Movement vs Shift in Demand
Sales can move because you changed the price, or because something changed what customers want at every price. Mixing the two leads to wrong conclusions about campaigns.
The Marketing Atlas / economics
How value works.
48 illustrated lessons on demand, costs, competition, macroeconomics and evidence.
Browse lessons ↓Microeconomics
A15 lessons ↗A25 lessons ↗A34 lessons ↗A44 lessons ↗A54 lessons ↗
Demand and Elasticity
See how volume responds to price, income and competitors. Measure that response in your own market before you forecast with it.
Costs, Margin and Break-even
Count what a price change really costs. Decide on marginal numbers, ignore sunk costs and calculate break-even volume before any discount.
Competition and Game Theory
Predict how a few large competitors react to each other. Avoid the price-war trap and respond in proportion.
Price Discrimination and Bundling
Charge different customers different prices for good reasons. Design pack ladders, bundles and versions that customers can choose between.
Networks, Switching and Customer Value
Understand what keeps customers with you and what each one is worth. Spend on acquisition and retention in proportion to that value.
Macroeconomics
B14 lessons ↗B23 lessons ↗B34 lessons ↗
Growth, Income and Spending
Read how the economy reaches your customers' wallets. Track real income and affordability, not just headline growth.
Inflation and Currency
Convert prices and revenue into real terms. Handle price rises and currency moves without breaking trust.
Rates, Policy and Tracking
Follow interest rates, taxes and remittances. Keep a short tracker and decide in advance what you will do when each number moves.
Behavioural economics
C14 lessons ↗C23 lessons ↗C33 lessons ↗C41 lessons ↗
Gains, Losses and Reference Points
Judge every price change from the customer's starting point. Present gains and losses the way people actually feel them.
Choice Architecture and Evidence
Design menus with honest expectations. Effects at scale are smaller than in published studies, and some famous effects are weak.
Time, Fairness and Norms
Price for customers who want benefits now, punish unfair prices and copy people like them, without exploiting any of it.
Claims to Drop
Retire popular claims that failed repeat testing or have no study behind them.
Application
The illustrated library
Find your next useful idea.
Search by concept, question or the decision in front of you.
No matching ideas.
Price Elasticity of Demand
Elasticity is the percentage change in volume for each 1% change in price. It decides whether a price change raises or lowers revenue.
Three Levels of Elasticity
The same word, elasticity, describes three different reactions: the whole market, one operator, and one pack. Each answers a different business question.
Cross-price and Income Elasticity
Cross-price elasticity shows how a competitor's or a complement's price affects your volume. Income elasticity shows which packs grow or shrink when customers' incomes change.
Measuring Elasticity with Your Own Data
You can estimate elasticity from past price changes, randomised tests, surveys or transaction models. Randomised tests with a control group are the most trustworthy.
Marginal Cost and Peak-load Pricing
Marginal cost is the cost of one more unit. On a quiet cell site it is near zero; on a full one it is high, because extra traffic slows everyone.
Sunk Cost and Opportunity Cost
Sunk costs are past spending you cannot recover; they should not drive today's choices. Opportunity cost is the value of the best option you give up.
Break-even Volume for a Price Cut
A blanket price cut needs a certain amount of extra volume just to keep total profit the same. The lower your margin, the more volume you need.
Targeted Offers and Buyers Who Would Buy Anyway
A targeted discount gives money to everyone who redeems, including customers who would have bought at full price. Only a control group shows the real effect.
Economies of Scale and Scope
Economies of scale lower average cost as volume grows. Economies of scope lower cost when one set of assets carries several services.
Market Structures and Concentration
Markets range from perfect competition to monopoly. Mobile markets are oligopolies, where a few large sellers watch and react to each other.
The Price-war Trap
The prisoner's dilemma explains price wars. Cutting looks better for each operator whatever the other does, so both cut and both earn less.
Repeated Games and Competitor Reactions
Because operators meet every month, a price cut usually wins share only until it is matched. Past behaviour is the best predictor of the next reaction.
Better Moves than a Blanket Price Cut
A blanket cut gives margin to every customer. Targeted offers, fighter brands, added value and public commitments defend share at lower cost.
Three Types of Price Discrimination
Price discrimination means different prices for nearly the same product. It comes in three types: personal, menu and group pricing.
Designing a Pack Ladder
A pack ladder is the menu from smallest to largest pack. Good ladders let customers sort themselves without leaking revenue.
Why Bundling Works
Bundling sells several products for one price. It earns more than separate pricing when different customers value the parts differently.
Two-part Pricing and Versioning
Two-part pricing charges a fixed fee plus a usage price. Versioning sells the same product at several quality levels so customers sort themselves.
Network Effects and Two-sided Markets
A network effect means each extra user makes the product more valuable to others. Two-sided markets, such as wallets, link users and merchants.
Switching Costs and Dual-SIM Customers
Switching costs are what customers lose or must do to move. With dual SIMs, customers often stay but shift spending, so share of wallet matters more than churn.
Information Asymmetry
Information asymmetry means one side knows more than the other. It causes hidden-quality problems, adverse selection and moral hazard.
Customer Lifetime Value
Customer lifetime value is the total margin a customer brings over their life with you, valued in today's money. Retention is usually its biggest lever.
How the Economy Reaches Your Sales
Inflation, fuel, wages, exchange rates and interest rates reach customers through real income, handset prices and credit. You see the result in pack mix, SIM spending and upgrades.
GDP: Real, per Person and Shared
GDP measures what a country produces. For marketing, real growth per person and how it is shared matter more than the headline.
Affordability: Price Against Income
Affordability compares price with income. The '1 for 2' target says 1 GB should cost no more than 2% of average monthly income.
The Business Cycle
Economies move through expansion, slowdown, recession and recovery. Customer behaviour and the right marketing response change at each stage.
Nominal vs Real
Nominal numbers are in today's money; real numbers remove inflation. In high-inflation markets, nominal growth can hide a real decline.
Money Illusion and Price Rises
Money illusion means people think in nominal prices. A pack that stays at the same price feels unchanged even as inflation makes it cheaper in real terms.
Exchange Rates, Fuel and Handsets
When the local currency weakens, dollar-priced equipment, fuel and imported handsets cost more. Dearer handsets slow upgrades, which slows data growth.
Interest Rates and the Discount Rate
Central banks raise rates to fight inflation or defend the currency. Higher rates make credit dearer and lower the value of future customer revenue.
Who Really Pays a Tax
Who bears a tax depends on who can walk away. If customers keep buying, operators can pass most of it on; if customers would cut back, operators absorb it.
Remittance Households
Remittances are money sent home by people working abroad. Receiving households spend more on mobile and need cheap ways to stay in touch.
The Macro Tracker
A macro tracker keeps six economic numbers and your own fast signals on one page, each linked to an action agreed in advance.
Prospect Theory and Reference Points
People evaluate gains and losses from a reference point. Losses can weigh more heavily than equivalent gains, but the size of that difference varies by context.
Separate Gains, Combine Losses
Separating gains or combining payments can change how an offer feels. Treat these presentation rules as hypotheses to test with your customers.
Reference Prices and Shrinkflation
The last price paid becomes the customer's reference point. Shrinking pack size quietly avoids the price shock but damages trust when noticed.
Prize Promotions and Small Chances
Probability weighting means people overweight small chances. A vivid prize can motivate more than a guaranteed discount of the same expected cost.
Nudges at Scale
Nudges published in academic journals show much bigger effects than the same kinds of nudges run at scale by organisations.
How Strong Is the Evidence?
Behavioural tactics differ in how well the evidence holds up. Grade them as strong, moderate or contested before building a forecast on them.
All-in Prices vs Partitioned Prices
Partitioned pricing splits a price into a base plus fees. It looks cheaper at first glance, and customers feel misled when the fees appear.
Present Bias and Pay-later Offers
Present bias means people weigh today far more heavily than any later day. 'Get it now' feels valuable and 'pay later' feels cheap.
Fairness in Pricing
Customers judge whether a price is fair, not only whether it is affordable. Unfair rises push spending to the other SIM and to the regulator.
When Social Norms Backfire
Social norms tell people what others do. They can shift behaviour at scale, and they can pull people above the average down towards it.
Popular Claims to Drop
Several popular behavioural claims have no study behind them or failed large replications. Retire them from decks and briefs.
The Ten-question Decision Checklist
Ten questions that pull the whole atlas together before any pricing or promotion decision.
Responding to a Competitor's Price Cut
When a competitor cuts price, a targeted match for customers at risk usually loses least. A blanket match gives margin to customers who were never leaving.
Price Review After High Inflation
After high inflation, unchanged prices are real price cuts. A careful review protects the poorest customers while restoring margin elsewhere.
Retention Offers with a Control Group
Retention offers look successful by redemption, but many redeemers would have stayed anyway. Only a control group reveals the real effect.