Marketing Idea No. 42 – Wishing the world on a plate and getting it July 19, 2007Posted by shahriar amin in Idea 41-50.
No matter what the psychologists or motivational speakers say about it, we dont get whatever we want. We only get what is available.
Think about it. When you go to the theaters, you make yourself believe that of all the movies released that week, “Spiderman 3″ is the one you are willing to see. But what you REALLY want to see is a gangstar movie from the 50s. But unfortunately, you are forced to want what is available.
Think some more. You go to the book store and set your eyes on an advertising book that is currently in the NY Times best sellers list. But your heart is set on finding “Confessions of an advertising man”, an out of print book from the 70s. Again, unconciously, you settle for what is aviailable, not what you want.
Therefore, our demand is simply a manipulation of limited supply chain. Very simply put, if our local departmental store cannot stock every available toothpaste brand available in the world, then we are forced to choose between the ones that are available. And since stocking so much inventory is physically impossible, not to mention tremendously costly, we have turned into creatures of limited demand.
But what if those supply restrictions were lifted? What if whatever we want, starting froma Jazz CD from the 50s to the never before released demo of a 70s rock band, is available to us? A lot of things will change actually. But the most dramatic change will take place in our basic supply demand dynamics. As we came to know from Economics 1.0 – as supply increases demand decreases, until it becomes zero. But according to the new theory – unlimited supply will bring unlimited demand.
A radical thinker called Chris Anderson is about to change all this known theories with some groundbreaking proposals, which he summed up with the term “The Long Tail”.
The basic propositions of this theory are stated below
1. In the physical world, stocking unlikmited inventory is impossible and costly. But in the digital age, cost of stocking additional inventory will be driven to zero. Then the virtual retailers ( i.e. Amazon) will stock all kinds of books, not just hit and popular ones. And the demand will not be limited to limited supply.
2. In the virtual world also, the demand for some mainstream books or music will be high and they will dominate the sales. But the moment we start adding more and more books and music tracks, we will see that the demand curve does not slide down to zero or negative. Rather the demand curve flattens ( See the picture). Meaning – there is demand for each and every additional books or tracks, no matter how outdated it is.
So what is this Long Tail in short? As taken from www.seoexploits.com
“The Long Tail is the transition from a hit-focused marketplace to a millions of niches marketplace. While the majority of profits previously were made by selling a handful of products (the hits) to a lot of people, now millions of products are being sold to smaller amounts of people based on niches. Yes that’s right – it’s niche marketing in it’s purest form, although it goes beyond merely setting up content sites to attract niche traffic and make a quick buck from it – we are talking about a general economic transition brought about by an opening up of distribution channels creating a near-frictionless and abundant source of product variety.
The Long Tail exists because in certain industries supply and demand have (finally) come to a point where supply is no longer limited by how much shelf space there is, how much it costs to manufacture, transport, store and deliver a product. The product is now “virtually” abundant and produced at such a low cost that business no longer has to place emphasis on the big hits, the huge mass-market blockbusters as the main source of profits.
It becomes possible to make margins from products that in the past were not profitable because not enough people would buy them, the niche was just too small to cater to and the cost of production and delivery out-weighed the potential revenues.”