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Posts Tagged ‘Marketing Techniques’

Most of you may be familiar with the term “Long Tail Marketing”, but thought to share the idea again because I found it very interesting…

 

Long Tail Marketing is a technique to increase sales while decreasing the cost per sale by developing and selling to thousands of niche markets. It has implications within search engine marketing, online selling and advertising purchases.

 

It was a term coined by Chris Anderson to introduce the concept of niche strategy of businesses. This theory has been used to explain the success story behind many big internet companies like amzon.com or netflix.com. Consider for example a hard rock CD which maybe only two to three folks might be interesting in grabbing if they could get hold of it , but such a CD would not find its place in the regular music shops because the cost of placing on stand would not compensate the gain. In order to develop such niche segments of market and maximizing the sales followed by profit could be achieved via internet as they could put that up in the e-shopping site with offsetting the operational cost.

 

The technical side of this aspect can be derived using the “Power Law of Distribution” in relation to high freedom of choice which the items command in market thus creating upper 20% items as “hits” or “heads” while the other 80% as “non-hits” or “long tail”. It is the 80% which needs to be developed to decrease the cost per sale.

 

Interestingly peer-to-peer collaboration groups targeted at open-source development or wikkis belong to the concept to long-tail distribution and groups of customers, users and small companies belong to this distribution.

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