Real Case Stories

The Pizza Principle, or the Pizza-Subway Connection, in New York City, is a humorous but generally historically accurate "economic law" proposed by native New Yorker Eric M. Bram. He noted, as reported by The New York Times in 1980, that from the early 1960s "the price of a slice of a plain, cheese or regular pizza has matched, with uncanny precision, the cost of a New York subway ride." In 1985, the late writer, historian, and film critic George Fasel learned of the correlation and wrote about it in an op-ed for The New York Times. The term "Pizza Connection" referring to this phenomenon was coined in 2002 by New York Times columnist Clyde Haberman, who commented on the two earlier publications of the theory in the Times, and predicted a rise in subway fare. In May 2003, The New Yorker magazine proclaimed the validity of the Pizza Connection (now called the pizza principle) in accurately predicting the rise of the subway (and bus) fare to $2.00 ...

CEO of Ryanair Michael O'Leary's vision is to make most of its seats free by the end of this decade. The goal, he says, is to make money by getting a share of the shopping and retail revenues from airports, where the airlines attract traffic. In 2016, Ryanair earned $2 Billion in ancillary revenues from snacks, check-in luggage, seat selection, insurance etc, amounting to nearly 30% of its total revenues. Mr Leary's predictions are bolstered by the fact that a quarter of its customers are already being offered free fares. Passengers only pay the taxes and duties while the airlines make money through extras like checked luggage, snacks, food, water and in-flight merchandise sales. source: Principles of Marketing: A South Asian Perspective,  13th Edition, Kotler Philip Further, the airline also saves costs by selling 99% of the tickets online with offers of travel insurance, hotels, car rentals and various other packages. To reduce costs, they have introduced...

This story talks about how an Entrepreneur started a paint shop but nobody would buy from his store. In the evenings he used to hang out with mechanics and body shop owners and over the course of time figure out that their biggest problem was wasted paint in body touch-ups. As the minimum paint can was of 500ml a lot of it would get wasted during small touch up works. He then pioneered the concept of packaging paint in small cigarette tin boxes (125ml) and thus the CT (cigarette tin) measure was born in Mangalore.

The Goldilocks principle is derived from a children's story "The Three Bears" in which a little girl named Goldilocks finds a house owned by three bears. Each bear has its own preference of food and beds. After testing all three examples of both items, Goldilocks determines that one of them is always too much in one extreme (too hot or too large), one is too much in the opposite extreme (too cold or too small), and one is "just right". The Goldilocks principle states that in a given sample, there may be entities belonging to extremes, but there will always be an entity belonging to the average. Or in other words, in a sample, there will always be a U-shaped distribution. When the effects of the principle are observed, it is known as the Goldilocks effect. src wiki In economics, a Goldilocks economy sustains moderate economic growth and low inflation, which allows a market-friendly monetary policy. A Goldilocks market occurs when the price of commodities si...

In his book "Influence, The Psychology of Persuasion", the author Robert Cialdini cites 2 examples where change in pricing/positioning influenced the decision of the buyer. In the first example a Jewelry shop owner was desperately trying to sell a piece of Turquoise set. It was the peak of the tourist season with the store full of customers but the set just wouldn't move despite the set being of good quality and reasonable price. She tried positioning it in the store and even getting the sales staff to push it but to no effect. Finally, in desperation when she was leaving for an outstation trip, she left a note to her Sales Head instructing her to price it at 1/2. When she returned she was not surprised when she was told that the pieces were sold off however she was shocked when she learnt that her sales Head misread the 1/2 to 2 and had in fact doubled the price. The author talks about preconceived notions that we have and one of them that we have is that Expensiv...

In his book Misbehaving: The Making of Behavioral Economics, the author Richard Thaler highlights an incident early in his teaching career when he gave an extremely tough test to his students. The average score for the test was 72/100 which resulted in a huge uproar by his students. To find a solution to this problem, instead of making the test easier he made the test harder but he increased the maximum score to 137. The average score was 96/137 which was 70% lower than the earlier average of 72%. However, the students were delighted with the absolute score of 96. This technique is also used by Marketers called Framing . The framing effect is an example of cognitive bias, in which people react to a particular choice in different ways depending on how it is presented; e.g. as a loss or as a gain. Buy the book at

The Decoy Effect or the Asymmetric Dominance effect is a phenomenon whereby consumers will have a specific change in preference between 2 options when also presented with a third option.  Source:  Wikipedia National Geographic conducted an experiment in a movie theater where consumers were presented with 2 Popcorn pricing options. A Small for $3 and a Large for $7. Consumers preferred the Small Popcorn. An additional variant Medium at $6.50 was added between the two. Buyers now had a distinct change in preference and opted for the Larger Popcorn. The Decoy effect is used extensively by Marketers in Pricing Strategy. Read more: How to use Decoy Effect to help buyers choose the right option Watch the Nat Geo video here: Also, watch how Economist used this effect to designed its subscription model: