This pattern classifies entities based on values, grouping entities together that contribute to a certain percentage of the total. A typical example of ABC classification is the segmentation of products (entity) based on sales (value). The best-selling products that contribute to up to 70% of the total sales belong to cluster A. The products making up the next 20% of sales are in cluster B, whereas the products representing the last 10% of sales, belong to class C. Hence, the pattern is named after the three clusters (ABC).
ABC classification can be either static or dynamic. Static ABC classification assigns a class to each product statically, so that the class of a product does not change depending on the filters being applied to the report. Dynamic ABC classification computes the class of each product dynamically, based on the report filters. As such, in the dynamic ABC classification the clustering of product needs to be done in measures, resulting in a less efficient – albeit more flexible – algorithm.