Daniel McCarthy

Who they are

The IDEAS/RePEc record of the 2019 paper lists McCarthy at Emory University and Winer at New York University. Beyond this paper, the sources used by this publication record nothing further about McCarthy's career, and this page does not supply it.

The paper builds on the 2017 study by Baek Jung Kim, Vishal Singh and Russell Winer, which found a mean ratio of 0.73 across 22 packaged-goods categories, and extends the question to companies that do not sell packaged goods.

Key papers

McCarthy, D. M., & Winer, R. S. (2019). "The Pareto rule in marketing revisited." Marketing Letters, 30(2), 139-150. doi:10.1007/s11002-019-09490-y.

The overall average ratio was 0.67 across 339 publicly traded non-packaged-goods companies. Product companies and service companies were close together, at 0.67 and 0.66. Non-subscription businesses had a higher ratio, 0.68, than subscription businesses, 0.59.

Key ideas

The rule overstates concentration. At 0.67, the top fifth of customers supplied about two thirds of sales on average, not four fifths. That sits above the roughly 50 per cent printed in Byron Sharp's How Brands Grow and below the 0.73 that Kim and colleagues found for packaged goods.

Subscription businesses are less concentrated. The ratio was 0.59 for subscription businesses against 0.68 for the rest.

Profit may be more concentrated than sales. The paper reports preliminary results showing much higher ratios for profits than for sales. The authors describe these results as preliminary, so the figure is a pointer and not a finding.

See Law of the Vital Few and The Sixty Twenty Rule.

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