What Does the Long Tail Have To Do With Industrial Marketing?

Industrial marketers may have heard a phrase called the "long tail". The term and concept originally was popularized in an article in Wired magazine in 2004 by writer Chris Anderson. Later the concept was propagated even more when Anderson wrote a book titled The Long Tail, Why the Future of Business is Selling Less of More.

Anderson, an editor and writer for Wired magazine, helped familiarize many of the gigantic shifts we were witnessing as a result of the disruptive powers of the Web. Due to the unique name, "long tail" and the fact Anderson had a bestselling book, business owners, CEOs and marketing managers began to take a serious look at the way they viewed the web and how they used the web to market their products and services.

Most of the case studies that Anderson referred to in his book were retail and consumer oriented. Anderson sites case studies from consumer oriented business models such as Amazon.com and Netflix.com.

The "long tail" concept describes the concept of selling large amounts of less popular items into smaller niche markets.

Let me give an example from my personal experience. I used to be in the men's retail business years ago. As in any enterprise it was our job to maximize profits by selling items that were in the most demand. Being in the fashion industry these demands changed often and it was always a guessing game to purchase six months ahead of time the items that would maximize profits. So it is with many industrial businesses, not just retail businesses.

The distribution and inventory costs of selling items that were not in demand made stocking these less popular items cost prohibitive. We sometimes call this the 80/20 rule, meaning we would make 80% of our profits from 20% of the inventory we purchased. The challenge was knowing which items were in the 80% category and which were in the 20% category.

The Internet has made this basic and accepted business concept obsolete. Let's stay on the same retail example. Let's say those sweaters we thought were so fashionable last spring were real dogs this Christmas. Keeping those dogs until next Christmas was out of the question. It was too costly to move the merchandise back to the warehouse and the probability they would still be dogs next year was pretty high, further extending our loss on those "beauties". So the challenge in our January sales was to get rid of the ugly sweaters at all costs. Those January sales were amazing.

If the Internet had been around back then and our business would have had a fully functional and well developed Web site we could have run a sale on those sweaters and attracted customers from all over the country instead of just west Michigan or Kalamazoo. Stocking costs would be negligible for these items and yet we could have accessed millions of "niche" customers who might have loved those "gems".

Those ugly sweaters would have been the long tail, previously a money loosing segment of our retail market. Fast forward 25 years and those ugly sweaters could be a money maker because they would be available to a much a larger pool of potential customers that actually like these sweaters.

So it is for the industrial marketer. Whether you are manufacturing products or marketing industrial MRO (Maintenance, Repair & Operations) items, you now have the opportunity to help your slower moving or more obscure products become highly visible to a much larger audience...the world!

Although much of Anderson's long tail concept uses retail, consumer and e-commerce case studies, the long tail also represents any kind of advertising or web based promotion. Industrial marketers have largely ignored this opportunity.

When Anderson popularized the long tail concept in 2004 the search engines were not nearly as powerful and relevant as they are today. Even in 2004 Anderson wrote:

The world is being transformed by the Internet and the near limitless choice that it provides to consumers; tomorrow's markets belong to those who take advantage of this.-Chris Anderson-The Long Tail, Why the Future of Business is Selling Less of More.

As the search engines get better at providing focused and relevant searches, they are your company's least costly and best industrial marketing partner.

For those long tail items that might not be as relevant or profitable as the 20% group, the search engines are remarkable marketing tools. Possibly your company offers unique services in your geographic area. The search engines are a terrific marketing partner that can help tell the region about your services.

Let's take a little different supply and demand scenario. Let's say you sell million dollar machines that can be sold all over the world. Your market is clearly small and niched. Your audience is plant and product engineers all over the world...a relatively small audience. The younger engineers are less likely to know your brand equity in the market place. They are less likely to visit the trade shows you have traditionally exhibited in. They are less likely to read the trade "rags" where you have spent marketing dollars in the past. Now, the younger crowd goes right to Google for their sourcing information.

"Google and other search engines have broken the world into tiny bits. No one visits a website's home page anymore...they walk in the back door, to the page Google sent them to." - Seth Godin, Meatball Sundae, Is Your Marketing Out of Sync?

Your company's website better be there!

You may go to an article that I wrote earlier about the increasing power of the search engines for industrial marketers.

Let me show just a couple examples of how the search engines and the long tail has changed industrial marketing for a couple of Market Pipeline clients.

Market Pipeline develops web based marketing for a manufacturer in northern Illinois, North American Tool. The manufacturer is a leading manufacturer of "thread mills". If you go to Google and type in "thread mills" you find approximately 2 million pages with the term "thread mills". North American Tool shows up on the search engine return page (SERP) in the third position. This position (December 2009) provides a lead generation opportunity for North American Tool and a very inexpensive "sales rep" for a niched and expensive audience to reach.

Market Pipeline recently launched a web site for a client that sells "repairable asset management software". TracRat has developed an innovative web-based software application that tracks repairable assets and gives large industrial companies opportunities to save significant money and resources. If you go to Google and type in "repairable asset management software" you will get approximately 10,000 pages with relevant content. Note that our client, www.tracrat.com, is in third position. (December 2009) Also note the first impression in the search engine return page is an entry on the Market Pipeline blog.

Call Market Pipeline today to find out more about the long tail and how our staff can exploit the long tail advantage for your industrial company.

Tom Repp
Principle
Market Pipeline