Do you consider yourself an impulsive buyer, or do you make a shopping to-do list, and stick to it no matter what? If you belong in the first category, chances are that the retail stores are using it to their advantage. Furthermore, if you’re also unaware of the difference, or lack thereof, between store brand, off brand and generic brand goods, you might be leaving a lot of money on the table. Supermarkets always place their popular products in such ways that it’s impossible to avoid it, and oftentimes try to capture our attention with their special sales and “great deals” that last for only the shortest amount of time. As a consequence, we often overshoot the budget we originally planned for.
Luckily, most individuals are perfectly aware of these tactics, and they try to combat it by creating the aforementioned shopping lists. These people consider themselves as “smart” buyers, and they believe that this behavior helps them save quite a bit of money. What most of them fail to realize is that big name brands are ripping them off in a completely different way.
Sometimes, you’re just paying for the packaging
By sticking with the premium brands, you might be thinking that you’ll end up with a superior product on your hands. In most cases, this is dead wrong! A friend of mine recently shared a story with me that really caught me off guard.
He works for a major food processing company that produces popular frozen meals you see everywhere. Recently, they came up with a new product, invested a lot of money into the development and branding, but unfortunately for them, the initial sales figures were terribly underwhelming. The price itself wasn’t much of a problem, as it retailed for .99 for a well-known budget brand. Eventually, they decided to change the plan of action.
What they did next was brilliant. They separated the same product into two sections. The first one was sold for .80, and it used a common store brand packaging. However, they also created a premium version, where the packaging was done in a very professional way, and they set the price tag at $1.45. The results? Premium brand sold out in no time, in rates of 3/1, compared to the cheaper option. At the end of the day, this begs a question: are you really paying for high quality, or are you just being bamboozled?
But, what do the doctors say?
Fear is also a big part of what keeps this corporate machine going. Shoppers who don’t really pay too much attention to these sorts of articles stick with popular brands almost every time, avoiding generic and off-brand merchandise as much as possible. Their reasoning? Being that the popular product is 100% of the time more expensive than the non-brand one, it also has to be safer, right?
To answer that question, we turn to what the doctors have to say. Let’s take the aspirin for example. Nine out of ten times, doctors will choose the generic versions, instead of sticking with the premium brands. How come? In case you’re just finding out now, aspirin is nothing more than acetylsalicylic acid, which is extremely simple to manufacture. No matter under which brand it’s sold, the product is 99.9% the same each and every time. The only major difference is, of course, the price. Regardless of that fact, we can still easily see that the best-selling brand of aspirin on Amazon is still the one from Bayer. Are you really all that surprised?
Marketing can turn an off-brand product into a best-seller
You’ve probably stumbled upon an article where they revealed the insane amounts of money popular brands pay for airtime during the Super Bowl. If not, prepare to be blown away. Still, when it comes to big brands, this step is a necessary evil. In order to create a name most people can relate to, you first have to invest insane amounts of funds into advertisement and marketing.
Quality control might sometimes be stricter with popular brands, but that’s not what drives the prices up. In fact, oftentimes, the quality control procedures are exactly the same. What does drive the prices way up is the marketing. It’s been reported time and time again that popular brand re-invest 50% of their entire income in marketing. Ultimately, someone has to pay for those expenses, and that duty comes down to the buyers. Wouldn’t it be smarter to invest that money into personal development instead?
Have you ever heard of outsourcing?
Outsourcing is a term most commonly used when talking about software. Major companies are using employees from other countries to get the job done. Both parties benefit from this deal. The job provider pays a whole lot less for the very same service, and the employees get a decent pay they wouldn’t be able to obtain in their country otherwise. However, what you didn’t know is that industry-leading companies also perform this routine on a daily basis.
Most notably, food industry stands out from the crowd. Big name brands are the ones to blame here. Instead of making their products from scratch, they tend to only own the recipe and the rights to their name brand. In order to produce their products, they turn to lesser-known manufacturers and go with the lowest bidder. The non-disclosure agreement is there to protect the famous brand. Most of the time, buyers cannot even tell the difference with the product, at least looking at it from the outside, as the branding and packaging are always the same. It’s oftentimes said that the biggest brands are solely relying on these mechanisms in order to keep the production going, but naturally, don’t expect to find any evidence online to support these claims. Call me a conspiracy theorist, but from my angle, this seems to be entirely possible.
Reselling popular goods by labeling them as store brand
When it comes to dirty tricks popular brands use, this has to be way up there on the ladder. In order for me to explain, I won’t name any names, but trust me, you’ll get the picture pretty fast.
Let’s say that a certain company is known for producing a superb quality olive oil. A great supermarket chain is interested in their products, but they want to sell it under their brand name. The company usually sells their olive oil for $15 a bottle, but the supermarket offers to buy 10,000 bottles for $10 a pop. Production costs revolve around $8 per bottle, so it’s still a win for the company in charged with production. Because of that, it’s not surprising that they accept the deal, only with one condition. The supermarket chain has to sign a Non-Disclosure Agreement, claiming they’ll never reveal the source of their products.
Re-labeling costs are $1 per bottle, and the supermarket chain has a brand new product on their hands. In order to be competitive with the popular brand, they set the price at $13 per bottle, just enough to find the middle ground where it’s both profitable and luring in customers. Some would say it’s a perfect crime. Once they can tell that the formula is working, they don’t stop with the olive oil, but branch out into different products as well. The possibilities are endless, and all sides share the profits.
Still, you might be wondering why would the major manufacturing companies accept this? At the end of the day, they are the ones that are cutting their profit margins. The answer is fairly simple. Manufacturers are constantly facing tons of logistical issues that supermarkets don’t have to. For instance, supermarkets don’t need to spend a crazy amount of money to advertise their products. Customers are already constantly coming into their stores to buy other items anyways. All they have to do is come up with a catchy name, design a decent packaging, and offer a slightly better price compared to the original manufacturer. Furthermore, it’s somewhat of a safety net to popular brands. Major brands are constantly having to deal with customers who aren’t always happy, and the bad publicity can really affect the value of the final product. What’s more, in case of a scandal involving their products’ quality control, the may be forced to deal with certain boycotts. By having someone who will buy their products no matter what, manufacturers will never be in that much of a jeopardy.
Finally, this can allow both parties to push the prices of their products. By creating an illusion of competition and free market, they always end up with all of the profits. Ultimately, in order to trick the buyers, supermarket brands are oftentimes a tad bit different compared to the original product. This is perfectly understandable, as they are trying to cover their tracks. The manufacturing process is pretty much the same, but, in this case, the supermarket will substitute one slight ingredient with a cheaper option. In the end, the products are nearly the same, but not entirely, and the supermarket chain saves a few bucks by using lesser ingredients. Once again, a win-win situation.
Products you can save money on
Let’s be honest here, this is all fine and dandy, but where can you really save your hard earned money? Well, pay attention, because we’re about to showcase some products that will keep the cash in your pockets.
Generic Brand Cereals
Have you ever wondered why the cereal brands differ so much when it comes to prices? Generic cereals usually use the exact same ingredients as the popular brands do, but the price tags are way off. Sure, sometimes generic brands tend to use more of filler type dried fruits, but is the difference all that great? Perform a simple test to find out. Gather your friends and perform blind tests on both the generic brands as well as the popular ones. You’d be surprised to see just how many people can’t tell the difference.
Once again, don’t be a fool paying for those marketing costs. Generic brand soaps and popular brand ones are 99.8% the same thing. Perhaps the popular brand’s packaging seems more appealing, but does that really play a factor when it comes to dish soap? On the contrary, store brands oftentimes trump the popular options when it comes to quality, as they’re trying to provide great value to their customers, knowing that they cannot compete when it comes to advertising.
The products that roll off the processing line are completely identical when it comes to quality. Seriously, you wouldn’t be able to notice the difference, even if you tried. The market forces the manufacturers to divide the sugar into two categories: the premium one, which is sold at the higher price points, and the low end one, intended for “smart buyers”. All brands are forced to employ this tactic, or they would suffer losses to a company willing to follow the working model. What matters to you is that the quality of sugar is always the same.
Tuna and other canned fish
You probably know of a brand or two that stand out from the rest in terms of quality as well as the prices. When it comes to the other ones, they are all identical, the only difference being the profit margins. With that in mind, don’t be a fool who pays extra money for a shiny label, when it’s all exactly the same. Stop by your local 99c store, and test these claims. You’ll quickly realize what we’re on about.
A certain manufacturer that ships out their products in a blue box claim that their pasta is unrivaled when it comes to quality. It all comes down to the drying process. The more the pasta is dried, the better quality it will be. Some manufacturers dry their pasta for hours or even days at low temperatures of 90-100°F, thus ensuring greater quality. Others dry their products in specially designed ovens, at much higher temperatures, yielding a product of inferior quality. Guess under which category the notorious blue boxed pasta falls under? Hint: it’s not the first one.
Not all famous brands are bad
At the end of the day, let’s not behave like a negative Nancy over here. As always, the truth is somewhere in the middle. For example, I am perfectly aware that 90% of world batteries comes from the same manufacturer. Some 13 years ago, I bought myself a battery powered shaver. It didn’t take long before I realized that it was complete rubbish and that it lacked serious power. At that time, I remembered that I still had some Duracell batteries left in my car, which I got as a free sample when P&G bought Gillette. I decided to give it a go, and boom, the shaver started working like clockwork. From that point on, I decided to stick with Duracell, chasing the quality which blew me away 13 years ago. As with all things, the quality started to dwindle away after some time. However, this new development was to be expected. Ultimately, if the batteries lasted forever, you’d never have to buy another pair.
Hope you learned something today, but don’t just take my word for it, go out there and test the products for yourself. Still, let’s leave the text on a light note. Did you know that the German’s popular supermarket Penny has a brand of toilet paper that is called Happy End?