In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, noting that 20% of people owned 80% of wealth. Pareto’s Law reminds us to give preference to the 20% that matters and that produces 80% of the results. The 80/20 rule also applies to sales which states that 20% of customers account for 80% of the profits or 20% of products resulting in 80% of total sales. 80/20 This law leads to the pursuit of niche that generates profits, which creates value. The latest practices in intelligence and CRM data have given us the task of identifying each of the products or services that comprise our portfolio in order to filter out those that generate increased sales or higher level of profitability.
But what about the forgotten repertoire of products that are not as defendants?, Is it really a good strategy to dispose of this group of products so popular? If all know the famous Pareto Law, try to sell the most popular and that is where the competition will be tougher. Michael Porter recommends us in the competitive strategies to differentiate ourselves from our competition. One of the ways to differentiate can be focused on selling products or services not so popular, so-called “rare products.” Long Tail Theory in 2004 originated a theory very interesting business models or so-called Long Tail Long Tail. According to this theory, in some areas 50% of sales being generated from products not as popular or rare products.