Greed. It's what kills the Golden Goose

I have been a paid member of the United Airlines Red Carpet Club (now the eponymous United Club) for many, many years.  I have dutifully paid annual dues - now $500 for individuals and $750 for couples - because I received a value commensurate with the price.  What I value is a quiet oasis in the middle of chaos.  And that, to me, is worth the price. 

A few years ago, some brilliant marketer decided to change the model.  In addition to selling annual memberships at a fairly high price (and resulting in some feeling of exclusivity), the airline now offers one time passes for $50 per entry.  So, unless you're flying more than 10 segments a year, you don't have a good reason to buy the annual membership.  I suspect the airline will see an erosion in membership as a result.  What's worse, by offering an inexpensive entry to the hoi polloi, the club has 1) become more crowded and chaotic, and 2) has lost its cachet as something special.

I'm sure that the person who suggested this based the recommendation on the premise that it would increase volume.  And it did.  The clubs are very crowded - but at the cost of eroding the brand and its margins.

The same thing can happen with many products and categories.  Stanley Plog wrote a wonderful book titled "Leisure Travel" all about marketing destinations.  In it, there's a wonderful chapter titled "Why destinations decline and fall and nobody does anything about it."  The problem is over-development and the motive is greed.  Hawaii's Waikiki resort area was greatly overdeveloped ... and the cost of redevelopment has been high (but necessary to make the destination attractive again).

I guess the moral of the story is that you need to watch the diet of your golden goose.