Anatomy of the long tail: ordinary people with extraordinary tastes (original) (raw)
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Information Systems Research, 2010
The Internet and related information technologies are transforming the distribution of product sales across products, and these effects are likely to grow in coming years. Both the Long Tail and the Superstar effect are manifestations of these changes, yet researchers lack consistent metrics or models for integrating and extending their insights and predictions. In this paper, we begin with a taxonomy of the technological and nontechnological drivers of both Long Tails and Superstars and then define and compare the key metrics for ...
Is Assortment Selection a Popularity Contest?
International Series in Operations Research & Management Science, 2009
Should retailers take product returns into account when choosing their assortments? And, when doing so, should they consider assortment selection as a popularity contest -by carrying products that they think will be popular among consumers? Or, is there ever a case for carrying eccentric products -those that are least likely to be purchased by a typical consumer? In search of answers to these questions, we explore in this chapter the interactions between product assortment, return policy, and pricing decisions of a retailer. We consider a category of horizontally differentiated products delivered in two alternative supply modes: make-to-order (MTO) and make-to-stock (MTS). In the MTO mode, products are supplied after demand materializes, whereas in the MTS mode, the retailer stocks products prior to the selling season. Underlying our demand model, consumer choice behavior follows a nested multinomial logit model, with the first stage involving a product choice, and the second stage involving a keep-or-return decision. We show that the structure of the optimal assortment strongly depends on both the return policy, which we parameterize by refund fraction (percentage of price refunded upon return) and the supply mode (MTO vs. MTS). For relatively strict return policies with a sufficiently low refund fraction, it is optimal for the retailer to offer most eccentric products in the MTO mode, and a mix of most popular and most eccentric products in the MTS mode. For relatively lenient return policies, on the other hand, conventional thinking applies: the retailer selects most popular products. We also
Outpacing Others: When Consumers Value Products Based on Relative Usage Frequency
Journal of Consumer Research, 2011
When considering the purchase of a new product, will consumers be more likely to make the purchase if they think about using it every day or if they think about using it every week? From an economic perspective, using a durable product more frequently should increase its perceived value. However, we show that perceived usage frequency relative to other consumers can influence product interest more than absolute usage frequency. In five studies, we use scale labels, advertisements, and customer reviews to invoke either a high-frequency or low-frequency norm. We show that high-frequency cues create less product interest and lower willingness to pay than low-frequency cues because consumers infer that their relative usage frequency will be lower, reducing the product's perceived fit. This effect is moderated by the consumer's perceived similarity to the standard of comparison and the consumer's own characteristics.
From niches to riches: Anatomy of the long tail
2006
Abstract: Dozens of markets 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. Although this revolution is based on a simple set of economic and technological drivers, the authors argue that its implications are far-reaching for managers, consumers and the economy as a whole.
Journal of Economic Psychology, 2011
For many consumer goods, the advent of online markets dramatically increases the amount of information available about products’ different features and qualities. Although numerous studies have investigated the effects of information quantity on individual-level decisions, it is still unknown how the amount of attribute information affects group-level patterns of behavior, particularly when consumers are also aware of a choice’s popularity. In the present studies, we hypothesized that when attribute information increases, it may exceed the individual’s cognitive capacity to process this information, and as a result conformity – choosing the most popular item – becomes more likely. In this study, we first examined empirical data collected from human subject experiments in a simulated online shopping experience, and then developed an agent-based model (ABM) to explore this behavioral clustering. Both studies confirmed our primary hypotheses, and the ABM shows promise as a tool for exploring extensions of these ideas.► We explored the interaction of information quantity and product popularity. ► Our results showed that large amounts of information lead to less choice diversity. ► We also simulated an agent-based model to explore these group-level patterns.
2011
Product variety is an important component of consumer welfare, yet many markets have historically been dominated by a small number of best-selling products. The Pareto Principle, also known as the 80/20 rule, describes this common pattern of sales concentration. However, by greatly lowering search costs, information technology in general and Internet markets in particular have the potential to substantially increase the collective share of niche products, thereby creating a longer tail in the distribution of sales. This paper first models how a reduction in search costs will affect the concentration in product sales. Then, by analyzing data collected from a multi-channel retailing company, it provides empirical evidence that the Internet channel exhibits a significantly less concentrated sales distribution, when compared with traditional channels. The difference in the sales distribution is highly significant, even after controlling for consumer differences. Furthermore, the effect is particularly strong for individuals with more prior experience using the Internet channel. We find evidence that Internet purchases made by consumers with prior experience are more skewed toward obscure products, compared with consumers who have no such experience. We observe the opposite outcome when comparing purchases by the same consumers through the catalog channel. If the relationships we uncover persist, the underlying trends in technology and search costs portend an ongoing shift in the distribution of product sales. *
Consumers' Choices Between Products with Different Uniqueness Duration
European Journal of Marketing, 2021
Purpose-This research introduces duration of uniqueness, an important dimension of unique products. It studies how choices between products with long versus short duration of uniqueness are influenced by the interaction between pressure and consumers' Need for Uniqueness (NFU). Design/methodology/approach-This research employs a multi-method study approach. A pilot field-study tested the novelty and importance of our research, by asking retail professionals to predict the choice of a hypothetical consumer. A retrospective study assessed the importance of duration of uniqueness in unique product choices, by asking consumers about a real and recent unique product purchase. Four additional experimental studies directly tested our hypotheses by manipulating pressure and by measuring or manipulating uniqueness motivations. Findings-The pilot field-study showed the novelty and relevance of this research for professionals. Study 1, revealed that, retrospectively, uniqueness duration was considered important for the choice of unique products, by high-NFU consumers under pressure. Studies 2 and 3 demonstrated that pressure increases the tendency of high-NFU, but not low-NFU, consumers to choose products with long over short uniqueness duration. Study 4 provided initial evidence for the process behind the effect. Study 5 showed that considerations of uniqueness duration when choosing mediated the effects. Research limitations/implications-The results of the pilot field-study and retrospective study might be affected by recall bias or lay theories. The findings need to be replicated with other sources of pressure and uniqueness. This calls for further research. Practical Implications-Results are important for companies marketing unique products, and they suggest that pressure-based marketing appeals can be used strategically to increase sales of products with long uniqueness duration but decrease sales of products with short uniqueness duration. While our research provides these guidelines, managers should consider the ethical implications of pressure strategies. Originality/value-This is a first attempt to empirically investigate duration of uniqueness. Whereas extant research has examined choices between products with different degrees of uniqueness, this research studies choices of products with similar degrees of uniqueness, but different uniqueness duration. Thus, this research adds to the scarce literature studying the duration of symbolic benefits. Moreover, although pressure and NFU frequently co-exist in uniqueness consumption settings, this study is the first to study their joint effects.
Consumer Behaviour: Utility Maximization and the Seek of Novelty
2004
Evolution of consumers’ preferences has been recognized by many scholars as being key to understanding technological change. However, mainstream economics cannot account for the seemingly irrational behavior of consumers based on changes in taste — consumer theory lacks flexibility and accuracy to explain changes in consumer behavior. Adopting a behavioral psychology perspective, this paper argues that there is a rational pattern in the change of consumers’ tastes. I argue that behavioral psychology offers us a unique perspective to solve some of the paradoxes of consumer behavior. This paper incorporates flexibility into Pollak’s (1970) utility function to more adequately account for, and differentiate between, habit formation routines. A model is developed in which habit formation and consumption of new goods are interrelated.