Train collectors Jack McCoy and Sandro Dias have decided to open a store that sells train memorabilia-everything from toy train sets to full-sized railroad signs.After 18 months in business,they have noticed that most of their sales are to the same small group of customers (about 40 people)even though they have records to show there are over 200 active train collectors within a 50-mile radius of their store.Their retailing experience is supportive of which of the following?
A) the rule of demand
B) the 80/20 principle
C) the optimizer principle
D) the min-max rule

Question

Quizplus · Accepted Answer

The situation described in the scenario is consistent with the 80/20 principle, also known as the Pareto principle. This principle states that roughly 80% of effects come from 20% of causes. In the context of sales, it suggests that a small group of customers (20%) will account for a large proportion of sales (80%). In this case, 40 customers out of 200 account for a significant portion of the store's sales. Understanding this principle can help the store owners to focus their marketing efforts on the most valuable customers, and to develop strategies to attract new customers who may also fall into this high-value group.

Train Collectors Jack McCoy and Sandro Dias Have Decided to Open