Worth of Stuff, Part III: Shop Wisely. Shop Privately.

Last week we analyzed the importance of looking past marketing tricks common in the food and grocery industry. People are sometimes fiercely loyal to products they "grew up with" and often skip private (store-brand) products because they feel they are "inferior" in quality. Sometimes they are, but many times they're not. Click here to review last week's article.

My guess is that it extends beyond just groceries. People are thoroughly convinced that their name brand clothing, cleaners, and personal-care products are far and above their national counterparts. Historically, that may have been true; there was a time where store brand were just not good at all--just a cheap imitation of the leading brand. However, as many grocery stores and drug stores sought to improve their margins, they invested in their own products, and they can choose their own shelf space and don't have to market it. Often, distributors would make the same brand and quality of product and distribute it to private labels! Bottom line--private labels no longer equal substandard quality if you know what to look for.

So, How to Tell a Bargain from a Cheapo?
Generally, the more common a product is (the easier to produce), the better the chance you have of buying a great product. For instance, I have a friend who used to work in the beer industry and he explained to me the difference between "cheap" beer and the seemingly better-tasting brand. Essentially what happens is that the beer company produced their "quality" product from a more advanced fermenting process and took more time to produce. The cheapo beer was made from the remnants of said beer product. There is a clear-cut quality difference here.

However, what about when it comes to more common products like milk/eggs/butter or products that require a specific makeup (like ibuprofen) you can definitely find ways to choose a better bargain by going to the right private labels. First, study the information provided. If its medicine, check to see if the concentrations of medicine are the same. If you are still unconvinced, ask the pharmacist!

As to other goods (as far as groceries concerned), I encourage you to just try private labels one at a time. When I was down South I frequented Kroger and tried their products one at a time--I tried their brand of Cheerios (a good move), their brand of garlic bread (another good move), and their brand of Ranch salad dressing (bzzzt). So you should try a little trial and error and see where it leads. You'll be surprised not only how much money you can save by shopping a little wiser (and more privately). And you won't be alone. National brands are losing their grip on many products because private labels are simply investing more into their products, and they don't have to advertise.

If you have taken the Private Label Challenge, let us know what brands you buy from around your way. I see that we're getting national and international visitors, and would like to see what you guys are buying and if name brands work for you.

I will be out next week, so make sure to check out our Newsreader hotbox over to the upper right. Take Care.

Worth of Stuff, Part II: What Really is the "Best"?

Countless number of times I hear people go on and on to justify why they buy only brand-name "XXX," or go to this or that restaurant. Most of the reasons revolve around the "best." People buy certain brands of cars because they are "safer" or "more reliable." They buy certain types of brand-name foods because they "taste better," without even venturing out to try the store brands or private labels. Sometimes such decisions are worth it, but many times they are not—this week we will focus on the "they are not" portion.

To illustrate our point this week, take a moment and watch this short video. Be warned, there is some strong language placed here and there, but overall the main point takes a look at how people interpret the expense of items (and a marketing department's power of suggestion).

If you decided to skip the video it basically analyzed consumer's perceptions of what is considered to be the best, which is often in the mind. Confounding evidence in the video could have shown that people didn't want to look uncultured in such a "cultured" restaurant, but that's not a reason to overpay for crap concentrate.

When I was a student at Georgia Tech, we ran an investment club and I performed an experiment where people were given name brand soda, and cookies compared to the Kroger store brand version and had them rate the products based on taste. (Our budget was somewhat low, so we worked with what we had). Most chose the private label (store) brand over the national brand or had no preference toward the name brand. Yet, few could be convinced that buying private labels is worth the financial savings.

Now don't get me wrong—some brand names deserve their respect. Take cookouts for instance. I can definitely tell the difference on something like aluminum foil—Reynolds's Wrap tends to be a more superior product versus er.."Wrap-It" Foil. You can usually tell when you get to the grill and the integrity of the foil fails under heat. However, there is no real difference between condiments, relish, plastic utensils and cups, etc. Buying brand names for such products when having a large event can definitively dent your budget if you're not careful. The purpose is not to be "cheap," but to know a quality product when you see it and to know if it's worth your money.

Next week, we conclude our analysis of the "Worth of Stuff" by analyzing why people think that store brands are usually better, and we suggest ways to choose store brands and private labels designed to save you money without losing quality. See you next week.