18 January 2014

An MBA Model in 5 mins - the Long Tail

The Long Tail of distribution..............

Scenario 1:

A few years back i was working for an online travel company that sold hotel rooms online globally. Like most agencies a large percentage of their marketing effort was via google. With the bidding war that materialized for words on google it was far from possible to compete for certain words let alone afford to maintain clicks on keywords such as 'HOTELS in SPAIN', 'LONDON HOTELS', etc. The Long Tail of distribution would see one bid for words such as 'Melbourne hotels close to 12 apostles' or 'Sydney hotels close to Granville'.

  Source: Wikipedia

To elaborate on the graph, the total sum of the yellow curve (i.e. the niche, the less popular, the more obscure, etc.) outweighs the total sum of the green (i.e. mass market). This is the key success factor of the Long Tail.

Scenario 2:

Candy Crush, World of Tanks, etc. etc. how do they make their revenue? Most of these games are free to play and who really buys those add ons? The fact is when you have such a large fan base the odds are that there would be at least the one or two serious gamers who would pay money for the add ons or bonuses. If there were the one or two in a small sample then how many would there be in a exceedingly large sample? It's these numbers that add up to give the long tail advantage over mass marketing.

The Long Tail deals with a large number of niche products as opposed to a small number of best sellers!

1 comment:

nancy john said...

An MBA degree is an effectual tool which helps you in developing business knowledge, gives you a competitive advantage, helps in developing overall personality, and also helps in enjoying enhanced job security.