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Applying the 80/20 law to everyday
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[QUOTE="lonelysoldier1, post: 10188472, member: 244915"] This was a great PR move, with the blogosphere offering nods of approval towards Apples gesture. An article pertaining to this issue admits that, taken at face value, its a great gesture to the early adopters, without which the iPhone would have tanked at launch. The majority of your business will revolve around a small amount of your products. Its no secret that moviegoers and television show watchers love new stuff. They love seeing the newest Brad Pitt movies and sitting through a disproportionate amount of commercials to see what happens in the latest episode of Mad Men. Netflix, a physical and online distributor of movies and television shows, is a company which has tried hard to shift consumer focus from its most popular offerings to its less-watched titles. Since new releases typically cost more to obtain than older titles, profit margins for older titles are much larger. With that said, incentivizing customers to join Netflix for its collection of oldies will yield much higher profits than getting customers who are interested in the small offerings of new releases. To do so, Netflix employed a state-of-the-art recommendation system. After viewing a title, each consumers recommendations list would change to reflect their tastes and interests. In doing so, Netflix began to shift the focus away from its popular titles to more obscure, high-margin ones. As you can see from the graph below, between 2000 and 2005, Netflix had indeed shifted consumer demand to the vast majority of its older content. This is an example of a company which is focusing on the 80% of content which only contributes 20% of the revenue to increase the returns of such at a low cost. The 80/20 law has many applications in the world of business. While the idea of a law which governs business behavior is daunting, the fact that companies such as Netflix can apply the idea in a contrarian fashion affirms the cliche that one must know the rules before they can break them. [url]http://www.mbaonline.com/applying-the-8020-law-to-everyday-work/[/url] [/QUOTE]
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Applying the 80/20 law to everyday
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