Long Tail or Steep Tail? A Field Investigation into How Online Popularity Information Affects the Distribution of Customer Choices
Name
4655-07.pdf
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317.78 KB
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Checksum (MD5)
d9d207d7f39568f9afc8eb8807e7dbeb
Author(s)
Tucker, Catherine
Zhang, Juanjuan
Date Issued
December 7, 2007
Series/Report no.
MIT Sloan School of Management Working Paper
4655-07
Abstract
The internet has made it easier for customers to find and buy a wide variety of products. This may lead to a "long tail" effect as more customers buy low-volume products. However, the internet has also made it easier for customers to find out which products are most popular. This could lead to a "steep tail" effect as customers flock towards the most popular products. Using data from a field experiment with a website that lists wedding service vendors, we find empirical evidence that a steep tail exists. The most popular vendors become more popular when customers can easily observe previous customers' click-through behavior. Then, we ask whether this steep tail effect "complements" the long tail, by attracting customers who would otherwise have chosen nothing, or "competes with" the long tail, by shifting customers from less popular vendors to popular ones. We find evidence of a complementary effect, where the steep tail indicates new interest in the most popular vendors from outside, with negligible cannibalization of interest for less popular vendors. The findings suggest that popularity information can serve as a powerful marketing tool that facilitates product category growth. They also explain the prevalence of firm practices to highlight bestsellers.
Subjects
Long Tail
Steep Tail
Customer Learning
Decisions Under Uncertainty
Internet Marketing
Category Management
Persistent DSpace Link
