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Recently I heard that a jewelry company branded their diamonds Hearts on Fire to charge a premium for the precious stones. The reason they did this is that lately diamond dealers’ profit margins have plummeted due to more educated consumers and online shops like Blue Nile where you can compare the prices on thousands of diamonds with ease. Prior to these branded stones, all diamonds have been “generic” and price was just determined by the characteristics of the gem itself. I personally think that diamonds are a scam, but charging extra for a branded diamond is even more ludicrous. The reason is that if you look at two diamonds of the same quality and size you can’t tell what the brand is at all.

I think that sometimes paying more for a brand name item makes sense. For example, I like name brand walking shoes for their quality. Compared to generic no-brand shoes, a pair of good brand name shoes just last a lot longer. It is the piece of apparel that takes the most beating and my mom found out early on that a more expensive pair of brand name shoes lasted a lot longer than the $7 generic shoes she was buying. The cheap shoes actually cost more in the long run because they broke so fast that she had to replace them. Basically, I think it makes sense to pay a premium for a brand name product if the quality is actually quite a bit higher than generics.

I also buy brand name products if the products are unique and can’t be substituted by generics. For example, many drugs under patent are irreplaceable by generics. So in the case of unique products consumers don’t really have a choice and the company that owns the monopoly on the product can charge any premium they wish. I guess that is why prescription drugs and health care in general tend to be fairly expensive.

Here’s where I think buying brand name products do not make sense. In the supermarket there are many foods that are branded. I have seen store brand butter that is half the price of a package of a frequently advertised branded butter. When the price difference between two virtually identical products is that high I think it makes no sense to buy the branded product. The premium is probably due to the marketing anyway and there is no point in supporting more advertising.

Another thing about branded merchandise I don’t like is that people often use the brand of their things as a status symbol. There is really no point in buying $300 True Religion jeans just for the brand because the same look can be achieved with much cheaper jeans. When people pay a ridiculous amount of money purely for the sake of the brand their behavior becomes brand worship instead of sensible consumerism. In that case, the marketing team of the company has done a fabulous job in brainwashing consumers and building up their brand, but it doesn’t mean that you have to fork over your money to follow a passing trend.

Finally, I hope all of you had a wonderful weekend! If you braved Black Friday I hope you got some deals to make me proud! Did you buy something for the sake of its brand? What attracts you to certain brands?

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viagra online consultationon 11.25.07 at 9:35 pm

Great Post! You raise very good points, especially about the long-term costs of cheaper, but inferior products.

However, there is also the x-factor. Many name brand companies also make the generic or store-brand label versions of their product.

We all learned that from the pet-food scare earlier this year. So-called high-end name brand dog food products were made at the same plant with the same formula as some of the cheaper no-name brands.

It’s a tough call. Sometimes a brand name delivers extra value and sometimes we’re paying more for nothing extra.

viagra online consultationon 11.25.07 at 10:54 pm

Yup, I remember the dog food fiasco. My coworker and my mom were all extremely surprised that Iams and Pedigree were manufactured by the same people because they seem like very different brands. It is too complicated and time consuming to find out where every single thing is manufactured so we often put our trust in a brand too.

viagra online consultationon 11.26.07 at 11:31 pm

I think diamonds should probably be consider a commodity. And economists have a fancy name for status symbols:

viagra online consultationon 11.27.07 at 12:08 am

That’s sadly just the nature of the world we live in today. If you’re not as self-reliant as the Amish are, then you’re going to have to get through life depending on others, especially their goods and wares. Problem is any 2-bit inventor can market and sell stuff these days and companies we have leaned on over the years are susceptible to lowering their standards when producing en masse. That’s why I bought myself a Chia Herb Garden woot.

viagra online consultationon 12.04.07 at 5:57 am

[...] a similar topic Bag Lady asks, how much do you value name brand things?”. My wife almost bought a brand name pair of shoes the other day, but realized she liked the no-name [...]

viagra online consultationon 12.04.07 at 9:03 am

Know what’s interesting about branded clothes that have their logo on them? You’re actually paying for the company’s advertising! People pay large sums to be walking billboards for the clothes companies.

viagra online consultationon 12.04.07 at 12:06 pm

You can’t tell the difference between branded and generic diamonds? Horror! :P

I’m with you about some products that just last longer or aren’t otherwise available. But for the most part I also do generics.

viagra online consultationon 12.05.07 at 9:17 am

[...] The Bag Lady ponder how you value brands. I don’t. That’s not really true. I actually do think that some brands do confirm quality, and am willing to pay a premium for those, namely toilet paper.  How you determine what is quality is the harder question. [...]

viagra online consultationon 04.17.11 at 5:04 pm

[...] A couple of favorites from the festival are How I Will Be Rich’s Promote Frugality Through Gift Giving and BagLady’s How Much Do You Value Brand Name Things. [...]

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