From wsuwiki

Contents 1 Definition 2 Summary 3 Life of The Long Tail 4 Conclusion 5 References

Definition

The long tails are products that appeal to niche markets that typically would not be purchased by the masses. Under a long tail business model, a company would use technology to make these niche products available to consumers at at profit. A long tail model theoretically would increase demand in products that were once considered "misses" and reduce demand for the "hits" that apeal to the masses.

Summary

The life span of the long tail may be short lived. Chris Anderson, author of "The Long Tail: Why the Future of Business Is Selling Less of More", has not only defined the term but also believes that the long tail strategy is the future of selling products. He believes that as technology makes distribution and sales of niche products easier, the demand will shift from your typical "hit" products to the less likely "misses" of the market. The demand shift is a bit skewed. Wharton Research did a study with data supplied by NetFlix, an online movie rental company, that shows that Anderson’s business model may not pan out in the long run. What isn't accounted for is the expanding product variety, customer demand, and false sense that a niche product is more satisfying.

Life of The Long Tail

When compared with the data in the “Is Tom Cruise Threatened study done by Wharton Research, Chris Anderson's theory of a long tail business model may be short lived. Anderson believes that the 20th century was about the “hits” and the 21st century will be about the “misses.”[1] Technology has made it possible to distribute less popular products the niche markets. The belief continues that recomendation systems with increase demand for the misses and derease demand for the “hits”, making long tails a successful business strategy. Unfortunately, Anderson defines the hits and misses in absolute terms and focuses on percentage which are irrelevant when you have an invetory that is growing exponentially. [2] With product variety going through the roof, you have to define what a hit or miss is in relative terms before you can say that demand is shifting to the long tails. For example, lets say you have a thousand items in your inventory, the top ten percent sellers consist of one hundred items. Let’s now say, thanks to technology, your inventory grows to over a hundred thousand items. Now your top one hundred selling items are only one percent of your total inventory. It appears the demand has shifted to the long tails because now only one percent of your new inventory is a "hit". The problem is, the shifting of demand is purley on paper. The same one hundred products are still your "hits" driving the majority of the revenue. Demand hasn’t shifted, your inventory has.

Anderson also believes through the power of recommendation systems, customers will be exposed to more obscure products that will leave them more satisfied than the "hits". [3] There are two major problems with this. First, according to Nick Carr, companies like NetFlix actually skew the information used in their recommendation systems in order to push people down the long tail to a product that costs them a lot less money.[4] Second, just because there are more products available, it does not mean they are of equal or higher quality. In fact, I would bet a manufacture that only sells a limited number of products will offer less customer support. They have greater chance of going out of business leaving consumers to fend for themselves. Niche products that come from nich companies smaller budgets to research and create the product.

The buzz around the long tails has created a frenzy of new business opportunities. Some companies will make it work, other will fall off the train. It is important to make sure you understand all the data behind the long tails before you decide to create a strictly niche market business.

Conclusion

Understanding all the data before you make a decision i imperative to success. The fad of the long tail may come go. Before you jump on the bandwagon, understand that the miraculous demand shift from the “hits” to the “misses” is relative. The long tails are not more satisfying and are not better products that have been hiding from us all this time. There is a lot of hype to sort through and much more research needed. The current research has holes and is not reflecting how numbers can be skewed when you’re dealing with percentage of top products. Chris Anderson is dealing with absolutes. Always remember, when something seems like it is too good to be true, it probably is.

References

Anderson, Chris (October 2004). "The Long Tale"

Business, KT (October 20090. "How to Define Hits and Niches"

Carr, Nicholas (Spetember 2009). "Netflix's Tail Massage"

Nettesine, Serguai; Tan, Tom (2009) "Is Tom Cruise Threatened?"