Brand names ARE better after all

brand name products are better after all

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.

Kona Coffee

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

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

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19 thoughts on “Brand names ARE better after all”

  1. I buy almost exclusively generic brands. My wife complains about store brand toilet paper’s softness, but I hate spending much on something you immediately dispose of after use for a few seconds.

    In Canada our most successful grocery chain is called Loblaws, and I have found countless store brand (President’s Choice) products over the years which are fantastic, often even BETTER than the brand name. They also have a “No-Name” store brand which is like a very generic discount store brand (also carried in the No Frills stores operated by Loblaws), which I always use for basic staples like spices, rice, dried fruit, etc.

  2. I normally don’t feel deprived buying generic brands, but I still buy plenty of name brands especially when it comes to food! As much as I like to save money, good tasting food is important to me. 🙂

  3. I personally don’t feel deprived when I buy generics. I pick and choose which products to buy generic and then enjoy what I want on others. I like saving money too!

  4. Some generics are just as good as the original. Often, on hardware items, they are both made on the same assembly line in China.

    Food things, can be hit of miss on taste, but they are often just as good. malt-o-meal cereal for me.

  5. Looks like you are preaching to the choir here but I’ll chip in with some comments supporting non brand as well.

    I genuinely think you can untrain your brain from the brand pleasure response most people apparently have. Or at least offset it, due to the reasons you mentioned in the article regarding pleasure from saving money. But I also think it’s more than that. I can tell the difference between certain items of brands and non brands and others I can’t. The ones I can’t I buy non brand and the pleasure is a double hit because you saved money and you feel like you’ve found a little secret loophole that maybe non of your friends do. On things where I can tell the difference (or at least I think I can. I’m not saying I’m infallible to every Psychological fallacy going by any means!) I am more likely to buy brand but still not necessarily.

    I’ve heard many stories from friends and in the press that products (shampoo, foodstuff, clothes, etc..) at greatly different final cost come from the same factories and this simple knowledge trumps any value a brand or advertising campaign can add to a product. Knowledge is power people. Find out the real story of your brand before purchasing. It’s all out there!

    As a final note, I do get the whole brand story thing, and I think it’s still very relevant (all ingredients of some food being locally/organically produced for example), but folk who derive more pleasure simply because the brand is seen to be more expensive than others are utter fools, and are making other people very very rich.

  6. I’m a big fan of generic products. Unless I’ve used it and find the brand name better, I will stick with them. Mentally some might find brand names more enjoyable but I find saving money ALOT more enjoyable! I’m not brand name guy…I go for the best price/quality.

  7. As someone who runs an advertising business, this is exactly what companies want us to think – that we’re depriving ourselves if we go the generic route. What I think it largely comes down to, as well as other things, is what do you value more. Do you value the “experience” or the name brand, or do you really not care that much? For us, we buy largely generic. I’d say we’re buying in the range of 90% or so generic and buy very few name brands. The savings are well worth it and all that extra just goes to our bottom line instead of someone else’s.

  8. It is unfortunate how many people can’t arrive at an educated decision without being tricked by advertising, but not all people fall into the “we” group. If your kid thinks anything from McDonald’s “tastes better,” you have failed as a parent.

  9. RB40,

    Great post! I tend to buy generic, and then once in a while I will splurge for the name brand (coupons always help, especially when the grocery store doubles them!). I do love coffee and I have 3 ways, fortunately to brew coffee at my house – pot, old school espresso for the stove top and a Keurig (that was bought with coupon codes and cash back offers). For guests that want that quick cup – I bought K Cups for $0.37/k-cup from doing research on different brands online. I haven’t seen anything less than that price and it’s actually a very good sumatra organic/fair trade blend and tastes amazing! I drink generic throughout the week and when guests arrive for special occasions – I will make them one of those or a “fancier” ground coffee that I may have, which still ends up being inexpensive. I’m with you on this though – I’d much rather enjoy the bigger/continuous enjoyment of a cash-flow producing asset for years to come or constantly having that “ST_Rbucks” coffee everyday, to where it is just “meh”. Great post, keep it up and thank you!

    -Lanny, one of the diplomats.

  10. I think it depends on the product. There are some store brands that come really close to the name brand products while other store brand products just don’t come close. For coffee, I have to say the name brand is always better!

    We’ve also found that sometimes you can find the name brand products on sale or through the use of a coupon to be comparably priced to the store brand. Sometimes, you can find them even cheaper than the store brand.

  11. One example that I have is restaurants. I would much, much rather eat at a good mom and pop place than a corporate chain. Just doesn’t compare.

  12. We bought Kauai coffee when on the island of Kauai but didn’t pay that for it. It was more the going rate and I think I bought a three pack of it at Costco. It was quite good. I wonder if Kona coffee even better.

  13. I think there is something to be said about how you “feel” about the company, and how that impacts how you perceive the product. Even between generics. For example, I buy generic Clariton (allergy med) at Target, and I love it. A few times I’ve bought the generic at Walmart, and don’t like it nearly as well. I hate Walmart, and I’m sure that taints my perception of how well their product works. The two products could be equally effective, but I’m likely to feel that the Walmart brand isn’t as good.

  14. We’re hooked on generics. Whether it’s food or drugs.

    Maybe it’s because we focus on the quality of what we are actually consuming instead of the plastic or cardboard it’s packaged in. Sometimes the store brand tastes different than the name brand. Sometimes slightly better, sometimes slightly worse.

    I’m rarely disappointed with the store brand, and almost everywhere offers a money back guarantee if the quality or flavor isn’t up to par. I’ve used this option twice in the last few months (store brand dishwasher detergent that didn’t clean as well as the name brand and faux ziplock bags that were defective). Exchanged or refunded zero questions asked.

    I’ll add that I have a superhuman (you might say engineer-like) immunity to advertising. So the name brand premium you mention just might not be there for me. I do like McDonald’s though (very occasionally), and my homemade big mac sauce is never as good as theirs. It very well could be the wax paper wrapper around my burger that makes it taste better! 😉

  15. Well, as a coffee connoisseur ~smile~ Kona coffee IS special. Not to take away from your point at all, but Folger’s or really any mass-produced coffee is just not the same as fresh ground, from the grower-fresh. No comparison at all! So, while I agree with the notion of name brand stuff not being worth it most of the time, it would seem to be a personal decision. I am worth ‘special’ coffee everyday because I can really tell the difference. I do not have a daily, need it addiction and totally agree with Kammi’s comments above – I don’t get the Starbuck draw, as it really is overpriced and not all that great. 🙂 Just my humble opinion . . .

  16. I think it depends on how or where you grew up. For example, until 2005, I had NEVER had a cup of Starbucks before. Where I’m from, we (still) don’t have a single Starbucks franchise. My supervisor at the time (I was in NYC then) had bought me my first frap, because he was treating us all and that’s what the group decided they wanted. They were shocked that I had never had one. Years later, I still don’t get it. Also, I get sick from their cream/milk/whatever is in there, so I guess I couldn’t get into it much, and I find it too expensive for what it is. I’m also particularly picky about other people making things for me (I’m THAT person who asks for custom made orders and watches the entire time that it’s done). I also grew up in a household that drinks a LOT of tea (as in, five plus pots a day).
    Plus, for me, non-brand has a nostalgic element for me, I guess. I grew up in a country where we mostly had local brands and I wasn’t exposed to cable television or anything like that until my late teens. My parents never placed a lot of emphasis on brands or anything like that, and my grandmother sewed clothes. So it’s very easy for me to not care about brands; BUT I tend to notice when things are made very badly (like when a suit fits a person badly) moreso than getting sucked into the brand mentality.

    • Thanks for your comment. I think your environment is a huge part of it too. We didn’t have a lot of money when we were growing up and we buy mostly generic. They work just fine and I don’t really care about brands. People who grow up with certain brands really stuck with them, though.
      So if you’re in a conference and they are handing out Coke and RC cola, which one would you take? 🙂


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