Long tail rule
Source: Shangpin China |
Type: website encyclopedia |
Date: August 23, 2012
The Long Tail Theory finally points out that the secret of creating a prosperous long tail market lies in that the first is to provide all products at a low cost, and the second is to find and present them to consumers at a high quality. Therefore, the author summarizes nine "long tail rules". 1. Centralized or decentralized inventory Sears is a pioneer in this field. It realized the first leap in efficiency by virtue of the advantages of large centralized warehouses in mail order business. Today, online platforms of Wal Mart, Best Buy, Target and many other retailers are exploiting their existing warehousing networks to open up online markets. Their online products are far more diverse than traditional stores, because centralized warehousing is much more efficient than putting products on the shelves of hundreds of stores. In order to achieve a higher level of diversity, Amazon and other companies have expanded to the "virtual inventory" model - products are placed in the warehouse of partners, but displayed and sold on Amazon's website. Today, Amazon's inventory and products are scattered Beijing website construction Every corner of the network is held by thousands of small businesses, and the market project is the aggregator of all these products and inventories. For Amazon, wood is zero. Digital inventory (such as iTunes) is the lowest cost inventory. People have seen what kind of impact the change from plastic discs to online traffic has on the music industry. Soon, the same thing will happen in the fields of movies, video games and television. News has bid farewell to the paper age, and podcasts are challenging radio stations. Eliminating the limitation of atomic or radio broadcasting spectrum is a powerful way to reduce costs. If this is achieved, new small markets will emerge naturally. 2. Let customers participate in production "Collaborative production" has created eBay, Wikipedia, Craigslist and MySpace, and Netflix has hundreds of thousands of film reviews. With its self service model, Google can sell advertisements at a price of 5 cents per click. Skype has attracted 60 million users in two and a half years. Both are good examples of users' enthusiasm for participation: enterprises need to pay people to do things, but users are happy to do them for free. This is not outsourcing, it is called "crowding". The advantage of crowdsourcing is not only economic efficiency, but also sometimes the work of customers is better. Users' comments are often profound and witty. Most importantly, other users believe these comments. Together, customers' time and energy are almost endless, and only collaborative production can be extended with the long tail. In the case of self service, those who participate in production are the ones who care most about production, and they also know their own needs best. 3. One way of transmission is not suitable for everyone The demand for some products is centralized, while the demand for other products is decentralized. If an enterprise only pays attention to one type of customers, it risks losing other customers. Therefore, the best long tail market should span time and space. They will not be subject to any geographical obstacles, nor will they try to guess when people will need what products. The advantages of iT unes mainly lie in its rich varieties and convenient download methods, but the all-weather opening is also a icing on the cake. To reach the largest potential market, multiple communication channels are the only way. 4. One product is not suitable for everyone In the past, there was only one way to buy music from CDs, but now there are many choices on the Internet, such as CDs, single tracks, cell phone ringtones, 30 second free samples, music videos, mixed music works, other people's mixed music samples, on-demand, download, and so on. In addition, the file format and sampling frequency are also various. Umar Haq calls this "micro chunking". Segmentation and mixing have gradually become a winning strategy: ① divide a content into different components ("micro chunks") so that everyone can consume it in the way they like; ② Mix various contents to create a new kind of content. Newspapers are divided into articles, and more specialized websites will link these articles to create a new product that is often more themed with content from multiple sources. People have seen this trend in differentiated products and brands. Now, this trend has expanded to everything, including the role and level of video games, as well as the sales business of recipes that only sell one recipe at a time. Each new combination will use different communication networks to reach different customer groups. One product is suitable for one person, and multiple products are suitable for multiple people. 5. One price is not suitable for everyone One of the most easily understood microeconomic principles is the power of price elasticity. Different people may be willing to accept different prices for various reasons, which may be related to their income or their time. But just as a single board product can often find its place in the traditional market, a single price can often find its place, at least at the same time a single price can be accepted. However, in a rich market with unlimited space, variable prices may become a powerful tool to maximize product value and market size. For example, eBay's transactions can take two forms: auction (generally lower price, but more trouble and greater uncertainty) and "buy now" (higher price). Even iTunes, which insists on $0.99 per song to simplify the process, has room for flexibility. If you buy a track from an album, iTunes will give you a lower price. Rhapsody is even more flexible. It has tried track prices ranging from $0.49 to $0.79. It has found that halving the price can roughly double sales. Whether it is music or any other product, as long as the marginal production and sales costs are close to zero, the variable price is the natural mode. The most popular products can be sold at a higher price, and the less popular products can be sold at a lower price. 6. Share information On this side, products that look similar are piled up on the shelves, leaving consumers at a loss; On the other hand, the function of "ranking by popularity" is concise and clear, which makes visitors feel comfortable. What is the difference between the two? It's information. In the previous example, the merchant knows what products sell best, but does not tell its customers. In the latter example, the customer gets this information. The same is true for "ranking by price", "ranking by comment", "classification by manufacturer", etc. These data already exist, but the problem is how to share them with customers. More information is a good thing, but the premise is that the way information is provided must help customers choose, rather than make the selection process more chaotic. Similarly, if it can be transformed into recommendation information, information about consumption patterns can become a powerful marketing tool. From user comments to detailed specifications, the detailed information of the product can answer consumers' questions and prevent them from giving up a consumption under doubt. Explaining clearly the source of recommendation information can help the system win the trust of consumers and help them use the system better. Transparency builds trust at no cost. 7. Consider "and", not "or" One of the symptoms of the lack of Rf era is to treat the market as a zero sum game - that is, everything is a choice of "this or that". Either release this version or release that version; Either choose this color or choose that color. It is very natural for the shelves or radio channels in shopping malls: one location can only accommodate one product. But in a market with unlimited capacity, it is almost always the right strategy to supply all products. There is a problem in product selection: it needs to distinguish between good and bad, and this differentiation process requires time, resources and subjective guesses. One person may decide that one product should be better than another according to certain criteria. At the macro level, they may be right, but such decisions are almost always wrong at the micro level. With DVD movies‘ Take the phenomenon of "alternative outcomes" as an example. Even though most people like the standard ending best, there are always some people who prefer the alternative ending. Now, we can see both endings. This principle can also be extended to other DVD options, such as the choice of foreign languages, the choice of standard screens and wide screens, and even different clip versions that meet different ratings - each choice has its own customer base, even if it is not as large as the mainstream customer base. The sufficient capacity of DVD provides space for all these "extra" choices. Directors can use more abundant content to "waste" capacity. Such content cannot be put into the traditional media that are lacking, such as cinema screens or old-fashioned video tapes. All online digital markets are also like this. With the decline of price and the increase of storage capacity, it is only a matter of time to use capacity almost for free, no matter how much capacity people need. The more abundant the storage capacity and communication channels are, the less people need to distinguish their use methods. The "and" decision is much easier than the "or" decision. 8. Let the market do things for the enterprise In a scarce market, enterprises must guess what will sell well. In the rich market, enterprises only need to leave their products there and let the market screen them. The biggest advantage of online market is the evaluation ability of group intelligence. Because they contain endless information, people are more likely to compare the advantages and disadvantages of products and spread their likes and dislikes. For example, collaborative filter is a market-based product promotion method. Popularity ranking is also a voice of the market, and will be multiplied by the positive feedback loop of oral communication effect. The user rating is a reflection of the collective concept, which can be quantified to make the comparison and classification of products easier. These tools can organize complex categories in order to help consumers make choices, and do not need a retailer to guess what products are being bought. In a word: Don't predict; To evaluate, to react. 9. Understand the power of free The word "free" has a bad reputation. It always reminds people of piracy or the evaporation of price hatred. But one of the most noticeable characteristics of the digital market is the possibility of free: since the cost is almost zero, the price can also be zero. In fact, a free strategy has become one of the most commonly used network business models: first, attract a large number of users with free services, and then persuade some of them to upgrade to paid "advanced" users in exchange for higher quality and better performance. Skype and Yahoo Mail are two examples. Because the cost of digital services is very small, and the cost of free services is also very small, as long as a small number of users turn into paying users, businesses can make up for all costs. From 32 second music clips to video previews, free samples are available because the cost of transferring bytes over broadband is very low. Video game producers usually release several free demo versions. If you like them, you can also pay for other versions. In 2005, Universal Pictures released the first nine minutes of the sci-fi film Tranquility on the Internet - the first nine minutes free of charge and without deletion. Because it has the ability to do so. There is almost no cost to transmit a film online to an interested audience, which is totally out of proportion to the huge marketing value - once attracted to the plot by this episode, there is still an exciting suspense that has not yet been solved, and the itching audience can only spend money to go to the cinema. Most TV programs are already free and supported by advertisements. But on the Internet, even if the broadcast income has made up for the production cost and the online transmission cost is insignificant, the television network is still trying to charge. Why can't online TV programs be free? After all, enterprises can add head and tail ads (rather than spot ads). Embedded ads will also have more audiences. In the final analysis, in a competitive and fertile market, the price tendency changes with the cost. Under the rule of digital economics, the cost will only become lower and lower. 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