roaring dragon

Topics: ITunes Store, Coca-Cola, IPhone Pages: 3 (569 words) Published: July 28, 2014
Chasing the Long Tail
Four groups of consumers
Based on Loyalty, consumers could be classified into four different groups. No Loyalty, Low Loyalty, Intermediate Loyalty and Premium Loyalty (Reichheld, 1996). The consumers that do not develop a loyalty towards any brand even after repeated use of the product can be identified in this group. Low Loyalty consumers are the consumers that buy out of habit and this sort of loyalty can be attributed to habit forming buying. Product and the consumer differentiation is low in such a group. Intermediate loyalty consumers are based on environmental and situation factors of buying and being loyal. Premium Loyal Customers are the ones that would not budge from buying one particular brand for its products. An Excellent example of such consumers is Apple Customers who are hardcore loyalists. Anderson's long tail theory

Long Tail theory suggests that consumers do not need to be grouped as single, and Premium products can be just as attractive to sell to consumers as their competitive mainstream products. The theory is based on the fact of how non- popular or niche products among the market that are not kept by the traditional stores can contribute to a significant portion of the sales in online models of shopping. The assumptions of the theory are based on low cost of distribution, Availability of all kinds of products in the product category, extracting markets and consumer buying out of niche products. The long tail model works on the fact of how besides concentrating on popular products in a category, a new market can be created for niche products and a profit be made on them. An Excellent example to explain this theory is Apple. Apple iTunes store offers, applications, songs, books and they can lump millions of apps, songs and books together. So, if you are looking for an obscure book on enzymology, and Google it, or find it on ITunes, you can find it and buy it and...

References: Kotler, P. & Keller, K.L. (2011). Marketing Management. (14th ed.). Upper Saddle River, NJ: Pearson Education. ISBN: 9780132102926
Carrol, P. and Reichheld, F. (1992) "The fallacy of customer retention", Journal of Retail Banking, vol 13, no 4, 1992
Reichheld, F. (1996) The Loyalty Effect, Harvard Business School Press, Boston, 1996
Dawkins, P. and Reichheld, F. (1990) "Customer retention as a competitive weapon", Directors and Boards, vol 14, no 4, 1990
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