Market Segmentation And Long Tail Theory

Market segmentation is one of the important ways to help business managers select the most attractive market opportunities.

By subdividing the market by subdividing the market and making a temporary decision, the selection process of the enterprise manager is easier to operate.

The concept of market segmentation was proposed by American Marketing scientist Wendell Smith (Wendell R.Smith) in the middle of 1950s.

Market is the sum of commodity exchange relationship, and it can be subdivided in itself.

Market segmentation should be based on consumers' needs, motives, diversity and diversity of purchase behavior, rather than simply subdivided according to product variety and product series.

After the market segmentation, the sub market is more specific, and it is easier to understand the needs of consumers. Managers can identify their own service objects, namely the target market, according to their business ideas, policies, production technology and marketing power.

In view of the smaller target market, it is easy to formulate special marketing strategies.

At the same time, in the market segmentation, information is easy to understand and feedback. Once the needs of consumers change, enterprises can quickly change their marketing strategies and formulate corresponding countermeasures to adapt to changes in market demand and enhance the resilience and competitiveness of enterprises.

The long tail theory, proposed by American Chris Anderson, is a new theory rising in the Internet era.

The long tail theory holds that due to cost and efficiency factors, in the past people could only focus on important people or important matters. If we used normal distribution curves to depict these people or things, people could only pay attention to the "head" of the curve, while ignoring most people or things that were at the end of the curve, requiring more effort and cost.

For example, when selling products, the manufacturers are concerned about a few so-called "VIP" customers.

In the Internet age, because the cost of concern is greatly reduced, people may pay close attention to the "tail" of the normal distribution curve at low cost.

A famous website is the largest Internet advertiser in the world, but it does not have a large client. Its revenue is entirely from other advertisers.

When the storage and circulation of goods are sufficiently large, and the cost of production falls sharply, so that individuals can make the production, and the sale cost of goods decreases dramatically, almost any product that seems to be very low in demand is bought.

These demand and the share of the common market share of the products with low sales volume can be compared to the market share of the mainstream products, or even larger.

For example, a large bookstore usually contains 100 thousand books, but 1/4 of Amazon's book sales come from books after 100 thousand.

The sales ratio of these "cold door" books is growing at a high speed, and it is estimated that the future will account for half of the total book market. This means that consumers are facing great changes when they are faced with unlimited choices, what they really want and the channels they want to acquire.

An airline is interested in people who have never been on a plane.

People who have never been on a plane can be subdivided into those who are afraid of airplanes, those who do not care about flying and those who take a positive attitude towards air travel (the standard of subdivision is attitude).

Among those who hold a positive attitude, they also include people with high income and ability to travel by air (the subdivision standard is attitude).

So the airline concentrated its efforts on developing high-income groups who took a positive attitude towards air travel but had not yet taken a plane.

Through market segmentation, enterprises can analyze and compare the purchasing potential, degree of satisfaction and competition situation of each market, and explore the market opportunities that are conducive to the enterprise, so that enterprises can make timely commissioning and relocation of sales decisions, or draw up new product development plans according to their production technology conditions, carry out necessary product technology reserves, grasp the initiative of product renewal, and open up new markets to better meet the needs of the market.

The Internet can help companies make good market segmentation.

The purpose of market segmentation is to achieve greater economic benefits by positioning customers' demand differences.

The differentiation of products will inevitably lead to the corresponding growth of production cost and promotion cost. Therefore, enterprises must weigh the income from market segmentation and the cost added by market segmentation.

The "long tail theory" is everywhere and is considered to be a complete rebellion against the traditional "28 laws".

The 28 law has always been used to define the mainstream of enterprise management and to calculate the efficiency of input and output, which runs through the whole life and business society.

In marketing, in order to improve efficiency, business operators are used to concentrating on 20% of the mainstream products that have 80% customers to buy, and strive to maintain the mainstream customers who purchase 20% of their 80% commodities. In fact, 80% of them are long tails.

Today, under the impetus of the Internet, the "28 law", which is regarded as the traditional business bible, has been changed. The economic driving mode is changing from the mainstream market to the non mainstream market.

The traditional market curve is in line with the 80/20 law. In order to rob the best-selling market that brings the 80% profit, the enterprises of the same industry are killing each other. At the same time, the so-called hot commodities are becoming more and more undeserved, although consumers are still fascinated by the popularity, but the economic strength is no longer the same.

These volatile consumers are scattered in all directions, because the market has been subdivided into numerous different fields. The emergence of the Internet has changed the situation, so that 99% of the enterprises have the opportunity to sell, and the long tail of the market curve also turns salted fish into a new profit growth point that business managers can hope for. The managers should make good use of the market segmentation and the long tail theory.

case

More than half of the exhibits in the handicraft yard of the Canton Fair are rattan exhibits, and there are many distinctive products such as rattan wine rack, pet rattan house, furniture and so on.

Creative design and hand-made handicrafts should have attracted many foreign businessmen for their business. But why is it so cold? Is the product really unattractive?

In order to attract foreign buyers, the organizers of the hall do everything they can: free buffet, free tour bus, free internet access, even "buyers party", Samba dance and so on.

But even so, a foreign businessman who only stayed in Guangzhou for 2 days had no spare time to appreciate the so-called Samba dance, which could attract foreign businessmen, but it was just the goods they wanted to find.

Then what are the goods they are looking for? They can only look at them one by one, and watch out for their products from a lot of rattan products. The whole stadium is exhausted.

No wonder foreigners are not interested in so many "hardware" and "service".

How can we make customers use relatively low?

There are twenty or thirty kinds of products in Taiwan. As the rattan product company has produced wine rack, pet products and furniture, etc., do they still have to run different crafts exhibition, furniture exhibition and hotel supplies exhibition? Of course, if they want to meet the needs of so many industries, they can do so, but often a rattan product manufacturer, a small number of 100 people, can meet the needs of so many markets? The problem is: our manufacturers are too eager to meet the customers of various industries. "We can produce whatever products we can produce, as long as customers order, design," everyone is holding this mentality to try to satisfy more customers, but in the end, no one can satisfy them. Exhibitors said, "one exhibition."

Once a French businessman walked around and exclaimed: "Chinese people like to put many things together like a big platter!" at that time he was puzzled why there were so many shops in China that were concentrated in the same place, the products of each shop were similar, but they were all kinds of things.

In France, most of them are exclusive stores, and their products are very clear. People also know very well where they can buy things, which is very convenient.

The manufacturers did not give the product a clear positioning, and a more effective trade screen was blocked.

Nowadays, more and more attention is paid to market segmentation in market competition. As long as we can seize a consumer group with "slit market", we can open up a competitive market.

In view of these special groups, the production of products is done according to the specific circumstances and requirements of this group, so as to solve the needs of the group in design.

Enterprise managers are most concerned about the source of tourists, "if we break the market, then our customers will be very few."

The practice of "market segmentation" has not really been accepted by business managers, because each market needs to take risks in finding and developing, and following the original business model is the safest way.

Many markets meet the new opportunities of the long tail theory, and the Internet provides a hotbed for its development.

Meticulous division of commodities with low demand extends the channel.

This mode of "no matter what is not sold, no time for sale" provides consumers with unlimited diversity.

Compared with the traditional artificial limited choice, this unlimited choice focuses more on customer needs and customer experience.

This subdivision has made Apple Corp's iTunes online music store a great success.

If consumers want to hear only one song, why do they have to force them to buy the whole CD? Two years ago, apple saw this business opportunity and provided users with genuine single sales on the website.

The gap between the 99 cents and the US $15 makes Apple sell 500 million singles at the moment, and the sales of its MP3 player iPod are also rising.

Market segmentation is also a study of consumers' thinking. According to consumers' purchase intention, motivation and attitude, a behavioral science method is adopted. Based on the benefit market segmentation method, the basis is the main benefit that consumers seek from products. Each group has specific requirements for a certain aspect of product / service / relationship, and enterprises can provide services according to their particularity.

At the same time, dragging the tail long enough will create a surprising effect. The long tail theory is a good theoretical fulcrum for its business model.