Transcript The Chasm and the Long Tail

Summary
Power shift in digital markets
Consumer behavior in overchoice
environments
Customer branding and big data
Online Branding:
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Inbound Marketing and Thought Leadership
Amazon, Twitter, Flashstock, SAP
Online Retailing and Fluid Markets
Virden and High Tech marketing
New Orders
Customer Adoption a la Moore*
Who influences whom?
Who references whom?
Who buys for what reason?
What is the whole product?
What is the minimum product?
Which partner helps bridge the gap?
What is the minimum customer base?
What are optimal price points?
Moore’s Chasm
Visionaries
Pragmatists
Skeptics
Conservatives
Time
Innovators/
Early Adopters
Early Majority
* Moore (1991), Crossing the Chasm
Late Majority
Laggards
Long Tail (Chris Anderson)
Fragmented Demand
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Niches are Riches
What is “Natural Demand”?
The “Head” of the Demand Curve:
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Pre-Internet, old economy firms
turned out a small number of “hits”
or blockbuster products
The “Tail” of the Demand Curve:
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Internet-era, digital marketing firms
offer a broader range of niche
products.
The Long Tail: Key Claims

In the long tail model, these
forces allow online
businesses to greatly
increase the variety of their
products.
Anderson argues that 98
percent of a long tail
business’s products sell
at least one unit in a
quarter
on a cumulative basis,
these small numbers of
sales of large numbers of
niche products generate
enormous revenues and
profits.
Is there a Long Tail?
www.rogerebert.com hosts more than
ten thousand reviews and its Web traffic
statistics show that even the most
popular film represents less than 1
percent of their business.
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In June 15, 2006, "The Da Vinci Code" and
"Brokeback Mountain" were tied at 0.8 % of
page views
the next most requested reviews in 2006
were for "V for Vendetta" (0.7)
"X-Men: The Last Stand" (0.6)
"An Inconvenient Truth" (0.5).
The lesson: People are curious about a lot of
different movies."
Is there a Long Tail?
The Long Tail of Holiday Music.
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eMusic had 1,226 holiday albums in the
catalog
1,128 had been downloaded over the
Christmas season.
That's 92% of the catalog!
Source: Digital Audio Insider, 2007
Is there a Long Tail?
To Summarize:
In virtually all markets, there are far more
niche goods than hits
The cost of reaching those niches is now
falling dramatically.
Simply offering more variety does not shift
demand by itself. Consumers must be
given ways to find niches that suit their
particular needs and interests. A range
of tools and techniques—from
recommendations to rankings—are
effective at doing this.
To summarize con’d
All the niches add up.
the natural shape of demand is revealed.
Network Products in Networked
Markets
The last decade has witnessed a shift from a focus on the value created by
a single product to an examination of the value created by networks of
products (product ecosystems or NETWORKED PRODUCT).
Network products emerge at the intersection of three types of networks:
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User network
Complements network
Producer network
Key Claims:
Any or all of these networks add value or enhance the attractiveness of the
associated focal product.
Consumers allocate resources among competing products based on the
perceived value added of any or all of these networks.
The Networked Product:
Complements network
Services that permit consumption
Focal Product
User network
Other consumers
Producer network
Other companies producing the same or
similar product or service
Linux as Networked Product:
Complements network
•Application developers
•Maintenance and Repair
•Service Companies
Ex.: Linux
Operating System
User network
number of other
companies that are using
Linux (moderated by size,
reputation, industry, etc. of
these companies)
Producer network
Other companies producing the same or
similar product or service
Remember:
If you are dealing with a focal product that is a
networked product
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Consumers allocate resources not only based on the
objective and perceived quality of the focal product
but based on the perceived value added to the
focal product by the networks it has.
Marketing of a networked product therefore is no
longer limited to developing a marketing mix and a
strategic position for the focal product. Rather,
marketing needs to support network strength as
well.
Examples?
Complements network
Services that permit consumption
Focal Product
User network
Other consumers
Producer network
Video game market
Satellite Radio
HDTV
Electric Cars?
Other companies producing the same or
similar product or service