The Long Tail of Consumer Demand

Thanks to the Project VRM team, I now understand the concept of a personal RFP (Request For Proposal). The idea is simple: have the individual consumer dictate what they want and at what price. Let the vendors who can match this need come to them rather than the other way around. Product marketers currently have an annoying habit of telling us what we need and then inundating us with a sea of unsolicited communications around products we may not want. Removing this vendor behavior would reduce an unwanted advertising burden on the consumer (annoyance) as well as on the marketer (cost). This should decrease total unit costs, and by extension the cost to the consumer.

A Project VRM participant (I believe it was Chris Carfi as referenced here) suggested that Google’s AdWords already is a great vendor matching tool for highly-personalized consumer requests – albeit around the broader realm of information rather than more specifically of products (I’m paraphrasing). I think he was implying that an AdWord ad is a real-time response to an individual's "three word RFP" (e.g. keyword search).

Leading up to this insightful comment, I had been noodling on who might be the perfect VRM vendor. If we found a good fit to sponsor a VRM initiative, the solution definition and adoption would be a cinch. The secret is to find a vendor with a unique customer acquisition problem that can be best addressed by the VRM model – an organization that would benefit only if consumers were driving the relationship and a traditional vendor-consumer model just wasn’t working. This is essentially the crossing-the-chasm strategy for high tech products – focus on a vertical that is uniquely positioned to benefit from the format and structure of your solution. In essence, who is the perfect vendor candidate for what VRM could provide?

Traditional large product companies would probably be a bad fit for VRM. Their competencies are centered on creating narrow demand, not addressing widespread niche demand. Chris’s comment about AdWords got me thinking that when looking at a personal RFP, you are essentially looking at the Long Tail of demand – a big chunk of typical, common requests followed by an endless sea of nuanced consumer need. But large, traditional companies are experts only at The Short Head of product options. The combined forces of scarce shelf space and the economies of scale explains why these companies meet demand the way they do and are wholly unprepared to respond to individualized consumer demand. For example, scarcity of parking and the economies of mass production explain why you won’t find a convertible, hybrid-powered rental car with an MP3 player. For many existing mass-market products, these laws push less consumer choice into the short head of product options. In other words, they will not respond to the majority of personal RFPs. But then, who will?

I propose that those best suited to responding to niche, personalized RFPs will likely be those already in the long tail business, such as product aggregators like Amazon, retail aggregators like eBay and the thousands of specialized merchants currently relying on search and filter technology to drive personalized demand to their unique solutions.