Last week, I was listening to the Brand Over Brain episode on the TED radio podcast and I was blown away. The episode was about branding and how it affects our enjoyment of consumer products. I usually buy generic or store brand products and I thought they are just as good as their brand name counterparts. Apparently, that’s not really true. I guess I was just fooling myself to believe the RiteAid brand Cetrizine was just as good as Zyrtec. Brand name products ARE better just because we know and trust the brand.
Here is how it works. The way we perceive value in and derive pleasure from a product is composed of two parts. First, there is the intrinsic value of the product. We can taste, touch, see, and feel the quality of the products that we use. The second part depends on the story of the product, essentially the brand. A box of corn flakes can be from the same batch, but you will like it more if the box has the brand Kellogg’s on it.
How do you convince a child to eat carrots and milk? Tell him they are from McDonald’s and the kid will enjoy the carrots a lot more. According to a research, kids believe food from McDonald’s tastes better and they’ll derive more pleasure from eating it. Well, this probably wouldn’t work with our kid because he isn’t familiar with the McDonald’s brand yet.
Sure, branding works with kids, but how about adults? Here is a personal example. We took a trip to Hawaii last month and dropped by Greenwell Farms to take their Kona coffee tour. We walked around the coffee trees, saw the roasting machine, touched the raw coffee beans, ate guavas, and they even gave us a big avocado that fell down from a tree. Of course, we splurged and purchased some Kona coffee beans to take home. Usually we pay $6.50 for a pound of organic coffee beans at Winco, but this time we spent $31.95… If I see $31.95 on the shelf at home, there is no way I would buy it. We just ground the beans and brewed it up this morning and let me tell you, it really was the best cup of coffee we’d ever made! The human mind loves a good story and we derive more pleasure from a product with one.
Does this mean I’ll only drink $31.95/pound coffee from now on? Probably not, we’ll go back to the store brand coffee beans once we run out. It’s better to enjoy really nice stuff once in a while and not every day. You’ll be able to appreciate it more. If you drink great coffee every day, then you won’t get the pleasure of drinking a great cup of coffee once in a while. A great cup of Kona coffee will just be – meh… Anyway, it’ll still be cheaper than buying a cup of coffee from Starbucks. Okay, that’s enough about coffee. 🙂
If price is no object
How do you make your friends enjoy the wine at your party more? Put a $50 label on it or whatever your crowd considers expensive. The price is part of the story and so is the appearance of the bottle. There have been many experiments that show people enjoy wine more when told it’s more expensive.
So the only reason why we buy generic product is because it’s cheaper. If we won a cart load of free groceries, I’d probably take brand name over generic. I’d take San Pellegrino over store brand sparkling water. I’d prefer Colgate over brand X toothpaste. The trusted brands are better in my mind and so it is better in reality. That’s how the human mind works.
Why buy generic?
So why do I buy generic if brand names are better? Brand name products cost more money, but I’ll get a little more pleasure from consuming them. Well… I also derive pleasure from saving money! Seeing our net worth grow is much better than that little spark of pleasure I get from drinking San Pellegrino. I really don’t mind store brand sparkling water and they taste the same to me.
This isn’t a natural response because most people would rather take the immediate pleasure they can see and feel. I must have trained myself to put financial growth over the incremental pleasure of consuming brand name products because we buy plenty of generic products.
Anyway, I think generic has come a long way over the last 10-20 years. These days, many generic products are identical to their brand name counterparts. If we conduct a blind taste test, we probably can’t tell the difference between most of them. Sure, consumers derive more pleasure from buying brand names, but it’s up to you to decide if that incremental pleasure is worth paying extra. For us, we’ll stick with generic for our everyday items and get brand names when the product is clearly better than generic.
Do you feel that you’re depriving yourself when you buy generic over brand names?
BTW, I was listening to the podcast on my Moto X from Republic Wireless. It’s awesome. I love my Moto X and I only pay $10/month for service. Check out my review of the Moto X.
Photo credit: flickr abbyladybug
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.