Tom Russo on the power of brands

[Liberty]

 

Someone posted this on Twitter. Sorry, I don't remember who it was. It's a 4 minute excerpt from an interview where he speaks about the power, predictability, and durability of brands.

[CorpRaider]

Brands are really powerful.  My wife still insists on buying Motrin.  That's ibuprofen with a sticker on it...with a jazzy name.

[NormR]

Brands are really powerful.  My wife still insists on buying Motrin.  That's ibuprofen with a sticker on it...with a jazzy name.

 

Don't dissuade her, brand name pills come with a placebo effect that probably makes the pain meds more effective.

[Liberty]

Brands are really powerful.  My wife still insists on buying Motrin.  That's ibuprofen with a sticker on it...with a jazzy name.

 

Yep. My mother in law once brought her bottle of Heinz ketchup to our house because we buy the cheaper store brand ketchup..

[fareastwarriors]

Brands are really powerful.  My wife still insists on buying Motrin.  That's ibuprofen with a sticker on it...with a jazzy name.

 

Yep. My mother in law once brought her bottle of Heinz ketchup to our house because we buy the cheaper store brand ketchup..

 

hahaha great story.

 

 

[CorpRaider]

Brands are really powerful.  My wife still insists on buying Motrin.  That's ibuprofen with a sticker on it...with a jazzy name.

 

Yep. My mother in law once brought her bottle of Heinz ketchup to our house because we buy the cheaper store brand ketchup..

 

Non-heinz ketch-up!?!  Oh dear.  I saw some Wal-mart ketchup in my brother's pantry once and I immediately became concerned about how his life was turning out.  ;D

[Kraven]

Brands are really powerful.  My wife still insists on buying Motrin.  That's ibuprofen with a sticker on it...with a jazzy name.

 

Yep. My mother in law once brought her bottle of Heinz ketchup to our house because we buy the cheaper store brand ketchup..

 

Non-heinz ketch-up!?!  Oh dear.  I saw some Wal-mart ketchup in my brother's pantry once and I immediately became concerned about how his life was turning out.  ;D

 

Appropriate here. 

 

[cobafdek]

I wonder whether Kirkland Signature could be considered a brand . . . .  Our household shopping habits say it is.

[peter1234]

I wonder whether Kirkland Signature could be considered a brand . . . .  Our household shopping habits say it is.

 

I think it is.

 

However, this would probably classify as a private brand with lower margins for the maker.

 

Tom Russo would like you to buy the original.

 

;)

[Liberty]

I wonder whether Kirkland Signature could be considered a brand . . . .  Our household shopping habits say it is.

 

I think it definitely is pretty strong, for a store brand. It's different from a single-product brand that is sold in all stores, but that doesn't mean it's not valuable and that shoppers don't use it as a shortcut to make decisions about "quality" and "value" and won't look for it (at Costco, anyway).

[oddballstocks]

Brands are fascinating.  I've found in many cases the brand name is better than the generic.  But other times the generic is the same or better than the brand name.  I don't think there's a universal rule.

 

What you get with brand names is reputation.  There is an implicit quality guarantee with the name.  If you buy a can of Coke and it takes like vinegar you can complain and I'm sure the company would stand by their product.  If you buy Generic Cola and it takes like crap you're on your own. 

[Liberty]

Brands are fascinating.  I've found in many cases the brand name is better than the generic.  But other times the generic is the same or better than the brand name.  I don't think there's a universal rule.

 

What you get with brand names is reputation.  There is an implicit quality guarantee with the name.  If you buy a can of Coke and it takes like vinegar you can complain and I'm sure the company would stand by their product.  If you buy Generic Cola and it takes like crap you're on your own.

 

Anything that is based on a subjective experience is full of these interesting psychological effects. I'm sure you've heard of the study where they make people taste some wine, and their feedback varies a lot based on what they're told the bottle cost, even if it's the exact same wine.

 

So two products that would score equally in a double-blind test might see the branded one win against the generic one in a non-blind test (which is how products are actually used).

 

My algorithm with this is to always buy generic/store brand first, and if I don't like it try branded stuff. In most cases, I never get to brands because the cheaper stuff is just as good, or at least fine to me.

[oddballstocks]

Brands are fascinating.  I've found in many cases the brand name is better than the generic.  But other times the generic is the same or better than the brand name.  I don't think there's a universal rule.

 

What you get with brand names is reputation.  There is an implicit quality guarantee with the name.  If you buy a can of Coke and it takes like vinegar you can complain and I'm sure the company would stand by their product.  If you buy Generic Cola and it takes like crap you're on your own.

 

Anything that is based on a subjective experience is full of these interesting psychological effects. I'm sure you've heard of the study where they make people taste some wine, and their feedback varies a lot based on what they're told the bottle cost, even if it's the exact same wine.

 

So two products that would score equally in a double-blind test might see the branded one win against the generic one in a non-blind test (which is how products are actually used).

 

My algorithm with this is to always buy generic/store brand first, and if I don't like it try branded stuff. In most cases, I never get to brands because the cheaper stuff is just as good, or at least fine to me.

 

Yes, I've seen the studies, they're awesome.  There was a 20/20 where they did this with vodka.  They took cheap vodka and purified it with a Brita and then did blind taste testing with supposed vodka experts.  All picked the purified cheap stuff, and all believed the cheap stuff was their 'favorite' brand.

 

We do the same thing with generic -> brands.  We sometimes buy brands, but not always.  Sometimes a generic offering isn't available.  I've also found over the years that it pays (literally) to buy up in quality.  I like to ski/hike/backpack/camp/run.  And with cheap gear it wears out quickly, quality gear last decades.  I have brand name gear I purchased 20+ years ago that I'm still using today.

[Liberty]

I've also found over the years that it pays (literally) to buy up in quality.  I like to ski/hike/backpack/camp/run.  And with cheap gear it wears out quickly, quality gear last decades.  I have brand name gear I purchased 20+ years ago that I'm still using today.

 

For durable goods, or for stuff where there's a real difference in quality, the value option can indeed be to buy higher quality, because you actually get more for your money.

 

There's a saying about how poor people pay more for shoes (or boots, whatever) over time because the rich person will buy a good pair that will last for years and years while the crappy shoes will need to be replaced every few years, resulting in a higher cumulative price.

[CorpRaider]

Brands are really powerful.  My wife still insists on buying Motrin.  That's ibuprofen with a sticker on it...with a jazzy name.

 

Yep. My mother in law once brought her bottle of Heinz ketchup to our house because we buy the cheaper store brand ketchup..

 

Non-heinz ketchup!?!  Oh dear.  I saw some Wal-mart ketchup in my brother's pantry once and I immediately became concerned about how his life was turning out.  ;D

 

Appropriate here. 

 

Yup.  I'm just waiting to hear "shitter's full!"

[oddballstocks]

I've also found over the years that it pays (literally) to buy up in quality.  I like to ski/hike/backpack/camp/run.  And with cheap gear it wears out quickly, quality gear last decades.  I have brand name gear I purchased 20+ years ago that I'm still using today.

 

For durable goods, or for stuff where there's a real difference in quality, the value option can indeed be to buy higher quality, because you actually get more for your money.

 

There's a saying about how poor people pay more for shoes (or boots, whatever) over time because the rich person will buy a good pair that will last for years and years while the crappy shoes will need to be replaced every few years, resulting in a higher cumulative price.

 

I guess non-perishable items.  For food we buy ingredients, not much packaged or canned.  For cars and other perishable items I buy the best cheap thing I can.  Some perishable things it does pay to buy quality.  For example running shoes.  I wear through those quickly, but bad shoes go even quicker, decent shoes are better on my body and last longer.

 

For non-perishable items I pay up for quality when appropriate.  I do the same math probably everyone on this board does.  I always figure out how many cheap items I can purchase for the same price as the good item.  If it's more than two and the expected lifetime is more than half it's better to go the cheap route.  But more often the price differential isn't that large so it's better to pay for quality.

[rkbabang]

I've also found over the years that it pays (literally) to buy up in quality.  I like to ski/hike/backpack/camp/run.  And with cheap gear it wears out quickly, quality gear last decades.  I have brand name gear I purchased 20+ years ago that I'm still using today.

 

For durable goods, or for stuff where there's a real difference in quality, the value option can indeed be to buy higher quality, because you actually get more for your money.

 

There's a saying about how poor people pay more for shoes (or boots, whatever) over time because the rich person will buy a good pair that will last for years and years while the crappy shoes will need to be replaced every few years, resulting in a higher cumulative price.

 

I guess non-perishable items.  For food we buy ingredients, not much packaged or canned.  For cars and other perishable items I buy the best cheap thing I can.  Some perishable things it does pay to buy quality.  For example running shoes.  I wear through those quickly, but bad shoes go even quicker, decent shoes are better on my body and last longer.

 

For non-perishable items I pay up for quality when appropriate.  I do the same math probably everyone on this board does.  I always figure out how many cheap items I can purchase for the same price as the good item.  If it's more than two and the expected lifetime is more than half it's better to go the cheap route.  But more often the price differential isn't that large so it's better to pay for quality.

 

Absolutely.  One interesting thing going on the fresh food/paleo-type diet 4 years ago did for us is that brands completely disappeared from our kitchen. We don't buy packaged food at all.  Just fresh fruits/veggies, meats(mostly local grass fed) and fish (mostly wild caught), as for beverages just our own filtered well water or brewed coffee (from local roaster in town) or tea (loose tea).  The one brand you will see in our fridge is Kerrygold Irish Butter.  But that is only because it is the only grass fed butter in the grocery stores around us and the farm where we buy our grass fed raw heavy cream charges way too much for their butter.

 

With durable goods, I use the same calculation as you.  Sometimes I buy the quality one even if the calculation comes out slightly in the multiple-cheap items favor. You need to factor in the trouble of shopping again for another cheap one 2 or 3 times rather than just 1 time for the quality item. My time and stress levels have a cost as well and need to be factored in to the equation.