What is the Goldilocks Effect?
The term ‘goldilocks effect’ derives from the children’s story “Goldilocks and the Three Bears”. In the story Goldilocks decides, amongst other things, to eat one of three bowls of porridge; the first being too hot, the next too cold, but the final one she picks for being “just right”. This, in a nutshell, is what the term goldilocks effect or ‘goldilocks pricing’ refers to. It is used to describe the practice of providing a premium as well as a budget option alongside the regularly priced product to make the standard option seem more appealing. A good example of this is the basic pricing structure adopted by most airlines. They encourage customers to see business class as good value by offering higher priced first class and economy options alongside it. A more everyday example can be seen in all mainstream coffee shops where the options range from small (tall) to large (venti), with regular (grande) in-between. The goal of this type of pricing is to push people who might usually buy t
