Top Market Strategy

Applying the 80/20 Rule


This eBook includes

Formats : PDF (Read Only)

Pages : 134

ISBN : 9781606493106

Language : English

About the Book

Book description

Virtually every business seeks to increase its profit from customers, but few business executives realize that a universal principle governs their customer profitability.  They may be applying the 80/20 rule to sales, quality control, investing, production, or other business functions without realizing that the 80:20 ratio actually summarizes the Pareto distribution of inputs to outputs.  According to his equilibrium theory of relationships, stability is reached when inputs in the top 20% generate 80% of the outputs while inputs in the bottom 80% generate 20% of the outputs.  Recently mathematicians confirmed that the Pareto distribution is as universal as the normal "bell-shaped" distribution, but is log linear and predicts results, rather than probabilities.   

 Applying this universal principle to customer profitability, a typical business can predict that customers in the top 20% generate 80% of customer profitability (four times more profit than expected), whereas customers in the bottom 80% generate only 20% (one-fourth as much as expected).  

This means the 20% most profitable customers tend to be 16 times more profitable than the 80% least profitable customers.     In order to capitalize on the Pareto principle, a business should  

1.  segment its customers by their profitability,  

2.  distinguish the top 20% of its customers in top market segment from the bottom 80% of the customers in the bottom market segment, and 

3.  target the top market segment with its marketing strategies.    

 The purpose of this book is to show business students and executives how to implement this process and thereby achieve the predicted results.

Top Market Strategy

eBook Preview

Author Details

user profile image

Business Expert Press

Since 2008, Business Expert Press has been providing business students and professionals with precise, business information written by experts in their fields. Available in both print and eBook formats, our books can be obtained by consumers through a variety of sources including direct purchase on our website and major online bookstores. Business librarians can purchase our entire Digital Library, published and updated annually, in total, or in various configurations such as topical e-collections or custom bundles, through perpetual access or subscription.


Our students work
with the Best

Related eBooks

View More

Annual Membership

Become a valued member of Tutorials Point and enjoy unlimited access to our vast library of top-rated Video Courses

Subscribe now
People having fun around a laptop

Online Certifications

Master prominent technologies at full length and become a valued certified professional.

Explore Now
People having fun around a laptop

Talk to us