2 Simple Principles Every Digital-Media Expert Should Know

New technologies may be radically changing how markets operate, but consumers remain people. And so it can be that two principles of how consumers decide, first described 50 years ago by the sociologist William McPhee, are just as true today as they were back then. In fact, although those principles were discovered for settings in which people typically had at most a dozen alternatives to choose from, my research shows that his discoveries can explain much of what we see in today’s markets — and are especially critical to online businesses with their vast assortments.

What are these principles?

1. Hit Products Monopolize Light Consumers

The first is that light users of a product category constitute a disproportionately large share of those who choose the most popular products in that category. In other words, hit products “monopolize” light consumers. Consider the world of televised sports: die-hard basketball fans will have watched a large number of games throughout the year, but more casual fans will have likely focused their attention on the most popular play-off games. That’s how Thursday night’s Game 7 between the Heat and Spurs accumulated 26.3 million viewers, the second-highest total ever for a basketball game televised by ABC—because of all the fans who otherwise rarely watch a game tuning in. If it sounds logical, that’s because it is.

2. Hit Products Are Enjoyed More

If my conversations with marketing executives are anything to go by, the second principle is directly related but somehow more counter-intuitive to many marketers. This principle dictates that, in McPhee’s words, “the larger the proportion of the people [unfamiliar] with a given alternative,” “the less likely are those who are familiar with it to like it especially.” Thus, the more niche a product, the less likely it is to be appreciated by its consumers. Many people’s intuitions tell them the exact opposite: they believe that, say, an out-of-the-way book, album or film can bring great joy to those who stumble upon it. But the truth is that, in general, niche products have a double disadvantage: first, they are not often chosen; second, when they are chosen, it is by people who “know better” (because they are frequent consumers in the category), leading them to prefer the popular products. That’s why this principle is called “double jeopardy.”

Implications for Online Businesses

These principles are everywhere in digital channels, too—even in settings where people can choose between hundreds of thousands of products. I encountered these laws when analyzing customer-transactions data for an Australian online movie-rental company. I found that those consumers who chose relatively unpopular products tended to order more movies than those who concentrated on popular products. And I found that niche titles, on average, were appreciated substantially less than popular titles.

Chances are you are thinking of deviations from these rules by now—you might remember that you recently downloaded an album by an unknown artist and really loved it, or saw an unheralded documentary on Netflix and gave it a “5” rating. That’s entirely possible. But the point is that vast amounts of online transactions data consistently show that these principles of consumer behavior hold in the aggregate. There are exceptions, but that’s just what they are—exceptions.

If you run a business—any business—you should know that your least loyal customers probably opt for your most popular products. And across the board, your customers probably give higher ratings to your most in-demand products. These are statistical phenomena that you ignore at your peril.

If you work for a retailer with a long-tail assortment involving thousands or even millions of products, you should know this all too well. Those companies are often very much stuck between a rock and a hard place. Vast assortments can be expensive to carry, but cutting back too much on variety can hurt their standing with their most frequent customers. At the same time, trying to foster demand for niche products by actively directing customers into the long tail (for instance using recommendation engines), can hurt overall customer satisfaction.

If you want to make the right choice of strategy in your specific situation, arm yourself with an understanding of both principles of consumer behavior—and make sure you have a keen sense of exactly what these patterns look like in your customer data.

Anita Elberse is the Lincoln Filene Professor of Business Administration at the Harvard Business School. In October, she will release her first book, “Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment.”