The 80/20 Rule Of Classic Marketing
Classic marketing is mostly geared towards the idea that 80% of sales come from 20% of top customers. That’s called the 80/20 rule. That’s why when you walk into two different stores in a mall, they may have slightly different merchandise, but often it is very similar. They are trying to market to the mass of people whose tastes are mainstream and easy to predict, leaving less room for variety and innovation.
In a recession, the 80/20 rule becomes so overwhelming that stores reduce their inventory into very narrow niches in order to market to the customers who are going to buy the more popular items and trends. Anything other than that is seen as a waste of display footage and an increase in rental space costs. This works well for them to keep costs down and sales up. However, that strategy also leaves a very big opportunity for online marketers to exploit the lack of diversity and novelty in mainstream retail stores by just doing the opposite: marketing to the “long tail.”
The Long Tail
The long tail is the other 80% of customers who aren’t going to buy the most popular or mainstream taste items. They might need a little extra coaxing and whole lot more variety to make up their minds to part with their dollars. In a retail store, marketing to these people can take far more time, space, and money than it is worth. However, online, it is a perfect area to exploit without incurring inventory costs or having to hire additional staff.
Marketing to the long tail means that you are going to offer a much wider selection online than anyone can possibly do offline. How are you going to do that and not have to warehouse everything that may or may not sell? The answer is simple. Online, one can represent a product via an image or virtual representation that doesn’t necessarily have to be directly in your inventory to sell. Instead, you just have to know where to locate it and how to get it shipped to the customer in a reasonable amount of time. That way, you can manage a very large inventory of products without having to buy them ahead of time to place them in a real, physical, inventory.
This makes it easy to offer products with a wide range of features from color choices to sizes. Now, that person that wanted that raincoat in hot pink and has searched far and wide in retail stores can hop online and instantly find it in your store. When you offer that type of variety that an offline retail store will find hard to duplicate, you gain loyal customers who will think to come to your online store first before looking elsewhere.