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Zipf's Law and Marketing

written by: Nicky LaMarco•edited by: Michele McDonough•updated: 9/23/2009

Although it is often considered as more of a statistical concept, there is actually a strong connection between the premises of Zipf’s Law and marketing. If these connections are understood, they can be used to great advantage by businesses in their marketing efforts.

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    Zipf's Law and Marketing
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    What is Zipf’s Law?

    In the 1930s, American linguist George Kingsley Zipf was studying the ranking of words by popularity. Basically, he found that the most-used word in the English language occurred approximately twice as often as the second most-used word, and about three times as often as the third most-used word. It has been found that the law, regardless of what you are ranking, translates to state that the xth item in the list is 1/x the popularity of the first item in the list.

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    The Connection Between Zipf’s Law and Marketing

    It’s always been widely understood that it’s better to be “Number 1" than “Number 2." But, by using Zipf’s Law and marketing together, it’s possible to take this concept further, and as a result, learn how to use these concepts to increase revenues and profits.

    First, the closer a company or brand is to the top of the list, the larger the profit advantage is to moving up one notch. Moving from being number 10 to number 9 doesn’t provide as much of an advantage as moving from number 2 to number 1. Second, there is a strong connection between the ranking of a consumer’s preferences, and the market share that product or company actually controls. Studies have shown that when customers are surveyed in regards to their stated preferences, their responses almost always closely match their actual buying habits.

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    The Advantages of Being at the Top of the List

    You can use the connection between Zipf’s Law and marketing to your advantage, once you understand how it works. For example, since studies have shown that there is a direct correlation between a customer’s perceived preference for a brand or product, and their actual buying habits, if you can build a solid reputation as the leader in a particular niche, then that perception will translate into your product being the one purchased most often.

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    The Value of Products Not at the Top of the List

    Another connection between Zipf’s Law and marketing is to remember that other products might not be popular individually, but can be made important if they are considered as a collection geared towards a particular audience.

    It’s also important to realize that when considering the full range of products that a company offers, the top preferred product sometimes accounts for a rather small percentage of the overall sales, when compared to the total for the entire product line. This means that even products that are further down the list in terms of popularity still account for a large percentage of total sales when considered together. Because of this, you can see why a company should not concentrate all their efforts on only the top few products or services.