market segmentation and the “long tail”
In a previous post , I had touched upon the concept of massive market segmentation.
There is another related way to approach market segmentation. That is to see markets through the “eyes” of search engine searches.
Search engines are the entry point for millions of people targeting specific topics. There is a lot of search engine data that has become available over the years. One of the most fascinating statistics about searches is that a very high percentage of searches that have very low volume, or very small “markets”.
In other words if you are searching for a digital camcorder to buy and type in “digital camera” as your keywords the number of other people also doing so is very high. The market for digital camera is large. However, if you type in “Sony PowerShot A70″ the market is naturally significantly smaller since fewer people are typing in those exact keywords. What is interesting is that keyword searches that are only done by a small number of people form a significant percentage of the overall searches.
I guess one could call these nano markets. These collections of “nano markets” were previously inaccessible due to the costs. But now, with huge advances in technology, costs are falling, and marketers are becoming very interesting in them, since they in aggregate can form a large market.
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Chris Anderson has written about smaller niche markets in his book, “The Long Tail” . I have not had a chance to read his book, but did glance through an earlier article of his, today. (He had apparently originally articulated the genesis of his idea in this interesting wired article . ) It talks about books, videos, and music. For example, the majority of overall book sales were in the “long tail” or smaller niche markets (See his chart “Anatomy of the Long Tail”.)
One of the primarily drivers of small niche markets, or the long tail, is technology. Technology, for example, in the form of digital products and delivery services is driving down product costs.
Chris has offered some interesting statistics in his long tail blog in these earlier posts of his. Here is part one , and part two of his stats.
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