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In the first two short articles, I learned what hot products are and what long tail is. This article follows "5 Minute Business School" to continue learning related content.
A question is raised at the beginning:
Suppose you are the CEO of a start-up company, and you have a lighting patent for LED lights that can protect your eyes. It can be used as a very good desk lamp to protect your eyes. You have two choices. The first is to cover as many price points as possible and make dozens of models of various styles to hit the market. Anyway, there is always one that suits you. The other means to make a product and make every effort to make it a hit.
What would you choose?
Do you want to cover the needs of the long tail, or do you want to make as popular a product as possible?
The long tail can be understood as 80% of the 80/20 rule. This 80% can only generate 20% of profits, which means that it covers as many people and markets as possible, but the profit The proportion is not high.
There is also a hot item, which refers to a product that is in short supply and has a high sales volume. That is, products that are sold by many people and are very popular. The reason for the emergence of popular products is that with the advancement of technology and the rise of the Internet, the marginal cost of product production and sales has dropped sharply, resulting in the best leading products being able to achieve winner-take-all in the market it covers.
For example, the president of Warner Bros. Pictures, he invests a large proportion of his budget every year in only a small proportion of what he considers to be blockbuster movies. This is a huge gamble.
If you bet right, you will make a lot of money. If you bet wrong, you may lose everything. His strategy of investing a large proportion of funds in a small number of products is called the hit strategy.
Let’s take the course “Liu Run’s Five-Minute Business School” as an example. This course was launched on the APP because it is online, and the marginal cost of collecting potential students is very low. The price of the course is only 199 yuan, and it has recruited more than 20,000 members in just 10 days since it was launched, making it a hit. It became a hit because of the decline in marginal costs.
Just imagine, in the era without the Internet and mobile Internet, a course like the 5-minute business school would have a very niche demand, and almost no one would do it in the long-tail part, because it is very rare. Make money. Therefore, everyone can only pay a high price to go to the doorstep of their home and go to the school's business school to study. However, because of the technological advancement of the Internet, there is an opportunity to get this kind of APP, and this demand for business education is Collecting the demand in the long tail end creates a category that did not exist before, and it becomes a hot product.
From this point of view, the long tail theory and hot sales are actually two sides of the coin of marginal cost. The Internet has brought about a sharp reduction in marginal costs. This makes long-tail demand increasingly easier to collect. And it is becoming easier and easier for good products to achieve winner-take-all success and become a hit. This has resulted in a phenomenon where demand is getting longer and longer, and demand categories are becoming more and more popular.
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How to understand this?
That is to say, in the past, only 20% of the demand for a certain product in a certain market was paid attention to, and it was made into a product, and 80% of the profit was obtained. The remaining 80%, the long-tail part that no one pays attention to, today, with the development of technology and the sharp decline in marginal costs, then we can find the demand in this long-tail part and make it a hit. This is the long-tail hot model, and this is the real future of business.
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Let’s go back to the table lamp example. At this tail, we need to find a long enough tail. For example, desk lamps can be divided into those for children and the elderly, placed in the study or at the bedside, and are they plug-in or battery-powered? There must be segmentation, and don’t expect to create a large-scale and large-scale hit-all product. Because even Xiaomi, which is famous for its popular products in recent years, in addition to Xiaomi mobile phones, it also has series of mobile phones such as Redmi to cover the long-tail needs of more people. In the long-tail demand, to truly find the pain points of the market and consumers, we must truly solve the problem, and it must be the best solution.
Of course, we must make full use of the technological advantages of the Internet and strive to reduce marginal costs, such as e-commerce, social networking, media, and a series of other means to bring together these long-tail users who would otherwise be unreachable and gather their small needs. Only by working together can we become a big market and achieve our business goals.
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Long-tail hot products are two aspects of marginal cost. With the advancement of technology, the demand for the long tail part is collected, and it can also be made into hot products. This will be a new phenomenon, worthy of observation and thinking.