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Long Tail or Steep Tail? A Field Investigation into How Online Popularity Information Affects the Distribution of Customer Choices

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  • Tucker, Catherine
  • Zhang, Juanjuan

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.

Suggested Citation

  • Tucker, Catherine & Zhang, Juanjuan, 2007. "Long Tail or Steep Tail? A Field Investigation into How Online Popularity Information Affects the Distribution of Customer Choices," Working papers 39811, Massachusetts Institute of Technology (MIT), Sloan School of Management.
  • Handle: RePEc:mit:sloanp:39811
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    File URL: http://hdl.handle.net/1721.1/39811
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    References listed on IDEAS

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    1. Dina Mayzlin & Judith A. Chevalier, 2003. "The Effect of Word of Mouth on Sales: Online Book Reviews," Yale School of Management Working Papers ysm413, Yale School of Management.
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    5. Erik Brynjolfsson & Yu (Jeffrey) Hu & Michael D. Smith, 2003. "Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers," Management Science, INFORMS, vol. 49(11), pages 1580-1596, November.
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    Cited by:

    1. Claussen, Jörg & Kretschmer, Tobias & Mayrhofer, Philip, 2010. "Private Regulation by Platform Operators – Implications for Usage Intensity," Discussion Papers in Business Administration 11374, University of Munich, Munich School of Management.
    2. Heski Bar-Isaac & Guillermo Caruana & Vicente Cunat, 2012. "Search, Design, and Market Structure," American Economic Review, American Economic Association, vol. 102(2), pages 1140-1160, April.
    3. Engström, Per & Forsell, Eskil, 2013. "Demand effects of consumers’ stated and revealed preferences," Working Paper Series 2013:6, Uppsala University, Department of Economics.
    4. Gal OEstreicher-Singer & Barak Libai, 2011. "Assessing Value in Product Networks," Working Papers 11-29, NET Institute, revised Sep 2011.
    5. Ajay Agrawal & John Horton & Nicola Lacetera & Elizabeth Lyons, 2015. "Digitization and the Contract Labor Market: A Research Agenda," NBER Chapters,in: Economic Analysis of the Digital Economy, pages 219-250 National Bureau of Economic Research, Inc.
    6. Guillermo De Haro, 2008. "Cuando una ´long tail´ no es suficiente," Working Papers Economia wpe08-16, Instituto de Empresa, Area of Economic Environment.
    7. Andres Hervas-Drane, 2007. "Word of Mouth and Taste Matching: A Theory of the Long Tail," Working Papers 07-41, NET Institute, revised Jan 2009.

    More about this item

    Keywords

    Long Tail; Steep Tail; Customer Learning; Decisions Under Uncertainty; Internet Marketing; Category Management;

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