Online Retail:the Long Tail Effect And Market Segmentation

In the traditional retailing market, the enterprises prefer to focus on rare good s which have awesome sales and amazing profit. That, according to the Pareto principle, the80%profit is decided by20%product.However, information technology in general and Internet markets in particular have the ability of online merchants to help consumers locate, evaluate, and purchase a far wider variety of products than they can via traditional brick and mortar channels. Internet markets have the potential to substantially increase the collective share of niche products, thereby creating a longer tail in the distribution of sales.The long tail effect refers to the behavior of economic sectors that provide products in relatively low volume, but are able to make a profit by providing a greater variety of products in aggregate. This is in contrast to the short head sectors where profit is based on a more narrow range of products selling in much higher volume. Due to advances in communication technology and social networking that have given more people access to a broader range of goods and services and information, the long tail idea has recently gained general popularity as a way of explaining the structure and success of Internet-based activities and, in particular, as representing a new market phenomena that did not exist prior to the advent of the Internet.This thesis study the Long Tai effect of china’s mobile phone market of online sales, by analyzing first-hand mobile phone sales data collected directly from the tmall.com, it provides empirical evidence that long tail effect exist in china’s mobile phone online retail market. Base on the existence of long tail of china’ mobile phone online retail market, we study the application of the long tail market whit the idea of market segmentation, find profitable points in the long tail market positioning through profit and loss-balance model, provide a guideline for small and medium-sized enterprises to take advantage of the long tail to expand market share. This paper is mainly including the following four parts:The first part is the introduction of the long tail. It leads to the topic research background, significance, research ideas and research contents.The second part is the related theories and literature review. In the mobile phone industry, the advantages and disadvantages of the long tail effect and market segmentation theory, based on statistical data and "long tail-profit and loss" model.Also, it shows the change of the long tail profits, putting forward to the corresponding strategy.The third part,through analysises the statistical data, reveals the presence of long tail market in the mobile phone industry.The fourth part,uses the long tail-break-even model to expain the changes between fixed cost and varriable cost under the online sale model.And than summarizes how to take long tail market and enlarge market share in the a brutal mobile phone industry.The fifth part is the summary and outlook of the shortage. Today, everyone is in pursuit of personality, enterprises should pay attention to numerous long tail markets. Small and medium-sized enterprise should focus on their advantages in their fields, the use of the Internet era of the marketing strategy, real-time control the market dynamic, nimbly business.