Pareto’s 80:20 principle applies universally, though its proportions vary across markets and circumstances. While media choices have proliferated over the past 25 years, the core drivers of consumer behaviour remain largely unchanged. However, brand loyalty has eroded as information became ubiquitous, and price promotions ‘trained’ buyers to prioritize ‘value,’ often misinterpreted as the lowest price available.
In Fast-Moving Consumer Goods (FMCG) markets, the Pareto curve is typically flatter than in Business-to-Business (B2B) sectors. The rise of house brands has further flattened this curve, resulting in a significant percentage, often a majority of sales, occurring at discounted prices.
The work of the Ehrenberg-Bass Institute has refined Pareto’s rule into the ’20:30:50′ rule. This suggests that the heaviest 20% of buyers contribute around 50% of total purchases, the middle 30% account for 30%, and the lightest 50% of buyers account for 20% of purchases.
Market variations significantly impact purchase behaviour, influencing marketing strategies. For example, household laundry detergent is a category with near-universal penetration but relatively low purchase frequency, driven by household size and composition. In contrast, the disposable diaper market has low penetration but high purchase frequency among households with babies.
The choice of media, weight of media, and the nature of the message delivered will vary significantly between these two different categories. This is before considering the different behaviours and preferences of individual buyers in these markets.
These complex and interrelated success factors are often overlooked by amateur marketers, but are always considered by experienced professionals.
