Building the Neighborhood

You have to build out platforms before you can build a community.

Price Skimming

Pricing strategy to maximize sales revenue and minimize consumer surplus.

Review Rate Sales Estimation

Using review rates as a proxy for sales volume.

Marginal Sales vs. Marginal Effort

Is additional effort worth the additional sales?

Game Sales are Exponential

The distribution of game sales follows an exponential curve.

Fear of Missing Out

People make irrational decisions when they are afraid they might miss out on a big opportunity.

Consumer Surplus

The amount a consumer would have paid for a product above the price they actually paid.

Word of Mouth Disparity

Negative information is much more likely to be shared and is transferred much faster.

Shock Value of WoM

Explains how content can go viral.

Long-Tail

Having a large number of ongoing occurrences beyond the initial spike (high standard deviation).

Threshold Effects

How multiple marketing exposures can yield greater conversion rates.

Top of Mind

Staying in the forefront of a customer’s mind.

Product Life Cycle

How sales volume and customer characteristics change as a product ages.

Loss Aversion

People are more sensitive to losses than gains of similar magnitude.

Social Proof

Grassroots signals that a product or service is good.

Expectation Management

Tempering expectations to avoid hype and eventual disappointment. Important due to sensitivity to loss.

Perception is Reality

For most people, truth is irrelevant. Perception is their reality, no matter how distorted.

Cumulative Advantage

How advantages can stack over time to yield increasing advantages.

Framing and Positioning

Context is everything.

Price Anchoring

Setting anchor prices like suggested retail price, can influence perceived value.

Opportunity Cost

The cost of what you are giving up when you make a decision involving scarce resources like time and money.

Substitutes (In Consumption)

Alternatives to a given product or service.