Wednesday, August 6, 2014

Brand Names

The poorest people in our society are the most likely to buy brand name products, hence they are poor.

A recent article on CNN states the obvious - the smarter you are, the more likely you are to buy a generic equivalent product than a "brand name" one.  The savings are not trivial - brand name products can cost 2-4 times as much as a generic version of the same product.

We have a Dollar Tree store next door to our grocery store.   Everything there is a dollar.   In many cases, you can buy products for a dollar there that are selling for $4 to $6 next door at the grocery store.   In most cases, the quality of the products is equivalent.

Why are people brand-conscious and brand-loyal?   There may be more than one reason.   In the past, before the Pure Food and Drug act was passed (all that "unnecessary government regulation" and all) many products offered on the market were substandard or even dangerous or poisonous.  A brand-name was the indication of quality and consistency.   And perhaps many older consumers, born into an era of questionable goods, still rely on brand-names.

But then again, back then, brand-name products didn't cost 2-4 times as much as generic ones.

My Mother, for example, had certain brand-name preferences all of her life.  She always bought Tide detergent, Land-O-Lakes lightly salted butter, and Birdseye frozen vegetables (a gourmet, she was not).  She was an educated person and fairly wealthy, but nevertheless relied on brand-names when shopping.

Of course, back then, in the 1960's, brand-name products weren't so staggeringly expensive, and the selection and availability of off-brand products was usually limited to a store brand, if that.   In the tiny grocery store in our home town, the choices, if there were any, were between two brand-names.

So maybe that accounts for one portion of the brand-name buying public - consumers who are older and grew up in the era of brand-names.   But that is a dying market segment.

When I am at the grocery store, what I see, however, is that the folks buying "brand name" products are often the poorest or lower-middle-class people.  This is a switch from when I was a kid.  When I was a kid, the only time I saw "store brand" products was when I was at a poor friend's house (poor people were a little smarter back then, I think - or had less gub-ment money to spend).

Today, poor folks buy brands, and I think the reason is status in part, and ignorance in another.

I recalled the story of our shopping trip to the wholesale club, many years ago, where two very overweight "white trash trailer park" girls were shopping ahead of us, lazily dragging whatever product they wanted off the shelf and tossing it in the car ahead of them, without looking at the price.   One of them commented to the other that maybe she should check the price on the paper towels she just bought (after seeing us agonize over the same buying decision).  Her friends' response was, "Honey, I just buy whatever I want, and HE has to pay for it!" - signs of a marriage that truly is a "race to the bottom".

So laziness is another reason, perhaps, that some folks buy brand names.

I can say that when I was younger (and poorer) I often did the same thing.   Even though I was a technician making less than $17,000 a year (and struggling to pay the bills) I bought brand-name products and thought nothing of it.  Part of this was training from my parents (buying Tide and Land-O-Lakes, because that was what I was exposed to) and part of it was status.  Yes, people really think that way - I know I did - thinking to themselves, "I can afford the 'real deal' unlike those poor folks!"

Yes, status rears its ugly head.   We rarely shopped in Wal-Mart prior to 2009, and frankly would joke about people who would buy FOOD there.  I mean, gross!  And at the Dollar Tree?  Disgusting!  That was the attitude we had, but attitudes can change. 

I recounted about my friend who spent all their money on leased cars and an unfortunate motorhome purchase, and ended up broke in retirement, at age 70.  Even trying to "get by" on Social Security, they still bought "brand name" groceries (and booze) at the upscale supermarket, rather than spend half as much at Wal-Mart or the Dollar Tree.  When they asked me for financial advice (read: money) I went through their budget and suggested they look for savings there.  "I would never shop at Wal-Mart!" they replied, "I have my standards!"

In America, apparently beggars can be choosers.

I've said it again and again in this blog - if you want to get ahead in America, it ain't hard to do.  You just have to act rationally in an irrational world.  Let the other guy squander his dough - don't get caught up in the status race - because it is a race that no one "wins" other than the marketers.

Poor folks are poor not because of "circumstance" or "luck" but because they make poor financial decisions in every sense of the word.

Think about it for a moment.  Where do they sell the most coveted brand-name products?  In the ghetto.   When kids were shooting each other over brand-name Nike(tm) Air Jordan(tm) sneakers, it wasn't at the prep school for rich kids (who wore loafers that cost half as much) but in the ghetto high schools.   

And this whole obsession about Tide Detergent?  Yea, in the ghetto.

This is not to say that all poor people are fools and idiots.   When you shop at Wal-Mart or the Dollar Tree, you see a lot of the working poor, and many of them are conscious shoppers, who stretch their dollars the furthest and are trying to get ahead.   On the other hand, many of them are just "shopping" in the sense of buying crap they don't need or want, and thus are squandering money.  And yes, Wal-Mart has lots of "brand name" products - sometimes crowding out the store brands (and that's not by accident, either).

But while the poor account for a big chunk of status-seeking brand-name purchasing behavior (or purchasing by laziness or ignorance) I think the largest single chunk is the "Status Seekers" - the people of the middle-class who are trying to achieve status through purchasing.  People who define themselves by the brands they swear loyalty to.

The very poor buy generic, often because they are forced to do so by means of a limited budget.  The wealthy buy whatever is the best bargain, and that is why they became wealthy and stay wealthy.   The clueless middle class believes that if they buy the right products, they will be "rich" because being rich, to them, is all about consumption (and spending money) and not about accumulating money (owning money).

For me, this is no longer an issue.  Brand names mean little or nothing to me anymore - particularly in today's world where a reliable brand-name company can be strip-mined by the likes of Mitt Romney and the quality of the product plummets overnight.   When you buy a car, relying on the "J.D. Powers Report" of quality is sort of foolish.  Even if the data were valid (which it often isn't - initial quality is rarely an indicator of long-term value) the car you buy today may be made by a company far different than the that made the same car a year or two ago.

And of course, many "generic" products today are made in the same factories and same assembly lines as the "brand name" products are made.   Brands are meaning less and less these days, as companies dilute their value (e.g., piss in the soup) by slapping brands on any product that comes down the pike.  For example, until recently, Volkswagen sold Chrysler Minivans (the Routan) re-badged as Volkswagens.  What does that say about the VW "Brand"?   VW is not alone, of course - all the automakers have been swapping cars and parts with each other for decades.  The idea of being "brand loyal" is something only simpletons can embrace (e.g., NASCAR fans).

THIS IS NOT TO SAY that generic brands are always better, or that you should always buy a generic or store-brand.  Buy the best value for the money.  For example, Dollar Tree laundry soap is a little on the watery side.  It is one "value" that I don't find at that store.   I do buy it, on occasion, when renting a house for a week or something.  But for regular use, we buy the large buckets or boxes of powdered detergent at the wholesale club - Arm&Hammer or Kirkland brand.  However, I could care less about the brand.   If I found another brand that worked as well and was cheaper, I'd buy it.

Brands should be an indicia of quality, and at least, that is how they started out, with Trademarks indicating the "source of goods or services".  However, today, brands are often just window-dressing - licensed marks that are leased out and tacked on to whatever goods the marketer thinks will be enhanced by the use of the brand.  Rarely, today, is a "brand-name" an indicia of quality or consistency of any goods or services.

And in fact, some brands can have reverse indicia.  Radio Shack, for example, has always sort of been a negative brand.  If you had a "Realistic" brand stereo system from Radio Shack, back in the day, it meant you were either kind of dumb, or couldn't afford a Sansui or whatever.   Radio Shack branded items were not an indication of quality.

And some companies have taken their brands and "dumbed them down" to the point where they have little value.  Campbell's Soup had arguably the most recognizable brand image, after Andy Warhol put their soup cans into art museums.   But today, the brand is struggling and it is not hard to see why.   Their products are viewed as retrograde, unimaginative, and even unhealthy.   We recently bought a jar of "Campbell's" salsa, and it was more like tomato soup - unimaginative, runny, and flavorless.  If you want good salsa, you have to look for the freshly made variety (in the refrigerated case) or often for off-beat brands from small companies and artisans.

Anti-branding is the new branding.   The micro-brewery movement is a case in point (no pun intended).   You can find some really good beers at a micro-brewery (or sold under their name at the local store).   You may have never heard of them, and you may never be able to find the same brand twice.  But the experience is going to be a lot better than a suitcase full of brand-name Miller Lite.

Our generation seems quite into this, trying to seek the offbeat and untried - looking for hidden values and product that say, "I'm special" or "I have discriminating tastes".  And of course, our corporate overlords are well aware of this - often buying up offbeat brands and then making them bland and generic (which most people really want anyway).    When Sam Adams made a "lite" beer, you knew it wasn't a micro-brew anymore.

They also manufacture brands that sound offbeat or like small-startup companies.   Movie studios all have "independent" brands (how independent is that, really?) and Hallmark has "Shoebox Greetings" which we are told is a "tiny division" of the company (really?  How dumb do they think we are?).

So even anti-branding has its branding.

Thus, I think the thing is, to ignore brand, other than as a means of finding the same product twice, and look for value - in terms of quality and price.   But that seems a fairly obvious statement, right?

Like I said, it ain't hard to get ahead in this country.  Act rationally in an irrational world.