this theory work.
From what I understand explanation from Wikepedia and Week 7 reading, also my friend.
The Long Tail Theory is opposite of traditional retailing graph.
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| Traditional business graph Let's say there are three movies (in X-axis) are available from the supplier, Y-axis is the number of demand or is better to say it is the number of audiences interested. The traditional retailer will definitely purchase M2 (Movie two) in order to make profit. Because there are less audience interested in M1 and M3, means they going to earn less. Who want to do this kind of business? However, according to the Long Tail theory by Chris Anderson, M1 and M3 's market is profitable than M2 because of the evolution of INTERNET. Internet enable the new market of M1 and M3, even better than M2.
Let me give you an example, imagine I am going to sell a rare's books, which not much people interested. And, you are a book retailer. (Usually retailer purchase a boxes of book, not only one book) Do you think you going to buy this book with less people buy? Rather than sell in the bookshop, the development of the Internet gives an pathway for these books. Anderson said, the new market (niche market) might even larger than the traditional market. So, I am not going to sell my books in physical bookshop. Instead I am going to sell it online. For examples, Kuala Lumpur, there might be only two reader who want to read my book. In Ipoh, there are 4 people read my book. Penang, 3 people read my book. . . . Singapore, there 2 people read my book. Brazil there are 2 people read my book China Hong Kong Japan US UK so on and so on... My book only selling in Kuala Lumpur, it is not going to work. (traditional business) However, If I sell it online, in Amazon.com, Ebay.... My business might work. Because it is reachable to my target audience. The Internet gives advance to Niche Market and it is a new market in business. Before I ended this topic I would like to summarize the points suggested by Anderson: Perception in Traditional Business Hit-driven mindset: Somethings is hit in the market means it is profitable. Poor taste: The industry has a poor sense of what people want, they think when that's an audience means there's demand Rules in Long Tail Make everything available Everyone is unique, what you like doesn't mean what I love too. With this new market, consumer able to get somethings that's really what he/she want, but no according to what the retailer decide according to the graph or what they expect. |
Cut the Price in Half. Now Lower it
With the development of internet, to sell book online, we doesn't need to pay for rental, transportation or shipping to delivery the books anymore.
Help Me Find it
With the use of search tool we can easy find what we want.
Nice post sarene, it's made me easy to understood what is long tail.
ReplyDeleteYup, it's true, it's impossible a bookshop buy all the books , but some book might not sold up and end up nor where to keep it. Compare to the online store, it's much more easier, it don't need so much space arrange the book as bookstore did.
well, I like the way you summarized the perception of traditional media, businessman used to have "Hit-driven mindset", they tend to think Somethings is hit in the market means it is profitable. Sometime they are just follow the market trend.
for me, I will say following the trend is right, the important thing is the strategies, if everyone doing the same things, indeed it's competitive, it will also lack of concern to a special group.
Hi,
ReplyDeleteI like your point - "The Internet gives advance to Niche Market and it is a new market in business."
It is true, online business is bigger and it can reach various consumers by minimal cost only. Some good examples are Amazon.com, ebay.com. If it is hard to find a thing you want in your country, you can always search it at Amazon.com or ebay.com. The item will send to you by airmail no matter where you are. This is to show how online business can reach different kinds of target market. Online business obviously can gain more profits due to it is not required to pay more fees such as taxes, expensive physical store rental fee. Pay less but earn more.
Thanks for the comment.
ReplyDeleteI would like to add based on my personal opinion.
To me, I think the opportunity is everywhere. Before this, people may have the perception toward something that is unusual is hard to be accept by people, especially in business. Someone wanted to take this risk means they are trying to kill themselves.
May be this statement might be true few decade ago, but absolutely not for now.
Therefore, the Internet advantage for human is unpredictable.
Hi Serene,
ReplyDeleteIn my opinion, everything in life has good as well as bad. In terms of this article. I must say that we are blessed to have the internet whereby we can assess any information at any point of time.
Imagine if the internet does not exist. And we can't get what we want from the stored due to the industry "deciding" what should be sold which will bring profit to them.
Sharmila