Almost 10 years ago, I read a book named <Long Tail Theory>. The book’s author Chris Anderson believed that the future of business would not lie on the traditional demand curve which represents the "hits". It is the long tail that represents the often missed "misses”. Products and services targeted to specific small groups could have the similar economic attractiveness as mainstream hotspots products.
Thanks to the coming of mobile internet age, specific but small demands can be interpreted and satisfied. Large-scale markets are transformed into countless niche markets by technology. Take the dressing market as an example. I favor simple-designed clothes, but it was hard to find those in the past because the dressing market would choose more popular styles which cater to the public in order to gain enough profit. Nowadays, I can find some small design studios from the internet market platform. Even though my taste is unique, I can still find many customers with similar taste as me around the world. This kind of customers is more likely to be regarded as long tail customers compared with a massive number of the mainstream customers. And the small design studio can still keep its business running because of the demands of the world.
In the long tail era, niche products far outnumber popular products. The cost of obtaining these niche products is falling significantly. More ways are created to obtain information on these niche products, such as search engines, product recommendations, etc. There are many kinds of niche products. Together, they will form a big market that can compete with the big hit market.
The long tail theory could also be applied to Human Resources Management. Everyone is unique and special, everyone could find their own position in which they belong to. So you could use your full strength by exploiting your own distinctness.
As to the network effect, there is another book named<Free> written by the same author. This new type of free business model is an important product in the Internet age. Anderson said:” the distinguishing feature of information technology is that there is a tendency for the price of any commodity product and service on the internet to gradually approach zero”. It is an economics example based on computer science, not an economics based on physical entities or tangible things in the past.
The most successful person to implement this strategy in China is Zhou Hongyi. When Zhou Hongyi entered the anti-virus software market, all anti-virus software had been charged for money for more than a decade. However, 360 anti-virus software quickly led in the industry since then by using its free distribution strategy. Later, it was listed on the Nasdaq and became a very important leader company in Chinese Internet industry.
The logic behind free strategy is: be free to millions of users on their platform of users and then sell his other goods. It's exactly based on the network effect: more users lead to more values. After Zhou Hongyi brought users to his own anti-virus platform through free strategies. They sold advertisements, games, and network traffics to others to earn more money.
Nowadays, the era of the mobile internet is booming in China and the value of those communities is looked upon. Businessmen are struggling to use better contents to attract users and get more users. In that case, it will become a widely known platform, the value will go up and attract other businesses opportunities happened. WeChat serves as a good example. At first, WeChat was only a chatting tool, with the multi-functionalities growing, more and more users found it convenient to start a chat, get information and even pay. Other businesses value the platform and provide their services and goods in WeChat. Users found WeChat could do everything thus creating customer stickiness.
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