Originally Posted by Ropey Pilot
Globaliser:
And Kremen With the wine analogy you both seem to be missing a step out by assuming that the upgrade is given once /the full price is paid once respectively(although you are using the analogy to illustrate opposing points of view).
What the wine analogy shows is that if a customer regularly buys £20 bottles of wine (business) but also regularly buys £5 bottles of wine (economy) then 'upgrading' his wine for free may backfire. If it is done once and it is this that causes the customer to come back then it won't be long before he is disgruntled that it hasn't happened again (as I said IF that was the reason he kept coming back - if it was for other reasons then there was no need to entice him as such in the first place).
If you then 'upgrade' his wine regularly (to keep him coming back) he will soon buy expensive wine less frequently as there is a good chance he will get it for £5 anyway.
Fair enough, on the occasions when he MUST have decent wine he may still pay, but there is likely to be a sliding scale and a lot of occasions where he would like it but it is worth the risk.
Eventually the wine shop notices that although the customer comes back regularly their profits are down and the customer realises at the end of a particularly ropey bottle of Bulgarian Cab Sav whilst trying to impress a lady friend that he shouldn't have gambled and bought a full price one - or goes into the shop with a fiver and because he needs an expensive bottle that day gets into 'discussions' with the owner, leaves with a cheap bottle and the memory of an unpleasant scene and gos to Tescos next time anyway!
Maybe one can take an analogy too far (but I want a drink now anyway
)
But the point about upgrades is that airplane seats are a perishable commodity - more so than bottles of wine.
Vinegar from £20 wine is not more valuable than vinegar from £5 wine.
So, what should the shop do when they notice that the "Use By" date on their best, most expensive wines is approaching, and they are not selling well enough at their real value?