4 ms·

I have sometimes speculated that the purpose of the $50 bottles is to make you think that you're being sensible by buying a $20 bottle, when really the $10 bott

I have sometimes speculated that the purpose of the $50 bottles is to make you think that you're being sensible by buying a $20 bottle, when really the $10 bottle is just fine. A few people will certainly buy the $50 bottle, but the real money is in upsale at the lower end.

dmix 4y ago
Reminds me of the loss leader strategy: https://en.wikipedia.org/wiki/Loss_leader https://en.wikipedia.org/wiki/Loss_leader A retail shop will put TVs on sale for 50% off but only keep 5 in stock. They advertise it everywhere, 100 people show up looking for cheap TVs, find it's out-of-stock and buy one of the expensive ones that are only 5-10% off.
- glxxyz 4y ago
  You're describing Bait and switch: https://en.wikipedia.org/wiki/Bait-and-switch https://en.wikipedia.org/wiki/Bait-and-switch
  - technothrasher 4y ago
    Right, that's bait and switch. A loss leader would be you selling milk at a loss in order to get people into the store and then get them to buy the high margin cookies as well.
  - dmix 4y ago
    I know the difference, that's still how it works in practice
- ketralnis 4y ago
  That's not a loss leader, and in fact depending on the jurisdiction might actually be illegal[0]. Loss leaders are intended to be actually sold. A loss leader might be Costco hot dogs or cheap razor handle for which replacement cartridges are the true profit centre [0]: https://portal.ct.gov/DCP/Common-Elements/Consumer-Facts-and-Contacts/Rainchecks https://portal.ct.gov/DCP/Common-Elements/Consumer-Facts-and... https://consumered.georgia.gov/ask-ed/2015-09-08/do-stores-have-offer-rain-check-if-advertised-item-not-available https://consumered.georgia.gov/ask-ed/2015-09-08/do-stores-h... http://www.ossh.com/firearms/caag.state.ca.us/consumers/general/rainchecks.htm http://www.ossh.com/firearms/caag.state.ca.us/consumers/gene...
- NikolaNovak 4y ago
  That sounds like bait and switch. Loss leader fwiw is a product that retailer intentionally and legitimately loses money on, in order to get you into the store where you'll buy other stuff. 20 years ago, Computers were perennially loss leaders at a best buy I worked at. We sold you $2000 computer at a small loss, hoping you'd buy printer paper and cartridges and cables and warsanty.printers are still notorious loss leaders of course.
- an_aparallel 4y ago
  rottisserie chickens for $3.50 in Australian supermarkets are great examples of loss leaders. They get you in there, to buy chicken...and other stuff :)
CharlesW 4y ago
In case you haven’t heard the term before, what you’re describing is called “anchoring”: https://en.wikipedia.org/wiki/Anchoring_(cognitive_bias) https://en.wikipedia.org/wiki/Anchoring_(cognitive_bias)
- lotsofpulp 4y ago
  A corollary to this is a restaurant selling the wine that they acquire for the lowest price at the mid tier price to maximize profit. A diner choosing a wine will most likely eschew the lowest price option, and obviously the highest price option will be out of most people’s reach, but customers will “spring” for the mid priced option.

dmix 4y ago

Reminds me of the loss leader strategy: https://en.wikipedia.org/wiki/Loss_leader https://en.wikipedia.org/wiki/Loss_leader A retail shop will put TVs on sale for 50% off but only keep 5 in stock. They advertise it everywhere, 100 people show up looking for cheap TVs, find it's out-of-stock and buy one of the expensive ones that are only 5-10% off.

glxxyz 4y ago
You're describing Bait and switch: https://en.wikipedia.org/wiki/Bait-and-switch https://en.wikipedia.org/wiki/Bait-and-switch
- technothrasher 4y ago
  Right, that's bait and switch. A loss leader would be you selling milk at a loss in order to get people into the store and then get them to buy the high margin cookies as well.
- dmix 4y ago
  I know the difference, that's still how it works in practice
ketralnis 4y ago
That's not a loss leader, and in fact depending on the jurisdiction might actually be illegal[0]. Loss leaders are intended to be actually sold. A loss leader might be Costco hot dogs or cheap razor handle for which replacement cartridges are the true profit centre [0]: https://portal.ct.gov/DCP/Common-Elements/Consumer-Facts-and-Contacts/Rainchecks https://portal.ct.gov/DCP/Common-Elements/Consumer-Facts-and... https://consumered.georgia.gov/ask-ed/2015-09-08/do-stores-have-offer-rain-check-if-advertised-item-not-available https://consumered.georgia.gov/ask-ed/2015-09-08/do-stores-h... http://www.ossh.com/firearms/caag.state.ca.us/consumers/general/rainchecks.htm http://www.ossh.com/firearms/caag.state.ca.us/consumers/gene...
NikolaNovak 4y ago
That sounds like bait and switch. Loss leader fwiw is a product that retailer intentionally and legitimately loses money on, in order to get you into the store where you'll buy other stuff. 20 years ago, Computers were perennially loss leaders at a best buy I worked at. We sold you $2000 computer at a small loss, hoping you'd buy printer paper and cartridges and cables and warsanty.printers are still notorious loss leaders of course.
an_aparallel 4y ago
rottisserie chickens for $3.50 in Australian supermarkets are great examples of loss leaders. They get you in there, to buy chicken...and other stuff :)

CharlesW 4y ago

In case you haven’t heard the term before, what you’re describing is called “anchoring”: https://en.wikipedia.org/wiki/Anchoring_(cognitive_bias) https://en.wikipedia.org/wiki/Anchoring_(cognitive_bias)

lotsofpulp 4y ago
A corollary to this is a restaurant selling the wine that they acquire for the lowest price at the mid tier price to maximize profit. A diner choosing a wine will most likely eschew the lowest price option, and obviously the highest price option will be out of most people’s reach, but customers will “spring” for the mid priced option.