Choices, Choices!

Whether shopping for clothes or electronics, books or microwave food, consumers have many more options than ever before. The variety of choices today gives us a much better chance of finding something that exactly suits our needs, our personalities, our activities and our bodies. However, those choices can be overwhelming. In his book  “The Paradox of Choice: Why More Is Less,” Barry Schwartz emphasizes the downside of these huge assortments. According to him, as the number of choices grows further, consumers feel overloaded and, as a result, choice becomes a burden rather than a freedom.

However, since we (i.e. the consumers) have easier access to more and more information and alternatives, the chances that there is a product perfectly fitting our preferences exists out there. Traditionally, the rule of 80-20 was overruling all markets. The underlying idea is that 20% of the products make up 80% of the revenues. 

However,although the rest of the 80% of the products, separately account for an almost null market share, all together they still account for a 20% of the market share (put that back into perspective to understand the total profits). Consumers who demand these (specialized) products are increasing. If a company can target these outliers, revenues can be great (The Long Tail by Chris Anderson)!!

         Another interesting example of the long tail is found in the Travel Industry. Somehow, it seems that this 80-20 rule is losing its power as long as these niches become more easily accessible!!

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