The KSeeker

In Search of Knowledge…

The Tail of the Pyramid

Posted by Girish Krishnan on October 17, 2006

Of late i have been getting opportunities to talk to some really interesting people and the experience has been worthwhile in terms of the new stuff I get to learn about various industries and behaviour of the world in general.One such discussion emboldened itself to compare the long tail as studied in the internet world to the bottom of the pyramid concepts elicited much earlier by CKP. I have my own analogies for understanding the long tail – such as one which starts by polling the opinion of the general public on matters and comparing it with the opinion of a few top people who rule the country!

Long tail, as a concept reverses the 80:20 rule on its head, and says that there is enough money to be made even if you go against the basic premise which companies of the world operate on while doing a targeting exercise ie- target the top 20% customers who can give you maximum returns.

But its just the sheer scale of business that the new age companies like Google depend on, to make their revenue models. Google, for eg:, derives 90% of its revenues from advertising – and that too completely search based! Its the channel which matters when it comes to leveraging the long tail (i.e in google’s case people who do one or two searches a day – the principle is that even a nickel per customer per day would boost the company revenues by millions!!)
The strength of the internet lies in the fact that it can make this channel work, mainly by attracting the customer with the product features that are provided free on the net. Now bringing it close to the Bottom of the pyramid concept, it is imperative that the power to make this as successful as any internet business is in the channel!

Come to think of it! This is such a freakin cool analogy – The internet is enabling all these long tail businesses because of its accessibility by the common folks and its ability to establish a connection through with multiple parties can communicate freely. So, even before we think of reap the benefits from the BOP, we need to grow the channel. But in India, just any one channel wont work to establish a link with the BOP – so its appropriate to think that we need multiple channels to make this possible. so, what could be these channels? ……

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