I can buy a bag of rolled oats generic for a dollar a pop.
The same weight in a box from a brand name is 4 bucks and more.
IS there gold involved in the packaging or are we paying all that extra for some advertising wide boy to support his coke habit?
Little something I know from my days being a trucker Earnest. Many of the so called name brands that charge higher prices under the cloak of better quality are duping the market as I have been to dozens of factories where they were using the exact same product to package in both the premium brand packages and the cheap brand.
Now this does not hold true for all products,but for many it is the norm that you are paying the extra money for name alone.
Not in all cases, but in many...
They are actually the same exact product produced in the same facility by the same company.
Case in point... your local grocery store does NOT own an oat packaging plant.
Economic models by people who know what they are doing are all about maximizing profit. Contrary to popular belief, this is usually done best by getting different groups of people to pay different amounts.
The same is true of cars, hotel rooms, clothing...
It's a fascinating topic, really... but in the supermarket case, it is in the economic interest of the manufacturing company to keep their brand name stuff selling higher for those who are willing to pay that price AND manufacture with a different generic label for those who are not willing to purchase at that price.
Similarly, it is in the best interest of the supermarket to charge one price AND honor coupons.
Many of the larger food products companies produce dozens or more brandings of the same product.
Brand names are always going to have their mark-up.
Example: a local grocery store I can buy the same product with their label on it for almost $2 or $3 cheaper than I can if I buy a Brand name product.
If the company is an established Brand name, then you will pay extra for their product. At least that is what happens here in America.
Not sure what happens in other markets.
Thanks Greg, you obviously know more about the supermarket thing than I do.
I appreciate your very sensible input.
Supermarkets... not so much...
... but I am just insane enough to have read a few thousand pages on economics over the years.
"Price discrimination" is the generic term used to describe this phenomenon, and coupon use, and various other forms of charging different rates to different customers with different elasticities of demand.
Once I started learning this stuff, it really became fascinating to see how most people talk about prices of goods and services... and how rarely it jives with reality.
You should see the formulas used to determine airplane ticket prices.
Sit on a plane and ask everyone around you what they paid. See if any two match.
The craziest thing I ever witnessed was at a cracker factory where they were taking the exact same crackers and filling normal brand cracker boxes and then also Kosher cracker boxes to pawn them off to Jewish people for a higher price.
Well I'm insane enough to be very interested in what you have said.
Yeah... I have the rather peculiar habit of picking up textbooks and reading them.
When I got tired of collecting useless pieces of paper, I finally realized I could just get the same education without the tuition. Overall, I've probably read the core texts for at least a handfull of phd's.
There are some lighter introductions to economics that are quite interesting without the heavy academic tone.
Freakonomics is a decent one in recent years that takes a fresh look at some social issues through an economic lens. Interesting stuff. I got that one on audiobook, though.
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