Real Case Stories

The dollar auction is a non-zero sum sequential game designed by economist Martin Shubik, a pioneer of game theory,  to illustrate a paradox brought about by traditional rational choice theory in which players are compelled to make an ultimately irrational decision based completely on a sequence of apparently rational choices made throughout the game, also known as "escalation of commitment" src wiki A one dollar bill is put up for auction with the following rule: the bill goes to the winner, however the second bidder also loses the amount that he bids. The winner can get a dollar for a mere 5 cents, but only if no one else enters into the bidding war. The second-highest bidder is the biggest loser by paying the top amount they bid without getting anything back. The game begins with one of the players bidding 5 cents (the minimum), hoping to make a 95-cent profit. They can be outbid by another player bidding 10 cents, as a 90-cent profit is still desirable. Similar...

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 ...

In his book,  Breaking Bad Habits: Defy Industry Norms and Reinvigorate Your Business , author Frank Vermeulen cites a case where the good intentions of the government actually fell flat on its face. The UK government had mandated all IVF clinics to publish their success rates which went up on a Government website. People then started treating this database as a ranking. The website was the government's good intention to implement transparency to empower patients and help them in decision making. What the government failed to factor in was that a clinic's success rate wasn't just dependent on their competency but also affected by the quality of the women. Younger women would probably have a higher chance of getting pregnant over someone who is 40 plus. However, what this resulted in was that clinic's started favoring patients who were most likely to get pregnant and rejected difficult cases. On the other hand, clinics who had expertise in treating difficult cases...

Black Friday  is an informal name for the day following  Thanksgiving Day in the United States , the fourth Thursday of November. It is regarded as the beginning of the Christmas shopping season.  In the 1980s , the term “Black Friday” began to be used by retailers to refer to the single day of the year when retail companies finally go “into the black” (make a profit) after being "in the red" for much of the year. Research shows that consumers would choose to shop on Black Friday again, only if their last year's experience brought them pride rather than regret.  For a consumer who bags a bargain in the sale only to find the item was further discounted at a later date, the initial feeling of pride may be tempered by the regret at having bought it too soon and not receiving an even bigger discount.   Source: The Psychology of Black Friday - how Pride and Regret influence Spending by Shalini Vohra The opposite is true, however, i f a consumer was app...

Watch the video to know how: Buy a copy of 'Catlin the Artist Shooting Buffalos with Colt's Revolving Pistol' ca. 1855 on Amazon.com Source: Samuel Colt: Arms, Art, and Invention (Wadsworth Atheneum Museum of Art) by Herbert G. Houze 10 Things You May Not Know About Samuel Colt by Christopher Klein Samuel Colt and George Catlin: Art and Product Placement by Rsimonse Catlin the Celebrated Indian Traveller and Artist, Firing his Colt's Repeating Rifle Before a Tribe of Carib Indians in South America Americans Really Like Their Guns by Kim Hjelmgaard

What do you see in the image above? Is it a diamond? Is it a rhombus? Or is it a square, rotated  45°? In 2008, Kraft Foods Canada capitalized on this confusion to revitalize a 78-year-old brand, Shreddies. Sales of this popular breakfast cereal had stagnated. According to a consumer research done in its Canadian market, customers wanted the brand to refresh itself without it changing anything.  How to increase sales of a product that is loved by its customers just the way it is? Kraft Foods accepted the challenge and launched the new & improved Shreddie, the 'Diamond Shreddies'. Hunter Somerville's idea, an intern with Kraft Food's creative agency Ogilvy & Mather Canada, became the basis of this campaign - an 'angular upgrade' to the original Shreddie, devised by a team of 'cereal scientists'.  Diamond Shreddies: Original Square Shreddie rotated 45° Packs of 'Diamond Shreddies' was launched with much fanfare. The ...

Source: The Legend of the Potato King , New York Times Blog Why the King had to Rebrand potatoes in 1774? by Sydney Burrows Consumer Behaviour and the Potato by Maud Evelyn Potato , Wikipedia

Our sense of sound, sight, touch, taste, self-motion, and smell don't work independently. Professor Charles Spence  of Oxford University has conclusively proved the intimate connection between our senses. He is, in fact, a leader in the field of Senseploration - the investigation of how our senses mingle and interconnect.  Marketing departments and product-design agencies have increasingly started using Spence's findings. In 2006, the FMCG giant Unilever commissioned a study to find whether volume and pitch of the sound from an aerosol affected a person's perception of the pleasantness or forcefulness of the deodorant inside. Based on the findings, the company invested in a packaging redesign for Axe deodorant , complete with new nozzle technology. The underarm spray, which is targeted at young men, now sounds noticeably louder than the company’s gentler, female-targeted Dove brand See how you score on this sensory test ! Source: Accounting f...

M&M's are part of the main operational food ration for the US Armed Forces. The candies have been part of NASA's every space shuttle mission since Columbia 1981 and are also on the International Space Station menu. Do you know why? Because the candy "melts in your mouth--not in your hand!"  In 1932, confectioner Forrest Mars Sr. moved to England and began manufacturing the Mars bar for troops in the United Kingdom. He  was looking to solve a key consumer problem of the time before air-conditioning: chocolate bars melted in the heat, so Americans stopped buying them.  During the Spanish Civil War , he  saw soldiers eating the British made  Smarties , a color-varied sugar-coated   chocolate   confect ionery , as part of their rations. Mars was thrilled by the unique construct of these candies and knew it to be the perfect solution to the sales slump that hit the family business every summer.  He returned to the Un...

In 1908, Sears issued its first specialty catalog for houses,  Book of Modern Homes and Building Plans , featuring 44 kit-house styles ranging in price from the US $360–$2,890. That's the equivalent of US $9,147-$73,431 today .  Cover of 1922 Sears Modern Homes catalog As Sears mail-order catalogs were in millions of homes, large numbers of potential homeowners were able to open a catalog, see different house designs, visualize their new home and then purchase it directly from Sears.  Sears reported that more than 70,000 of these homes were sold in North America between 1908 and 1940. In late 1918, Sears conducted a “race,” building two houses, a Sears Honor Built the pre-cut kit home and an identical house with no pre-cut lumber.  The pre-cut Honor Bilt Rodessa was the easy winner in this race, with 231 hours to spare (compared to the stick-built house).  Today, those two houses are still standing side by side as Sears struggles ...