There's been a lot of buzz about the long-tail phenomenon—the strategy of selling smaller quantities of a wider range of goods that are designed to resonate with consumers' preferences and earn higher margins. And a quick scan of everyday products seems to confirm the long tail's merit: Where once we wore jeans from Levi, Wrangler or Lee, we now have scores of options from design houses. If you're looking for a nutrition bar, there's one exactly right for you, whether you're a triathlete, a dieter or a weight lifter. Hundreds of brewers offer thousands of craft beers suited to every conceivable taste.
It's not surprising that so many companies have embraced this strategy. It allows them to avoid the intense competition found in mass markets. Look at the sales growth that has taken place in low-volume, high-margin products such as super-premium ice cream, noncarbonated beverages, heritage meats and heirloom vegetables.
But the case for the long tail has frequently been overstated. This strategy can be expensive to implement, and it doesn't work for all products or all categories. It's surely better to produce a blockbuster film, for instance, than a smattering of low-volume art films.
In other words, simply avoiding the clutter of mass markets isn't enough. Companies need to stake out unique market sweet spots, those areas that resonate so strongly with target consumers that they are willing to pay a premium price, which offsets the higher production and distribution costs associated with niche offerings. We call this approach resonance marketing.
The vast amount of information available on the Internet has made this kind of niche marketing more important than ever and easier to do. More important because all that information encourages comparison shopping, putting tremendous downward pressure on prices and profits in highly competitive mass markets. And easier because it eliminates much of consumers' uncertainty about new niche products, since they can easily find reviews, ratings and comments on everything that hits the market. For decades consumer uncertainty blocked the launch of new offerings that were too focused to be supported by national ad campaigns; today's empowered consumer is truly listening to word-of-mouth.
Finding sweet spots in the market is especially important in these tough economic times, when so many consumers are strapped for cash. Many shoppers will compromise whenever possible by looking for cheaper alternatives to the things they usually buy—but keep buying products that don't have any direct substitutes.
With the right approach, resonance marketing can fulfill its promise. We have found that six marketing principles, taken together, will allow a company to manage the complexity of this strategy and reap superior profitability.