According to the "80/20 rule":
A) marketing accounts for 80 percent of the consumer's dollar.
B) only 20 out of every 100 firms use formal marketing control programs.
C) about 20 percent of a typical firm's customers are unprofitable to serve.
D) even though a firm might be showing a profit, 80 percent of its business might be coming from only 20 percent of its products or customers.
E) None of these is correct.

Question

Quizplus · Accepted Answer

The 80/20 rule, also known as the Pareto Principle, states that 80 percent of a company's sales come from only 20 percent of its customers or products. This means that even if a firm is profitable, it could be heavily reliant on a small portion of its offerings or customer base. Option A is incorrect because it overgeneralizes the role of marketing in consumer spending. Option B is a unrelated statistic about marketing control programs. Option C is partially correct, as the principle can also be applied to customer profitability, but it oversimplifies the concept by suggesting that all firms have a 20 percent unprofitable customer base.

According to the "80/20 Rule