Explain the relationship between 'implicit market' and 'explicit market' with the Long Tail theory.

Hey there! Great question – I could see how these concepts might seem tangled at first, but let's break them down with a real-world example. No jargon, just everyday stuff. Let's imagine going shopping.

First up: Let's talk "The Mainstream Market" and "The Hidden Market"

Picture this: It's the pre-internet age, and you want to buy a book. You head to the biggest Xinhua Bookstore in town.

1. The Mainstream Market

As you walk in, what books take center stage? Bestsellers everyone knows, like The Three-Body Problem or To Live, or works by the latest Nobel Prize winner.

Characteristics: High demand, mainstream popularity, broad audience.
From the seller's view: Shelf space is limited and rent is expensive. So, I'm naturally going to prioritize stocking only the top sellers to maximize profit.

This market, composed of a small number of popular items prominently on display, is The Mainstream Market. Think of it like the tip of an iceberg – highly visible, but only a small portion of the whole market.

2. The Hidden Market

Now, let's say you're looking for a super niche book, maybe one on "18th-Century European Wig-Making Techniques." You hunt all over the store, but the staff tell you, "Never heard of it. We don't stock that. We'd be lucky to sell one copy a year."

The demand for this obscure book, and millions of other "long-tail" demands just like it, genuinely exists. However, they are too fragmented and individually low-volume to be viably served in a traditional physical store. These demands are invisible, intangible, hidden away.

This vast mass of non-bestselling, non-mainstream products with small individual demand volumes is the Hidden Market. It's the immense, submerged part of the iceberg, largely unseen in the physical world.

So then, enters "The Long Tail Theory," changing the game entirely

Fast forward to the internet era, with online retailers like Dangdang or Amazon.

The Long Tail Theory's core idea is this: When storage and distribution (shelf space) are near limitless, the combined market share of all those low-demand, non-mainstream "niche" products can rival, or even surpass, the market share of the few best-selling "hits."

Sound complicated? Let’s stick with our bookstore example.

Amazon operates an online bookstore. Its warehouse space is effectively infinite, and its virtual shelves can display an endless number of titles.

For the Mainstream Market: Of course, it sells The Three-Body Problem, likely featuring it prominently on the homepage. This part resembles the "Head" of a demand curve – tall and steep, representing the big hits.
For the Hidden Market: Amazon can also sell that book on 18th-Century European Wig-Making Techniques! Even if it only sells two or three copies a year, it's perfectly viable. The storage cost per copy is minimal, and listing it doesn't consume precious physical shelf space. Meanwhile, there are books on "Oracle Bone Script Identification," "Repairing Vintage Radios," "Cthulhu Mythos Cookbooks"... hundreds of thousands of such niche titles. Individually, the sales volume for each is tiny. But combine the sales of these hundreds of thousands of distinct niche products, and the total becomes incredibly significant!

This market segment, formed from countless non-mainstream products, creates the "Tail" of the demand curve – very long but very low/tiny in height for each individual item.

So, here's the relationship between all three: Key Takeaways

Let's tie these three concepts together:

The Mainstream Market = The "Head" of the Long Tail
- Represents mainstream culture and mass demand – popular hits targeting the majority. Think Top 10 music charts, big box-office movies.
The Hidden Market = The "Tail" of the Long Tail
- Represents diverse niche cultures and personalized demands. In the traditional model, these demands were "hidden" because serving them wasn't cost-effective. The internet and digital distribution have uncovered them. Examples include finding obscure indie bands on Spotify or hyper-specific anime merch on Taobao.
The Long Tail Theory
- It's the theoretical framework that brilliantly explains why the Hidden Market becomes so important in the digital age.
- Its insight: The future of business isn't just about serving the high-volume Head (Mainstream Market). It's equally crucial to leverage low-cost distribution channels (like e-commerce, streaming platforms) to unlock the value contained within that long "Tail" (the Hidden Market).

So, when you find that ultra-rare hobby part on Taobao, or discover a hidden gem song through NetEase Cloud Music's "Daily Recommendations," you're experiencing the Long Tail Theory firsthand – treasure hunting in that rewarding, surprise-filled Tail!