There’s been a lot of buzz about the long-tail phenomenon — the strategy of selling smaller quantities of a wider range of goods that are designed to resonate with consumers’ preferences and earn higher margins. And a quick scan of everyday products seems to confirm the long tail’s merit: Where once we wore jeans from Levi, Wrangler or Lee, we now have scores of options from design houses. If you’re looking for a nutrition bar, there’s one exactly right for you, whether you’re a triathlete, a dieter or a weight lifter. Hundreds of brewers offer thousands of craft beers suited to every conceivable taste.
It’s not surprising that so many companies have embraced this strategy. It allows them to avoid the intense competition found in mass markets. Look at the sales growth that has taken place in low-volume, high-margin products such as super-premium ice cream, noncarbonated beverages, heritage meats and heirloom vegetables.
But the case for the long tail has frequently been overstated. This strategy can be expensive to implement, and it doesn’t work for all products or all categories. It’s surely better to produce a blockbuster film, for instance, than a smattering of low-volume art films.
Questions to Ask Yourself
- As part of a strategy of selling a wider range of high-margin goods, are you being careful to distinguish potential future market sweet spots from valueless niches that produce needless complexity?
- Are you listening carefully to what consumers are saying online about your products, not just to you but also to each other, and are you reacting quickly to make improvements that address any negative comments?
- Are you standardizing design components as much as possible to limit the costs of producing an extensive product line?
- Are you aggressively keeping inventory and distribution costs down with strategies that allow you to configure finished products quickly when orders arrive, swap inventory among outlets or share distribution with other producers?
- Are you continually reviewing your product portfolio to weed out those products that aren’t contributing to profits, while being careful not to dump products that aren’t big sellers but still contribute to the portfolio’s overall profitability?
If you answered no to any of these questions, you’re not getting the most out of what we call resonance marketing — selling a variety of precisely targeted goods designed to resonate with consumers. Following the steps in this article will
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It is almost impossible to capture consumer’s attention and maintain their interest in this overly cluttered and deluged marketing world. In the chaos, brands that don’t have a POV or stand for something relevant end up blending in. Phill Barufkin
Your basic premise is right about targeting very tightly identified niches. Phil’s comment about getting attention is true to some extent. The bigger problem is to get them to make a decision. The biggest problem facing business isn’t the economy because there are opportunities available. It’s the lack of decision making by business owners and managers.
Great post. Shared via twitter
Very Informative post…It seems that often the really smart companies zoom in on a highly focused niche not to just profit from the niche per se, but to get a foothold on what they have identified as a booming future mass market. Think Toyota and the hybrid car.
Excellent article. Your example of Toyota targeting the sweet spot in the luxury car market was perfect. By listening and responding to their customers, Lexus was able to immediately establish themselves as a luxury car manufacturer that delivered quality at a lower price point.
Tightly targeted niches is one way to reduce online competition but it is beginning to sound like ordering your favorite Starbuck’s drink. Still I long for the days when it was just a cup of Joe.
Ron Hartwell
http://www.therainwaterbarrel.com