Name Brand versus knock-off

[SamSpade]

Ever since I was a little kid grocery shopping with my Dad, I knew that the store brand or off brand items were a LOT cheaper.
Sometimes - with food - there was a *reason* - it didn't taste the same, and sometimes tasted WORSE - some canned goods just tasted saltier or were mushier, some cereal seemed tasteless, and ice cream seemed full of air bubbles and wasn't very creamy.

Other stuff - I never noticed. Stuff like dried beans or pasta always seems the same. My general rule since I bought my own stuff is, if you honestly CANNOT tell the difference, buy the cheaper one (unless you have some kind of knowledge like, this brand has been recalled due to too many insect parts, and so on).

What I have *NEVER* figured out is something my Dad and about a million other people have told me - that in all likelihood, many of those off brands *ARE* the name brand in different packaging ----- so how does something like "Mister Clean" manage to compete against ITSELF with a much cheaper brand in what looks like the same bottle?

You know what I mean? You see the Pop-Tarts on the shelf - it looks EXACTLY like the real brand - but it's a knock-off, and the conventional wisdom says - they ARE Pop-Tarts in different guise.
So how can they make money? How does that work?

 

[Bird Dog]

Ever since I was a little kid grocery shopping with my Dad, I knew that the store brand or off brand items were a LOT cheaper.
Sometimes - with food - there was a *reason* - it didn't taste the same, and sometimes tasted WORSE - some canned goods just tasted saltier or were mushier, some cereal seemed tasteless, and ice cream seemed full of air bubbles and wasn't very creamy.

Other stuff - I never noticed. Stuff like dried beans or pasta always seems the same. My general rule since I bought my own stuff is, if you honestly CANNOT tell the difference, buy the cheaper one (unless you have some kind of knowledge like, this brand has been recalled due to too many insect parts, and so on).

What I have *NEVER* figured out is something my Dad and about a million other people have told me - that in all likelihood, many of those off brands *ARE* the name brand in different packaging ----- so how does something like "Mister Clean" manage to compete against ITSELF with a much cheaper brand in what looks like the same bottle?

You know what I mean? You see the Pop-Tarts on the shelf - it looks EXACTLY like the real brand - but it's a knock-off, and the conventional wisdom says - they ARE Pop-Tarts in different guise.
So how can they make money? How does that work?

Two main reasons:

1. Marketing costs
2. Once the machine is running, all costs come down. So it is better to keep producing, even if you sell at a lower cost for a house brand. Your costs on your name brand get reduced also.

 

[SamSpade]

Two main reasons:

1. Marketing costs
2. Once the machine is running, all costs come down. So it is better to keep producing, even if you sell at a lower cost for a house brand. Your costs on your name brand get reduced also.

This only makes sense to me if one thing happens - the knock-off doesn't directly compete with the regular brand.
If you had one box of Cheerios on the shelf for 3 bucks, and another EXACTLY the same box for 2 bucks, you'd buy the 2 dollar one, right?
You'd think "they must have had a sale and forgot the change it" (although I realize, the days of actual price labels are pretty much gone).

So if it's the same product in a DIFFERENT box, isn't it competing?

It however, makes a little sense if I'm shopping say, at Aldi's and the name brand isn't THERE. Then, you might as well buy the knock-off.

 

[Larry Gude]

Ever since I was a little kid grocery shopping with my Dad, I knew that the store brand or off brand items were a LOT cheaper.
Sometimes - with food - there was a *reason* - it didn't taste the same, and sometimes tasted WORSE - some canned goods just tasted saltier or were mushier, some cereal seemed tasteless, and ice cream seemed full of air bubbles and wasn't very creamy.

Other stuff - I never noticed. Stuff like dried beans or pasta always seems the same. My general rule since I bought my own stuff is, if you honestly CANNOT tell the difference, buy the cheaper one (unless you have some kind of knowledge like, this brand has been recalled due to too many insect parts, and so on).

What I have *NEVER* figured out is something my Dad and about a million other people have told me - that in all likelihood, many of those off brands *ARE* the name brand in different packaging ----- so how does something like "Mister Clean" manage to compete against ITSELF with a much cheaper brand in what looks like the same bottle?

You know what I mean? You see the Pop-Tarts on the shelf - it looks EXACTLY like the real brand - but it's a knock-off, and the conventional wisdom says - they ARE Pop-Tarts in different guise.
So how can they make money? How does that work?

Food is a LOW margin, high velocity game. It's like gas. You don't make much of a percentage but the gross is enormous, so you don't need to make much of a margin. Take a can of tomatoes, store v. Your Brand. Same tomatoes, same field, same plants to make them, put in can, maybe some little, tiny difference that the marketing people can use to push their brand. A different label machine.

It's ALL about BRAND because if they tell you it's better, it is and there are enough people happy to take that at face value to charge more. And, over time, those little differences, like perhaps an anti clumping agent, some shelf life additive or color enhancer, and all of a sudden you get a can of Safeway sauerkraut that has...sauerkraut in it and the nice, premium looking bag of the Name Brand kraut and it's got umpteen different additives, including for color, and costs 1/3 more. But, it sells. Because it's name brand. And they've got their lawyers and experts to help back up that all that crap isn't harming you.

Sauerkraut, cheap, simple, no name vs. sauerkraut with a bunch of crap in it that isn't food.

 

[GURPS]

So how can they make money? How does that work?

CVS and Wal-Mart do this with their 'house brands' something are obviously coming directly off the same production lines as the Name Brand
.... I guess the name brand company makes its money selling in bulk to CVS and Wal-Mart


Giant / Safeway also did this with house brands - Corn from a can, just as good as Birds Eye or Green Giant


Aldi's Pop Tarts are good, but not near as fancy as " POP Tarts '


I am old enough to remember when 'Generic' was all the rage in the 80's and stores offered triple coupons

 

[Rommey]

I think generic medicines and vitamins have to be identical to the name brand, so there shouldn't be a difference there.

 

[GWguy]

I think generic medicines and vitamins have to be identical to the name brand, so there shouldn't be a difference there.

But they're not. There are differences in the compounds. Many doctors I've spoken with are fully aware that some generics do not works as well on some people. I take a generic blood pressure med, and I can prove it is not as effective as the name brand. But my insurance won't cover the brand name and it's hella expensive, so I use the generic.

 

[vraiblonde]

So how can they make money? How does that work?

Appealing to two different demographics. They can put out a cheaper version because marketing costs money and packaging costs money, and some people are strictly "whatever's cheapest" consumers. The other demographic is those who purchase by name/brand recognition and status appeal.

 

[Monello]

Some major appliances are the same way. They come off the same assembly line but 1 washer gets a brand A sticker while the other gets a brand Z sticker.

 

[Wishbone]

That might explain my Wurrrlpool Dishwasher and Jenrul Electric Clothes Dryer.

 

[vraiblonde]

Golf clubs - my Strata clubs are made by Callaway, but it costs 2-3x as much to have the Callaway name on them.

 

[SamSpade]

Some major appliances are the same way. They come off the same assembly line but 1 washer gets a brand A sticker while the other gets a brand Z sticker.

My wife says in her business, the machines they get from places like Lowe's are not the same models as the ones from the dealers and manufacturers, and that becomes evident during repairs.
When they are the SAME company! A John Deere at Lowe's is not the same machine as the one the dealer sells.

I know from similar experience that the computers at Wal-Mart or Best Buy aren't the same - crack 'em open and you'll see. SAME company.

My guess is - volume. You can sell a cheaper version at WalMart of the same item.

I guess what I don't know necessarily is how to make money when your own repackaged item must compete against your normal product.
I realize there are some people who are convinced the store brand is inferior and they MUST buy the name brand.
Maybe there's a lot of people like that - I just wouldn't run a business on that premise. BETTING that people will buy the more expensive version of the same product.

I was thinking it might be - something ELSE - - for instance, I know that sometimes a production line can put out so much during a run, but it exceeds demand - so they create a "new" product even though it is the same product and sell it off cheaply. They still make their money, but now they make money in different markets with the SAME product in a store that will sell it.

It's like selling lumber - and making money selling the sawdust, pieces and leftovers.

 

[vraiblonde]

BETTING that people will buy the more expensive version of the same product.

And yet they do it all the time. Like, ALL the time. Advertised name brands ALWAYS outsell their generic counterparts.

These companies aren't competing against themselves; they are targeting two different demographics.

 

[SamSpade]

And yet they do it all the time. Like, ALL the time. Advertised name brands ALWAYS outsell their generic counterparts.

These companies aren't competing against themselves; they are targeting two different demographics.

Ok, so - sorry if I just sound dumb - they make a cheaper version of a product - because they've reached saturation of their main product?
Because it seems as though instead of making cheapo version of something - just ship out more of the expensive stuff, right?

There must be more to it than I am getting.

 

[GWguy]

Ok, so - sorry if I just sound dumb - they make a cheaper version of a product - because they've reached saturation of their main product?
Because it seems as though instead of making cheapo version of something - just ship out more of the expensive stuff, right?

There must be more to it than I am getting.

Buyers for the major corps deal with the manufacturer to lower prices, or because the WalMart/CostCo/BestBuy ask for a specific change to the product line. Sometimes that means changing a component or two out for a less expensive part, just to get the price down. If you look at the specific model numbers of a TV at Best Buy vs the part number of the very same TV at another retailer, you will find minor differences in the number. It could be one omitted a Blutooth connector, or the remote was cheaper. It's all about lower costs.

 

[vraiblonde]

Ok, so - sorry if I just sound dumb - they make a cheaper version of a product - because they've reached saturation of their main product?
Because it seems as though instead of making cheapo version of something - just ship out more of the expensive stuff, right?

There must be more to it than I am getting.

Many times, as you said, it's the exact same thing with a different name and packaging.

If they just ship out more of the expensive stuff, they lose the sales to the price-sensitive folks who will buy the generic can of corn to save 10cents. So they gen out a cheaper product with no fancy label or marketing campaign, and get those sales too. Two completely different demographics that they are appealing to and targeting.

Just as there are people who will buy whatever's cheapest, there are those who will buy the name - and pay a higher price for it. No kid ever begged for generic cereal or off-brand waffles.

 

[SamSpade]

Many times, as you said, it's the exact same thing with a different name and packaging.

If they just ship out more of the expensive stuff, they lose the sales to the price-sensitive folks who will buy the generic can of corn to save 10cents. So they gen out a cheaper product with no fancy label or marketing campaign, and get those sales too. Two completely different demographics that they are appealing to and targeting.

Just as there are people who will buy whatever's cheapest, there are those who will buy the name - and pay a higher price for it. No kid ever begged for generic cereal or off-brand waffles.

I suppose that makes sense - but you did say in an earlier post that the name brand always outsells the generic - which tends to make me think - why not just make more of THAT? If it will *always* outsell, you can always just make more of it. I GET what you're saying, but it only makes sense to me if you're already selling almost as many of the expensive stuff as the market will bear.

 

[PeoplesElbow]

Some products are made to a lesser standard, some are simply different and some are plain better.

I enjoy some of Aldi's brands more than the national brands. The Clancy potato chips have no equal.

Harbor Freight tools are usually quite a bit cheaper, but there are some that are downright excellent at any price. Their pneumatic nail guns for example, they will never equal a Grex, but for about $25 their 23 and 18 gage nailers are at least as good as the brands Lowes and Home Depot stock at 1/4 the price. A Grex is around $200 btw. Stay away from the harbor freight nails though, they are flat out terrible and will jam every time. Years ago I found a blog dedicated to talking about the good, the bad and ugly at HF and they had a humorous page "Things not to buy at Harbor Freight" and one of the first things was parachutes....

 

[Rommey]

But they're not. There are differences in the compounds. Many doctors I've spoken with are fully aware that some generics do not works as well on some people. I take a generic blood pressure med, and I can prove it is not as effective as the name brand. But my insurance won't cover the brand name and it's hella expensive, so I use the generic.

Per the FDA: "Generic drugs are required to have the same active ingredient, strength, dosage form, and route of administration as the brand name product. Generic drugs do not need to contain the same inactive ingredients as the brand name product."

So while there may small differences in the drug's inactive ingredient compound, the "medicine" part has to be identical. I'm not discounting your anecdotal proof because I know a few other people who have said similar things. But someone would only know that there was a difference if they have had the chance to take the name brand drug and then switched to generic. And how much is perception in the effectiveness of the generic vs. name brand?

 

[Rommey]

Some products are made to a lesser standard, some are simply different and some are plain better.

I enjoy some of Aldi's brands more than the national brands. The Clancy potato chips have no equal.

Harbor Freight tools are usually quite a bit cheaper, but there are some that are downright excellent at any price. Their pneumatic nail guns for example, they will never equal a Grex, but for about $25 their 23 and 18 gage nailers are at least as good as the brands Lowes and Home Depot stock at 1/4 the price. A Grex is around $200 btw. Stay away from the harbor freight nails though, they are flat out terrible and will jam every time. Years ago I found a blog dedicated to talking about the good, the bad and ugly at HF and they had a humorous page "Things not to buy at Harbor Freight" and one of the first things was parachutes....

Harbor Freight is great when you need a specific tool for a one off or occasional use. Why buy a $200 nail gun to do a small job when a $40 nail gun from Harbor Freight will do? But you know that gun is not going to be as durable and its not good for someone that does construction on a daily basis.