Strategic Growth

Chris Anderson's Insights into the Long Tail: The New Dynamics of Consumer Choice and Market Behavior

Chris Anderson discusses the concept of the "long tail" in the context of consumer choice, markets, and the influence of digital platforms.

To exemplify the "long tail" phenomena, he delves into how digital platforms and the internet have transformed the dynamics of choice and market behavior, highlighting both the challenges posed by this new landscape and the tools that have been innovated to address them.

Paradox of Choice: Drawing from Barry Schwartz's theory, Anderson highlights the potential pitfalls of overwhelming choice. Barry Schwartz's theory suggests that having too many choices can be paralyzing and often leads to dissatisfaction with one's final selection.

Abundance of Choice with Help: The internet offers an overwhelming number of choices. However, tools and platforms like Google and Amazon help navigate this abundance by ranking, categorizing, and curating content or products, effectively assisting consumers in making decisions.

Physical vs. Digital Marketplaces: While there might be an abundance of choices, we have inherent methods and tools to help us decide, especially online. To make this point Anderson compares the number of product choices in physical supermarkets with online platforms like Amazon.

Micro Hits: Within broader and expansive categories, there are niches that have their own "hits" or popular choices. This segmentation allows consumers to make more informed choices that align with their specific interests.

Content Creation: The rise of platforms like MySpace, YouTube, and blogging is driven not necessarily by monetary incentives. Anderson argues that the drive comes from the human desire for personal expression, reputation-building, and genuine passion.

Oligopoly in Digital Marketplaces: Addressing the digital realm, Anderson touches the dominance of a few major players in various online markets, such as Google in search, eBay in auctions, and iTunes in music. He suggested in 2007 that this dominance might be a short-term phenomenon, with more competitors emerging over time.

Airbnb's approach embodies the customer-centric idea that businesses should not just sell products or services but should aim to create outstanding experiences that resonate emotionally, foster loyalty, and turn customers into brand advocates.

For that you need a deep understanding of your customers and a holistic view of the customer journey.

Airbnb's realization that – just like Disney – their product isn't just the app or website but the entire experience indicates a holistic view of the customer journey. Every touchpoint, online or offline, is an opportunity to delight the customer.

Watch minutes 30:33 to 36:55, to find out how Brain storyboards an 11-star AirBnB experience.

Your growth potential is limitless if you overcome the notion that you compete in a market.

With a mindset of abundance, you realize that the business universe consists of more than one kind of markets.

In Kim and Mauborgne theory two kinds of markets to be exact: red ocean markets and blue ocean markets.

Red oceans represent competitive or market competing strategies. As a red ocean player you do everything to outperform rivals and grab a bigger share of existing demand.

By contrast, if you strive for a market creating strategy, a blue ocean strategy, you create a new market that is un-competed or define a new category from a demand-side perspective.

“Most blue oceans emerge when a company alters the boundaries of an existing industry”, or as Drucker would say a type 2 innovation where you either attract a whole new group of customers or your biggest competition is non-consumption.

Lessons Learned: “When you break the bounds of existing industries, competition becomes irrelevant.”