MIT Sloan Management Review

Corporate Strategy, Marketing

 

From Niches to Riches: Anatomy of the Long Tail

By Erik Brynjolfsson, Yu "Jeffrey" Hu and Michael D. Smith

July 1, 2006

The Internet marketplace allows companies to produce and sell a far wider range of products than ever before. This profoundly changes both consumer behavior and business strategy.

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Eric Clemons, a professor at the Wharton School, is an aficionado of Dogfish Head World Wide Imperial Stout beer at $160 per case. How did Dogfish Head find a customer like him? They didn’t. He found them. Clemons was not always a connoisseur of rare beers, but after trying Victory Hop Devil beer, the top-ranked India pale ale at the time, he learned of Dogfish Head, as well as Victory’s Storm King Imperial Stout and other niche beers, through the Internet. Clemons notes that he “would never have bought the Dogfish Head without the reviews on ratebeer.com and without the chain of experiences with ever-more interesting beers along the way.”

For most of the past century, companies of all types strove to introduce products and services that were blockbuster hits and could capture the mass market. Bigger was better. But now dozens of markets, from beer to books, music to movies, and software to services of all types are in the early stages of a revolution as the Internet and related technologies vastly expand the variety of products that can be produced, promoted and purchased. Though based on a simple set of economic and technological drivers, the implications of this are far-reaching for managers, consumers and the economy as a whole.

Early discussions of Internet markets focused on how “frictionless commerce” would lead to fierce price... To read the complete article, login or sign-up using the form below.

 
 

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