The Long Tail

Niche Markets and Marketing

There is a lot of money and opportunity in the Long Tail, or niche markets and marketing. There’s a lot less competition and there is still room for profit.

Obviously big companies see this and want to take part in this arena. But how do they enter successfully? How do they avoid failures like Hewlett-Packard’s acquisition of Palm, Inc.?

There are many important factors to consider and most have to do with context. The long tail looks different for different categories. Take, for example, the automotive industry versus the food industry. The cost of entry into the automotive industry is very high and doesn’t allow for as many niche producers whereas companies like Odwalla can enter the food scene and eventually become a competitor to giants like Minute Maid. (Odwalla was acquired by Coca-Cola Company, in which Minute Maid is a division.)

It’s important to understand why consumers are moving from the big hits to the niche markets, not just that they are. Unfortunately, big companies either don’t have the budget or aren’t taking the time to understand the long tail or the cause in the behavioural shift of consumers. Often they apply their existing frameworks to new situations. For example, if you classify a tablet the same way you classify a high-end computer, you might be left scratching your head as to why ‘Budget Betty’ all of a sudden deviated from her normal behaviour of purchasing mid-range PCs to purchasing a tablet.

So how might companies go about understanding why? Surveys are one method, but often companies will ask questions relating to specs (i.e., When did you buy your last computer? How long do you spend on it?) versus questions that seek to understand deeper behaviours (i.e., are you the person in your social group who buys tech and your peers follow?).