Long Tail Definition
The concept of the Long Tail is that the economy is shifting from mainstream products and large markets and to the high number of niches that sit at the tail end of the demand curve.
A Little More on What is Longtail
The Longtail theory in statistics refers to the portion of a distribution that holds the largest number of occurrences. In such a case, the distribution could include random numbers on events and popularities. Companies apply the concept of Longtail to create new products that will interest consumers. These companies may be working to create technical innovations or venture into markets that their competitors have not yet joined. With this trend, it shows that in future companies will be working to create products for individuals. Already, there are car manufacturers that claim no two cars they produce are identical. Each car produced comes with a different dashboard color, different music system and much more.
Another scenario that can be used to illustrate this concept is where a company has many products; when plotted on a graph, the most popular products will constitute the thickest part of the graph and the less popular will occupy the long end of distribution. With the rise of e-commerce new products do not have to struggle to catch the interest of consumers as companies can reach new markets fast. The internet has also made it possible for publishers to keep a large number of books and in print and the same titles out-of-print online. This lets consumers search numerous titles online.
The concept of the long tail was made popular by Chris Anderson who said that companies should ‘sell less of more.’ He observed that while the products at the tail end do not sell much, when these products are taken together, they all add up. In general, the concept of long tail and the emerging technologies have made it easier for new products and new businesses to enter the market. These products may not sell well in brick-and-mortar stores but they are easily sold online. Since these products are produced in low quantities, companies only have to sell a small quantity to break even.
Reference for Longtail
Academic Research on Long tail
From niches to riches: Anatomy of the long tail, Brynjolfsson, E., Hu, Y. J., & Smith, M. (2006). This paper observes that there are so many markets that are just starting out. These markets are starting out in a world of technologies and increased internet usage. While the revolution on markets affects how products are produced and marketed, the implications are much far-reaching for managers. The paper examines the implications of long tail and how it has affected the way in which consumers access products online.
Goodbye pareto principle, hello long tail: The effect of search costs on the concentration of product sales, Brynjolfsson, E., Hu, Y., &Simester, D. (2011). Management Science, 57(8), 1373-1386. The author starts by noting that most markets have for a long time been dominated by a small number of popular products. This is the Pareto principle that describes the 80/20 market distribution. However, with the internet and emerging technologies, the distribution of niche products is enhanced and new companies are able to enter markets. The paper investigates how the online channel has reduced concentration of sales and distributed sales across different niches.
Fitting mixtures of exponentials to long–tail distributions to analyze network performance models, Feldmann, A., & Whitt, W. (1998). Performance evaluation, 31(3-4), 245-279. This paper examines distribution of communication across networks. The authors show that this distribution shows long tail probability. It shows that long tail distributions have a significant effect on product performance but it is not easy to describe the effects of the phenomenon. This paper develops an algorithm that helps estimate long tail distributions.
The long tail of social networking.: Revenue models of social networking sites, Enders, A., Hungenberg, H., Denker, H. P., &Mauch, S. (2008). European Management Journal, 26(3), 199-211. The phenomenon of long tail has been enhanced by the emergence of social networks. This paper takes a look at two German social sites, StayFriends and XING. It seeks to answer the question, ‘how do social networking sites influence creation of value and how can consumers capture that?’ Following Chris Anderson’s concept of Long Tail, the paper develops an approach which can be used to create value for consumers. It also identifies how many users rely on these form of product marketing, their will to pay and how trust can be achieved in online platforms.
The long tail of recommender systems and how to leverage it. Park, Y. J., &Tuzhilin, A. (2008, October). In Proceedings of the 2008 ACM conference on Recommender systems (pp. 11-18). ACM. This paper studies the Long Tail concept in recommender systems where the products in the long tail have low ratings. It splits items into heads and tails and clusters those at the tail together.
The long tail of destination image and online marketing, Pan, B., & Li, X. R. (2011). Annals of Tourism Research, 38(1), 132-152. The author in this paper seeks to describe how long tail distribution is affected by the phrases that people use to describe China. Destination image is described by a number of terms but there are so many other phrases in smaller niches. A Google search on volume of keywords shows that the phrases tourists use to describe a destination are the same they search online. It also shows that tourists using niche phrases are more likely to visit China.
Recommendation networks and the long tail of electronic commerce, Oestreicher-Singer, G., &Sundararajan, A. (2012). Mis quarterly, 65-83. This paper examines the recommendation networks and how they are related to long tail of electronic commerce. The paper finds that doubling network influence is associated with average increase in revenue.
Breakthroughs and the” long tail” of innovation, Fleming, L. (2007). MIT Sloan Management Review, 49(1), 69. This paper shows that there is a perception that break-throughs are not possible to predict. The author shows that for managers to understand break-throughs, they need to ignore the process and instead concentrate on inventions a company has made, the mean value of these inventions and the breakthrough inventions.
Long tail tourism: New geographies for marketing niche tourism products, Lew, A. A. (2008). Journal of Travel & Tourism Marketing, 25(3-4), 409-419. This paper examines the concept of long tail and how it has affected markets. It shows that the concept concentrates on internet based economies that seek to sell specialized services and goods that are not in high demand but have the potential to sell in great volumes. It also examines the challenges that long tail markets face including competition, and geographic considerations.
Vocal minority versus silent majority: Discovering the opionions of the long tail, Mustafaraj, E., Finn, S., Whitlock, C., & Metaxas, P. T. (2011, October). In Privacy, Security, Risk and Trust (PASSAT) and 2011 IEEE Third Inernational Conference on Social Computing (SocialCom), 2011 IEEE Third International Conference on (pp. 103-110). IEEE. This paper examines the effects that social media sites such as Facebook and Twitter have on long tail distribution. It shows that these platforms are very popular for discussing trending events. Search engines have even made a pact with these sites to include conversations happening in real time on these sites. This paper compares two users of these platforms; the vocal minority and the silent majority and how they benefit from these platforms.
Microfinance, the long tail and mission drift, Serrano-Cinca, C., & Gutiérrez-Nieto, B. (2014). International Business Review, 23(1), 181-194.The author starts by observing that poor households have always been excluded from financial services and it was only after microfinance institutions that they started accessing finance. This paper looks at the role of MFIs and how their market is distributed. MFIs have their client based situated in the rich thick and short tail where administrative costs are high but they have shifted their base to the poor. This paper analyzes the mission drift of MFIs.
Consumer informedness and diverse consumer purchasing behaviors: Traditional mass-market, trading down, and trading out into the long tail, Clemons, E. K., &Gao, G. G. (2008). Electronic Commerce Research and Applications, 7(1), 3-17. This paper examines the traditional markets and their challenges and the emergence of new markets and their challenges and strengths. It shows that consumers are pursuing products of better quality and those that succinctly meet their needs. In this paper, the authors seek to explain the shift in consumer behaviors and how companies can meet their needs. It also analyzes the effects of online reviews on sales.