Which of the Following Statements Is $\bold{FALSE}$ Regarding the Use of the 80/20 Rule in Managing Customer

question 13

Multiple Choice

Which of the following statements is $\bold{FALSE}$ regarding the use of the 80/20 rule in managing customer relationships?

• A) Advances in technology and data collection techniques allow firms to profile customers in real time.
• B) Twenty percent of customers provide 80 percent of business profits.
• C) Some customers are too expensive to keep given the low level of profits that they generate.
• D) The 80 percent of customers in the bottom tier should be fired so the firm can focus on its top customers.
• E) The firm's top customers are the most obvious candidates for retention strategies.

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Definitions:

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum price each consumer is willing to pay, capturing the entire consumer surplus.

Deadweight Loss

The inefficiency caused by market distortion, typically due to taxes or subsidies, leading to a loss of economic efficiency.

Price Discriminate

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on the willingness to pay of different market segments.

Resale

The act of selling a product or service again, often used goods, to another buyer.