Spend More for Less

You go to the grocery store and see a scrumptious looking box of Honey Nut Cheerios, and you know for sure it’s going to be your breakfast for the next week. But then, you look to your right and see an equally nice looking box of Honey Nut O’s. Not Cheerios, but virtually the same thing. What’s more, these off-brand Honey Nut O’s are only $1.99, while the name brand cereal sits at a hefty $4.99. So which one do you buy? The store brand’s or the one with everyone’s favorite bee?

Name brand products are often associated with widely known, trademarked goods. On the other hand, generic brands are not marketed as heavily to the public. Name brands are everywhere. We see them on television and billboards to the point where we’ve begun to associate the brands with the products. Whenever we think of cola, we immediately filter our brains to Coca Cola. Similarly, when we think of peanut butter, we think of Skippy or Jif. But in terms of quality and taste, name brands are virtually identical to typical store brands. The only real difference between Cinnamon Toast Crunch and Cinnamon Squares is the extra money you spend for a sense of familiarity associated with the brand.

The common idea is that name brands taste better than generic brands simply because they are more popular. However, in a 2011 survey by Consumer Reports, three percent of respondents thought store brand was better than name brand, 78 percent believed they tasted the same, and only 18 percent said that it was worse. Consumer Reports also tested 19 different generic products on consumers, and name brand tied with store brand in 10 cases. People could hardly taste the difference between name and generic brands, so taste is a less influential factor than most would think.

Another reason people prefer purchasing name brand items as opposed to generic brands is because they think name brands have better quality. Since consumers are more familiar with name brands, they provide a sense of reassurance that the product will provide a high quality experience. For example, when buying flour or sugar, many people purchase a name brand version instead of a store brand one. However, flour and sugar are processed and manufactured very similarly for most brands, making the only difference the familiarity of the packaging. Some store brands even have lower sugar and sodium content and higher nutritional value than name brands. Generic chocolate sandwich cookies from Walmart have roughly 12 grams of sugar per three cookies, while Oreos have 14 grams for the same serving.

Furthermore, name brand products are typically more expensive than generic brands, despite their similar tastes and manufacturing methods. On average, generic products are 29 percent cheaper than name brand products. Brand names cost more than store brands because of the large amounts of money necessary to promote and advertise their brand. As a result, the production quality of name brands can often decrease in order to lessen the gap created by aggressive advertising. According to e-commerce expert Ben Hallman, larger companies generally use at least 20 percent of their revenue toward advertisements. For some companies, this percentage can go up to 50 percent. Generic brands are typically made by more than one company, while name brands are produced from a single company, causing prices to go up. The FDA found that when name brand drug producers had only one competing generic brand, the generic brand would be priced 39 percent lower. However, when the number of competitors went up to six, generic brands could have prices lower by 95 percent.

People have to be pushed away from this bias toward name brands, because in reality, they’re hardly differentiable from generic store brands. So next time you step into a Whole Foods or Walmart, check out their in-store brands. Chances are, you’ll find 365 Cola to be more satisfactory than your everyday can of Coca Cola.