Many examples of the 80/20 Principle can be found in the business arena. 20% of the product range usually accounts for 80% of total sales in monetary terms, the same can be said about 20% of buyers and customers. In addition, 20% of the product range, or 20% of customers, typically generate 80% of the company's profits.

• 20% of criminals commit 80% of crimes;
• 20% of drivers are responsible for 80% of road traffic accidents;
• 20% of those who marry are responsible for 80% of divorces (those who constantly get married and then get divorced greatly distort statistics, which gives a pessimistic and one-sided picture of the instability of marriages). Finally,
• 20% of children use 80% of the opportunities provided by the education system in a given country.

Even at home:

• 20% of your carpets account for 80% of the impacts leading to wear.
• 80% of the time, you wear 20% of the clothes you have.
• 80% of all false alarms when the anti-theft alarm is triggered are caused by 20% of possible causes.

• 80 percent of the profits give us 20 percent of all clients
• 80 percent of people died in 20 percent of all wars on Earth.
• 80 percent of production is provided by 20 percent of enterprises.
• 80 percent of our trouble comes from 20 percent of our neighbors.
• 80 percent of the time missed due to illness is accounted for by 20 percent of the workforce.
• We need 80 percent of documents in use in 20 percent of work situations.
• 80 percent of the dirt accumulates on the 20 percent of the most walked floor area.
• 80 percent of the food we buy is 20 percent of our daily costs.
• 80 percent of the laundry is in 20 percent of the garments.
• 80 percent of the best TV time comes from 20 percent of the programs most loved by viewers.
• Newspaper readers spend 80 percent of their time reading 20 percent of the materials published in the issue.
• We make 80 percent of phone calls to 20 percent of our subscribers.

So what did Vilfredo Pareto discover? It so happened that he was looking at the distribution of wealth and income in 19th century England. He found that most of the income and wealth belongs to a minority of people in the studied groups. It is possible that for Pareto there was nothing surprising in this. However, he also established two very remarkable, in his opinion, facts. The first was that there is a constant mathematical relationship between the size of a group of people (as a percentage of the total population under consideration) and the share of wealth or income controlled by that group. In other words, if it is known that 20% of the population owns 80% of material assets, then it is safe to say that 10% of the population have approximately 65% ​​of material assets, and 5% of the population - 50%. For Pareto, the main thing here was not the percentage figures, but the fact that the distribution of wealth among the population is predictably unbalanced.

Another Pareto find that delighted him was that this pattern of imbalance remained unchanged for statistics from different time periods and different countries. Whether it is data for England for any period of its history or data available to Pareto for other countries for different periods of time, it turned out that the scheme is repeated over and over again, and with mathematical precision.

Is this just a coincidence or something of great importance to the economy and society? Would this scheme work for data from other areas, not just wealth or income? Pareto was a brilliant innovator because it had never occurred to him to look at two systems of interconnected data — the distribution of income or wealth and the number of people earning income or own property — and compare the percentages between the two. (By now, this method has become commonplace and has led to major advances in areas such as business and economics.)

Unfortunately, although Pareto was aware of the importance of his discovery, he did not succeed in explaining it. He put forward a series of not bad, but incoherent sociological theories, in which he attached great importance to the role of the elite and which were appropriated by the fascists of Mussolini at the end of his life. For a generation, the importance of the 80/20 Principle has been underestimated. Despite the fact that some economists, especially American ones, realized the importance of this principle, it was only after the Second World War that two people simultaneously, but independently of each other, began to demonstrate to the world what the 80/20 Principle is capable of.

One of these pioneers was Harvard professor of philology, George C. Zipf. In 1949, he discovered the Principle of Least Effort, which was essentially a rediscovered and detailed Pareto Principle. Zipf's principle stated that resources (people, goods, time, knowledge, or any other source of a product) self-organize so as to minimize the work expended, and thus approximately 20-30% of any resource produces 70-80% of the related activities. with this resource.

To demonstrate the consistent recurrence of this pattern of imbalance, Professor Zipf examined population statistics, the field of philology, and industrial dynamics. For example, he analyzed the statistics of all marriages concluded in 1931 in 20 quarters of the city of Philadelphia, and showed that 70% of marriages were concluded between people living from each other at a distance of no more than 30% of the length of this territory.

Zipf gave the scientific explanation for the lack of order on the desktop and justified clutter with another law: things are as close to us as we often use them. Well, more intelligent secretaries have long ago realized that often used papers do not need to be filed!

Another pioneer in the practical application of the 80/20 Principle was the 1904 Romanian-born American engineer Joseph Moses Juran, a great quality guru; this man was at the origin of the quality revolution of 1950-1990. Juran made the Pareto Principle (or, as he sometimes called it, "the principle of the few that matters") synonymous with finding ways to improve product quality.

In 1924, Juran joined Western Electric, a manufacturing arm of Bell Telephone Systems Corporation, as a production engineer. Subsequently, he became one of the world's first quality consultants.

He came up with the brilliant idea of ​​using the 80/20 Principle, along with other statistical methods, to eradicate defective products and improve the reliability and usefulness of industrial and consumer goods. In The Guide to Quality Control, the first edition of which was published in 1951, Juran lavishly extolled the virtues of the 80/20 Principle.

Major American industrialists were not interested in Juran's theories. In 1953 he was invited to lecture in Japan, and here he found an audience ready to accept new ideas. Juran stayed in Japan and began working with several Japanese corporations, dealing with issues of improving the quality of consumer goods, their value for the buyer. It was only after 1970, when the Japanese threat to American industry became completely obvious, that the West began to take Juran seriously, and he returned to the United States in order to do for American industry what he did for Japanese. The foundation of this global quality revolution was the 80/20 Principle.

One of the earliest corporations to adopt the 80/20 Principle and to use it most successfully was IBM. This is why most computer systems specialists trained in the 1960s and 1970s are familiar with this theory.

In 1963, IBM found that about 80% of computer time was spent processing 20% ​​of the program's instructions. The company immediately rewrote the system software to make the most-used 20% more accessible and user-friendly, making IBM computers more efficient and faster in most applications than competing machines.

Next-generation personal computer and software developers such as Apple, Lotus, Microsoft have applied the 80/20 Principle with even greater sophistication and made their machines cheaper and easier to use. By doing this, they have conquered new masses of buyers who would have previously fled from the computer like fire.

The far-reaching implications of the Pareto Principle made themselves felt to the general public a century after Pareto discovered it, in recent discussions about the astronomical and ever-increasing incomes of superstars and the richest few in certain professions. Director Steven Spielberg made $ 165 million in 1994. Joseph Jamiel, the highest paid lawyer, received $ 90 million. It's just that directors and lawyers competent in their field, of course, earn negligible in comparison with these amounts.

In the twentieth century, there were massive attempts to equalize income, but inequality, eradicated in one area, unexpectedly reappears in another. In the United States, real incomes of non-government workers fell 14% from 1973 to 1995. In the 1980s, all income gains went into the hands of the richest 20%, and the unimaginable 64% of the gains went to the richest 1%. The lion's share of all shares of private investors in the United States is in the hands of very few owners: 5% of American families hold approximately 75% of all assets. If we look at the role of the dollar in the modern world, we will see the same picture: almost 50% of world trade settlements are made in US dollars, which far exceeds the 13% share of the United States in world exports. World foreign exchange reserves are 64% of dollars, although the share of the US gross domestic product in the world gross product is only slightly more than 20%. The 80/20 Principle will work anytime, anywhere, if you do not make a conscious, persistent and massive effort to overcome it.

Why is the 80/20 Principle so important?

The 80/20 Principle is so important because it contradicts what we think is logical. We can reasonably expect that all factors are of approximately the same importance. That all clients are equally valuable to us. That every deal, every product, and every dollar earned from a sale is as good as the others. That all workers in a given category bring about the same benefits. That any day, week or year is equally important to us. That all our friends are equally valuable. That all papers or phone calls should be treated with equal care. That education received at one university has the same value as education received at another. That all problems stem from a variety of reasons, so you shouldn't even try to look among them for a few key ones. That all possibilities are equally valuable, so it doesn't matter which one we choose.

We used to think that 50% of the reasons or resources invested in the business will give us 50% of the results or the final product.

However, the "50/50 fallacy" is one of the most untrue, harmful and deeply rooted in our brains. The 80/20 Principle says that if we examine and analyze two sets of data related to cause and effect, we are more likely to get a picture of imbalances. Numerically, this imbalance can be 65/36, 70/30, 75/25, 80/20, 95/5, or 99.9 / 0.1, or any other value. Moreover, the sum of two numbers in such ratios does not have to be equal to 100.

So why do we need the 80/20 Principle?

Whether you realize it or not, it leaves an imprint on your life, on the world in which you live, on your work. Understanding the 80/20 Principle gives you a sober view of what is really happening in the world around you.

As you can imagine, the 80/20 Pareto rule applies to all spheres of society, so it can be applied everywhere.

Time management. The Pareto principle in time management is quite simple. You analyze all the cases for the day, and choose from them those that led to the final result. You can simply cross out useless activities from your to-do list. The first work day planned according to this method will surprise you with its ease and productivity.

Self-development. Remember that you will be most successful in the area that works best for you. It is often not worth wasting your time mastering skills that are acquired “with a scratch”. Highlight your strengths. If you have developed communication skills, continue to develop them, and choose activities related to communication. If you are not attracted to human contact, telecommuting is a great alternative for you.

Finance. Decide from what sources you get 80% of the money coming into your pocket. Focus on them as they play a key role in shaping your budget. Ignore the rest of the options, because they only take time and effort. An exception may be passive sources of earnings (deposits, passive investments), since labor costs for their implementation tend to zero.

Productivity. Given that each person is tuned to their own biological rhythm, you will have to calculate yours. Determine when you are working most efficiently. This will be the period when you need to pay maximum attention to your work. The rest of the time, all your efforts will be ineffective.

Reading of books. The 80/20 Pareto Principle applies to the literature you choose. About 80% of the books you read have brought you nothing, except for wasted time and damaged eyesight. Choose those books that can enrich you spiritually. If there are works, familiarity with which has had a serious impact on you, then it makes sense to re-read them periodically. The Pareto rule means that you should not fill your free time with "light" uninteresting literature.

Unnecessary things. You have probably noticed that you have things in your apartment or car that you hardly use. They constantly interfere, take up a lot of space. The practice of space exploration Feng Shui calls such things energy blockages. By getting rid of them, you will feel a surge of inspiration and freedom from unnecessary junk.

Relationship. Meeting more and more new people, we may not realize which of them really plays an important role in our life. Analyze for yourself and make sure that only 20% of the people with whom you communicate emotionally fill you and bring something new into your consciousness. These are the people that need to be given the most attention. Short communication with close friends is much more important than hourly correspondence on social networks with virtual acquaintances.

QR code of the page

Do you like reading from your phone or tablet more? Then scan this QR code directly from your computer monitor and read the article. To do this, any "QR Code Scanner" application must be installed on your mobile device.

Pareto's Law? What is it? Many of you have heard this phrase, but you hardly know exactly what it is about. Most of us come across this rule in our field of work or study. His statement will be useful to many, because it teaches you to achieve maximum results, while making a minimum of effort. Pareto's law is widely used in practice in the field of economics, marketing, logistics, as well as in other specialized industries.

A bit of history

The law, or the Pareto rule, was first introduced into practice in 1941 by the American theorist Joseph Juran (1904-2008). He named it after Vilfredo Pareto (Italian economist 1848-1923). Since it was this scientist who noticed a pattern back in 1897, which was later named after him. Examining the division of agricultural land in Italy, Pareto found that about 80 percent of all land is owned by 20 percent of the population. It was the 80/20 ratio that subsequently became the main one in this rule. The spread of the influence of the Pareto law on various phenomena in the social and economic sciences was due to the English scientist Richard Koch and his book "The 20/80 Principle: Secrets of Great Achievements with Less Effort".

Today it is generally accepted that a person has three resources: time, money and mobility. A person who has all the listed resources in his arsenal can be called successful, and the work done - highly effective. But not everyone understands the principles of this law.
Each of us daily uses the Pareto law in school, at work, in everyday life, and without knowing it. If you become more knowledgeable about the 80/20 rule, your chances of success will be greatly increased.
The 80/20 ratio, by the way, is rather arbitrary and often, depending on the scope of use, fluctuates in one direction or another. While in some industries this ratio is 90% to 10%, in others it is 75 to 25 or even 70/30.
In the article we will try to figure out exactly where the Pareto law can, and sometimes even need to be used in practice.

Self-development

A relatively small number of people can consider themselves professionals in several industries at once. Indeed, in reality, only 20% of skills bring results. Although you can be quite successful if you take the Pareto law as a guide, and make every effort in the direction that suits you best. We strongly advise you not to be scattered about mastering the skills that are given through "I can not".
Highlight your strengths. If you have well-developed communication, why sit over a mountain of paperwork that does not bring any pleasure? Better to develop communication skills and choose an area where they can be useful.
Don't like communication? Freelance work may be a great alternative for your new career.

The Pareto Principle: Learning

In all likelihood, you have often noticed that you can remember no more than 20 percent of the material that you passed in school or university. Many may appeal to the low quality of education in our country. But, most likely, our "forgetfulness" will be a manifestation of this all-encompassing principle, which is very difficult to overcome.
Often managers use the Pareto principle in teaching. They are taught to choose only 20% of the tasks, the completion of which will achieve most of the maximum result of the work.

The Pareto principle is also an integral part of the teaching methods for people who want to successfully control their time. Using the 80/20 Principle in education would help high school and college students improve the quality of their learning and significantly reduce the time it takes to learn. Therefore, it would be worthwhile for these categories to familiarize themselves more with the classical formulations of the Pareto Rules - 20% of efforts can bring 80% of the result. As a result, the earlier you begin to define the main points during the training, the better results you will achieve. The main thing is that it is worth highlighting a fifth of the objects or material on which you need to spend more time. Using this approach will allow you to become a more successful specialist in your field in the future.

Related videos:

Computer and Pareto

Many users have a variety of software installed and countless files downloaded. For those who have a PC as a working tool, this cluttering of the workspace can be a real problem. Although, if you analyze in detail the contents of the hard disk, then in fact it turns out: only 20 percent of programs are actually used for daily activities on a computer or laptop. The same applies to a multitude of photos, various music and documents, with the improvement of which it is more and more difficult for the majority of "users" to cope. It's better to take your time and put things in order with programs and files.

Transferring only a small part of them to disks or flash drives, or even completely removing them, will not only make your computer "more spacious", but also increase its performance. It will also free up several additional "gig" of useful memory.

Time management

"How many things need to be done, I do not have enough time", "I do not have time, I will have to take work home."

Similar thoughts often “walk” in many heads.

Sometimes the thought even appears: 24 hours a day is not enough for all the things that need to be done. This is primarily due to the fact that each of us has our own biological clock. Some consider themselves a "lark", others - an "owl", and there are, of course, "pigeons". Some work to the accompaniment of loud music, while others want complete silence in order to concentrate on doing the work. Each of us has periods during the day or day when we are most active. Try to calculate your intervals of business activity - do important things or those that require increased concentration during these periods.

If you evaluate your working day, you will notice that real activities that produce results take about 20 percent of the time. The rest of the day is likely to be ineffective.

The same applies to scheduled meetings for each day. After analyzing all the planned activities, you can choose from them those that will give the greatest result, while the rest would be worth postponing to other days or canceling the meetings altogether, because this is a significant risk of wasting your precious time. In the future, you may even get into the habit of deleting useless activities from the list of daily tasks. The very first day, planned according to the Pareto rule, will not only save time, but also surprise you with its simplicity and productivity.

Pareto law in business

Applying the Pareto rule in business allows you to focus on the activities that bring the maximum profit. To do this, first of all, you need to streamline your affairs. Try to highlight those groups of goods or services that bring a total of up to 80 percent of the profit, and pay more attention to their development. The rest of the activity, most likely, will only take a colossal amount of time and effort, practically wasted.

An example is freelance work, which, unlike the main business, takes more time and effort than brings in funds. An exception is passive income like a deposit, since in this case your labor is close to zero.

Saving money

If you save always and everywhere, it will quickly turn you into a rather stingy person. But if you don't go to extremes and adopt Pareto's Law, you can significantly reduce your costs. Many financial problems arise when a person sees that he does not fully control his money. And here you can also take advantage of this universal law. After all, a significant part of the funds is spent on the same items in the budget. By analyzing and organizing expenses, you can easily see where most of the money earned is going. Try to allocate a fifth of the costs that are likely to receive the lion's share of funds, and consider how you can save on them. These include, for example, the constant renewal of the wardrobe.

"Friendship" Pareto

During our life, each of us communicates with many different people. With some communication is a lot of fun, with others frustration and wasted time. Getting acquainted and communicating, not everyone is able to immediately understand whether a new acquaintance will bring at least some benefit in life. If you refresh your memory of your relationships with friends and acquaintances and highlight those with whom spending time together brought positive emotions, and who will not hesitate to help in difficult times, then it turns out that there are probably not so many such people.

This also applies to several hundred “friends” on the Internet, in particular on social networks. In fact, maintaining connections with your family and true friends will give you such a dose of positive emotions that even a thousand shares or likes under the photo cannot compensate.

Reading books with Pareto

We draw a lot of life lessons from books, because this is a huge experience accumulated by generations. It is reading, perhaps, that most of all helps in the self-development of a person. We do not argue, there are books whose plot you want to quickly get out of your head. After analyzing the previously read literature, it turns out that, most likely, only a fifth of it really benefited readers. The rest did not add anything except the time spent and the deterioration of vision.
Try to select literature that will really be useful to you, will allow you to gain new knowledge for general development or a future profession. A detailed selection will allow you to enrich yourself spiritually to a greater extent.

Applying the Pareto rule will help you understand which books are worthy of attention, and which ones are better to put aside in the “distant box”. Reading reviews, comments or reviews on thematic sites will facilitate this choice. The application of the law applies not only to books, but also to posts on social networks, as well as various articles. It is also worth rereading those books or articles, familiarity with which had a significant impact on your worldview.

Pareto "on a diet"

There are thousands of diets on the world wide web, ranging from recipes from Hollywood stars to exotic Himalayan methods. Each of them was created to help a person change their eating habits, appearance, and even their emotional state. Using Pareto's Law in your diet will also help you achieve your goals. Many nutritionists of the world will agree with this; in the practice of creating dietary regimes, they also use the 80/20 ratio. If you generalize its use in dietetics, then it consists in excluding about 20% of foods from the diet, the absence of which will not worsen your well-being, but will allow you to normalize your weight and metabolism by 80 percent.

These results are caused by dietary restrictions on four food groups: flour, sugar, salt and alcohol. Not much, right? But at the same time, it is very effective, because their daily absence on the table will improve your metabolism and eventually bring your weight back to normal.

As an alternative to the Pareto rule diet, experts suggest abstaining from these four foods for four days, and on the fifth day there is whatever your heart desires. That's right: all those sweets that you love - coffee, chocolate, your favorite pasta or even cakes - whatever. This will allow your body to get the nutrients it needs, while at the same time you can maintain a healthy weight.

Try to restrict your intake of these four food groups for four days out of five - and you will see that Pareto's Law really works.

Pareto in everyday life

If you think carefully, you will see: in everyday life there are a lot of all kinds of unnecessary things that we keep at home for nothing. In many homes, there are more of them than we really need. Some things are a pity to throw away, while others are kept in case "might come in handy someday." Sometimes they constantly get in the way, taking up the right space. In feng shui practice there is even a name for such a phenomenon - energy blockages.

But if you soberly assess what exactly you have stored and, most importantly, how often you use it, it turns out: only a small part of all accumulated things are really needed in everyday life or life. Everything else takes up useful space not only at home, but also in the car or even in the wardrobe. The older brother's roller skates that he grew out of twenty years ago, hats or shoes that are out of fashion a long time ago - all this really only clutters up space in the closet and garage.

Understand the truth for yourself: those things that you have not used or worn over the past two years, with a high degree of probability, you will not need. Thus, the lion's share of things that you do not need (and others really need) can be given to the nearest boarding schools or orphanages. So you will not only clean the room, but also do a good deed. Just do not give out frank trash. This is, at least, not beautiful and not correct. Only good is worth giving.

Having made an assessment of the need for things, you can leave only the most necessary. By the way, order with things quite often also puts things in order in the head.

Pareto "learns languages"

The vast majority of people believe that the talent for learning languages ​​is manifested only in childhood. However, in fact, this is all fiction and each of us has the opportunity to learn several languages ​​at any age and in the shortest possible time. You just need to change the approach to mastering new words and grammar rules. Most of those who tried to learn a foreign language were finally disappointed in their abilities, simply not knowing where to start and how to actually learn words and grammar.

A new language is, first of all, new words. Many new words. A significant number of future polyglots give up this occupation, motivating with poor memory to process new vocabulary. In this case, it will be useful to know that you do not need to know all the words of a new language for yourself, because you will agree, in your native language you have not mastered all the words?

Then, again, the Pareto law will come in handy. For foreign study it sounds like this: 20% of the learned new words and grammar will allow you to understand up to 80% of what you hear or read.

An example is the most popular language that millions of people around the world study - English. 65% in English will only include the 300 most common words. It is from these most used words and phrases that frequency dictionaries are made up, which significantly accelerate the learning of a new language. But the assimilation of such a dictionary of 2000 words will allow you to understand 75-80% of the information in the target language.

PS

It is always difficult to readjust to something new, but if you treat the task correctly, then the solution will be quite simple. Pareto's law, which many have met in this article, conflicts with the fact that we are all accustomed to take it right and for granted. Its use in various fields of knowledge has long been widespread in the world. The examples given here are only a small part of the potential that it carries in itself. People often consider all the work that we put into achieving the result, equally important. But very often this is not the case at all. Many discoveries and achievements, the careers of successful businessmen and famous people are based on the Pareto law.

In the 21st century, the emphasis of the world community has shifted from scientific and technological progress towards the quality of a specific person. And this is no coincidence.

Perhaps someone will doubt the accuracy of the established ratio: eighty to twenty. But these numbers, of course, cannot be considered an axiom. Rather, it is a landmark.

Although for his time, the scientist quite accurately determined that eighty percent of Italian income is concentrated in the hands of twenty percent of families.

Pareto's law reflects the uneven distribution of causes and effects in nature, and it can be observed in almost any area.

For example, 20% of people own 80% of the capital, a fifth of regular customers bring most of the profit, etc.

It should be understood, however, that numerical values ​​are not essential. The very fact of the colossal difference between these indicators is important.

Lack of the Pareto principle

However, the Pareto principle also has its drawbacks. Despite the fact that it is fully justified, it is not possible to literally follow it in real life.

Let's put it differently. Even with the full realization of the fact that only one fifth of the efforts gives the lion's share of the result, the remaining 80% of the efforts still have to be spent. It is simply impossible to organize the activity in another way.

For example, a customer regularly uses only 20% of your products. But he doesn't like it if you only produce that percentage. He needs 100% so that he has a "assortment range" and "has plenty to choose from." This is what all processes have in common.

An interesting fact is that science has long known this drawback. Moreover, it is enshrined in the following statement: "20% of scientists make 80% of discoveries, but this would be impossible if it were not for the remaining 80% of scientists."

We hope that you have grasped the pattern.

Now we will give the most important consequences of the Pareto law.

• There are few key factors and many insignificant ones, so only a few actions can bring major success.
• The vast majority of efforts do not bring the desired result.
• There are always hidden factors - this should not be forgotten.
• As a rule, we get results different from what we planned (latent forces are at work).
• Most of the trouble occurs due to the action of a small number of highly destructive forces.
• Most of the actions (group or individual) are a waste of time, since they do nothing to achieve the desired result.

If you wish, you can easily notice that in all of the above consequences of the Pareto law, the same principle is used. Therefore, you can actively apply it in any area of ​​life: both at home and at work.

It may seem surprising, but the Bible mentions the described principle, revealed by an Italian scientist.

Joseph, being the governor of Pharaoh and knowing that soon 7 years of famine would come, issued a decree according to which all those given to Pharaoh were to bring a fifth (20%) of their harvest to the granaries of Pharaoh.

The Egyptians hardly noticed this expense from the general income, but Joseph was able to collect such state reserves of grain that the country survived the seven-year famine.

If you like interesting facts and you love - be sure to subscribe to. It's always interesting with us!

It is a popular way to measure performance and optimize performance across industries and businesses.

Companies often find that 80% of their profits come from 20% of their customers; that 20% of salespeople close 80% of sales and that 20% of value accounts for 80% of costs. The same over time: 80% of productivity takes 20% of the time, 80% of profits come from 20% of employees. Examples can be given further.

Of course, the numbers are not always exactly 20/80. It may be 76/24 or 83/17, but there is always a four to one ratio.

The 20/80 principle is widely used in business, but it can be applied in everyday life as well. First of all, at work.

What tasks do you spend 80% of your time on? On ? Messengers? Remember that this is only 20% beneficial and focus on the things that really matter. And what part of your work activity brings you 80% of your earnings, the demand from your superiors and the respect of your colleagues?

Try to answer the following questions as well. They seem complicated, but only because you've never tried to calculate it before.

• What 20% of things have the most value for you (80% or more)?
• What do you spend 20% of your time on while getting 80% of your happiness?
• Who in your environment makes you as happy as possible?
• What 20% of clothes do you wear 80% of the time?
• What's in the 20% of foods and meals that make up 80% of your diet?

Have you answered? Now consider how you can improve these areas of your life.

For example, if it turns out that 80% of your time you spend with those who give you only 20% pleasure, then you should change your social circle.

If you spend 80% of your time, for example, on the Internet, but enjoy only 20% of your time, think about what you do on the Internet? It might be worth changing activities or shortening the time spent at the computer.

If you use only 20% of your items, throw them away or sell them. It's the same with clothes.

By analyzing your diet according to the 20/80 principle, you will understand how healthy your diet is. If 80% of the time you eat fatty foods, is it time to go on a diet? Reconsider the proportions so that not-so-healthy food occupies only 20% of your table.

Rational Pareto's law is applicable even to the sphere of love, which at first glance is completely irrational. What 20% of actions provoke 80%? What were those 20% of conversations that made you and your partner 80% closer?

Most of us have never looked at relationships that way, and it can be very rewarding.

Every aspect of life has its own efficiency.

Using the 20/80 principle, you can not only assess the effectiveness of life, but also take control of it. Take responsibility and improve those areas where there are problems.

Of course, Pareto's law is not a panacea. You should not elevate it to the rank of a life credo and weigh absolutely everything according to this principle. But the 20/80 rule is a great tool to bring something new to your life.

Think about what you could change in your life based on the 20/80 principle?

Record your answers on paper or in the comments.

V. Pareto discovered the effect of concentrated tension. In this case, it is meant that focusing on vital activities most of all affects the achievement of the desired results. Hence the 20/80 rule: concentrating 20% ​​of the time on the most important issues can lead to 80% of the results. The remaining 80% of the time provides only the remaining 20% ​​of the results (Fig. 1).

In 1897, the Italian economist V. Pareto invented a formula showing that all benefits are distributed unevenly. In most cases, the largest share of income or wealth belongs to a small number of people. M.S. Lorenz (American economist) illustrated this theory with a diagram. Dr. D.M. Juran used the diagram to classify quality problems into a few essential and many non-essential and called this method Pareto analysis. He pointed out that in most cases the overwhelming majority of defects and associated losses arise from a relatively small number of causes.

Application of the Pareto law in marketing analysis

Consider the application of the Pareto principle, also called the Pareto law, in the marketing analysis of buyers or suppliers.

An Italian scientist engaged in sociology and economics, Vilfredo Pareto (1848-1923) in 1897 formulated a universal law, which was based on a large number of statistical measurements carried out by the author in many fields of activity, including finance, sales, economics, sociology, production. The main postulate of this law says: 20% of the efforts made give 80% of the result, and the remaining 80% of the efforts add only 20% to the result. Pareto used the same ratio in relation to the time spent on carrying out certain works.

The main provisions of the Pareto law can be summarized as follows:

• In any process, there is a very large number of factors or causes influencing it, of which only a few have a decisive effect. This rule "works" in many other areas. For example, it most often manifests itself in manufacturing processes when conducting quality analyzes and identifying the causes of manufacturing defects. Is the Pareto rule applicable in geopolitics? Rather, you can give a positive answer, since out of almost 200 countries in the world, only 20-30 are the most influential. And in sports? Of the 400 rated professional tennis players in the world, only the first few dozen mainly share prize funds and compete in matches.
• Most of the effort put into the business is spent ineffectively, without the desired return, and only a small part of them leads to a positive result.
• It is difficult to understand a large number of individual events and make the right decision based on their analysis, since these events can be very different in nature and essence.

From a marketing application point of view, this refers to the analysis of consumers and suppliers, of which some enterprises have hundreds or thousands.

In the practical application of the Pareto rule, the ratio of 20: 80 is not exactly maintained. This is a conventionally generalized relationship. In reality, the ratio can range from 5: 95 to 30: 70, depending on many factors.

A typical form of distribution of the number of buyers depending on the share of income brought is shown in Fig. 3.9.

Rice. 3.9. The ratio of purchase volumes to customer profitability

In fig. 3.10 shows areas A-D, which distinguish groups of different clients in terms of profitability. Area A denotes a group of unprofitable clients, area B - break-even clients, bringing zero or almost zero profit, area C - a group of buyers, making a profit, but not high, and area D - a group of very profitable clients.

Rice. 3.10. Distribution of buyers by income

A significantly smaller part of buyers (about 20%) provides the majority of purchases (about 80%), a limited part of the assortment of a retail store (about 20%) brings the bulk of income (about 80%). For example, ZAO Klinsky Pivokombinat had three groups of wholesalers. Table 3.18 shows the sales volumes as a percentage of total revenues for these three groups.

Table 3.18. Distribution of income from buyers

Within this framework, the application of the Pareto rule can simplify the conduct of marketing analysis, facilitate decision-making on organizing work with suppliers and buyers, and help in developing the principles of relationships with them.

Consider the procedure for constructing a Pareto chart and the principle of identifying customer groups. Suppose that according to the results of the work of the enterprise, let's call it conditionally "Finishing", for a certain period of time, services were provided in the amount and for the consumers indicated in table. 3.19. Table form 3.19 is quite common in practice, since it is a typical table of operational reporting.

Table 3.19. Summary reporting on performance results

Table 3.19 reflects the consumers of the company's services, the number of services purchased, the unit cost of the purchased service and the amount of payment received. In fig. 3.11 shows the distribution of the shares of buyers in the total sales.

Rice. 3.11. Distribution of consumption shares

However, from the form of presentation of the calculated consumption shares, it is impossible to identify trends and typical consumer groups that are necessary for the analysis. Therefore, the next step in constructing the Pareto distribution is to rank consumers, for example, according to the criterion of the received gross income. In practice, other criteria can be chosen as the maximum profit, the number of one-time purchases, the frequency of purchases, etc. In table. 3.20 shows the distribution of consumers in descending order of the purchase amount.

Table 3.20. Ranking of consumers by hem in purchases

The corresponding distribution of ranked consumers is shown in Fig. 3.12. This form of presentation is very clear, since there are clearly visible groups of consumers with relatively high and low shares.

Let's carry out an additional construction, which will make it possible to obtain the cumulative (total) distribution of the shares of consumers in the total income. To do this, starting with the second, we will add the sums of the shares of all previous consumers to the current one (see the column "Total share" of Table 3.21). The cumulative distribution of consumers is plotted in Fig. 3.13.

Rice. 3.12. Ranking of consumers by share in the generated income

Rice. 3.13. Cumulative distribution of consumers in total sales

All consumers add up to 100% of the income. From the distribution, you can get formal signs of assigning a consumer to one or another group: of primary or secondary importance, taking into account the ratio of 20: 80.

Let us analyze the distribution shown in Fig. 3.14. We approximate it to the corresponding curve shape. The Pareto standard distribution is described by the density function (for a positive parameter c) by the following formula:

f (x) = s / x s +1

c - parameter (shape) of the distribution; c> 0, x≥ 1.

Depending on the number of consumers (from 1 to infinity) and the volumes of consumption of each of them (from equal shares to very different ones), the Pareto distribution forms can take the form shown in Fig. 3.14.

Rice. 3.14. Possible forms of Pareto distribution

The ratio 80: 20 is considered to be a normal and fairly stable situation in the business of a particular enterprise. If the analysis shows that the ratio is, for example, 90: 10, then this is a signal that the company is becoming financially dependent on a small part of its partners or customers, who at a certain point in time may stop working with this company and disrupt its entire system. A situation where the ratio is, for example, 50: 50, can mean that the company does not pay attention to the definition of its target segments and scatters its efforts without a good return. The foregoing does not apply to cases where the enterprise is a subsidiary of a large firm and provides certain links of functioning or is unitary.