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Is Your Perceived Value of Name Brands Ripping You Off?

At what point is something overpriced versus just expensive? At what point are you no longer “getting what you pay for” and just plain getting ripped off?

You may not care about price, and that is fine – sometimes you just want what you want. When you are paying for a name BECAUSE you want that name, then the value is something that you can determine for yourself.  But if you’re a penny pincher like me, that is almost never an option. I’ll buy nothing new I can get used, and I steadfastly refuse to over pay for any item I don’t think is worth it. I’ve also taught myself to catch on to pricing tricks that companies use.

Gibson Les Paul Classic Custom

Gibson Les Paul Classic Custom

Are you ready for a personal example? I’m a huge guitar nut. I’ve had over 30 electrics at this point. I’ve sold them, bought them, and built them – all brands, all styles. So, by now I’ve got a pretty good idea of their values.  There is one guitar that has eluded me, however….The Gibson SG Standard. When I was in my teens, it was priced around $800 (way too much for someone making $6 an hour at a shoe store). Several years later it was up to $1099 (even with more in the bank account, that gets hard to justify). Then a couple years ago it jumped up to $1629. At this rate I’ll never get one! But then a few months after that it went back down to $1199. Wait a second! What that tells me is that even after a $430 price reduction, there’s still enough room for profit. How much is this thing actually worth?! I don’t think I’ll ever buy a new one solely because I don’t like the pricing games. No matter how you boil it down, The Gibson SG Standard is still a chunk of wood with strings on it (a really nice chunk, but a chunk nonetheless).

While Gibson’s pricing strategy has driven me away, it has had the opposite effect on a lot of people. If it costs more it must be better, right? This theory is commonly known as perceived value. It can mean a variety of things, but in this case it means that the price point has made many people believe that Gibson’s products are superior to almost everything else out there, when in reality, they are very comparable to many other brands.

VERY effective marketing….if you can get away with it. Just charging more for something usually doesn’t pay off, but it pays off big when it does. Just think of all the HUGE names out there: Gibson, Bentley, Prada, Dolce & Gabbana, Armani, Louis Vuitton…they built their names from the ground up and now their perceived value is extraordinarily high, and they can charge WAY more than the actual product is worth.

Do your detective work

With a bit of searching, I can usually find lesser-known brands that are comparable and affordable.

If the name is worth it to you, by all means go for it! But if you’re like me, it’s not (usually – I do love my Air Jordans). I swear by generics in almost every situation that makes sense to me. If a name brand is significantly more expensive than its generic counterpart, then you can rest assured the majority of your money is going to their name recognition and advertising costs. I also look for lesser-known competitors. My favorite guitar company is ESP, which makes many guitars similar to Gibson, with the same if not BETTER quality for a fraction of the cost. They even have a SG type guitar….

SIDENOTE: I highly DISCOURAGE the buying of counterfeit items, however. Cashing in on someone else’s name is an entirely different situation than buying something clearly generic!

What are your thoughts on perceived value? Are you willing to pay more for name brands or are savings more important to you?



Jeff Porretto

Recently dethroned as the shortest member of the blogsquad, Jeff considers himself to be an artist in all facets of life. Be it playing or building guitars, writing blogs with scathing dry wit, or simply finding new ways to be productive, creativity is a central focus of his day. More than anything, Jeff likes to spend time at home with his wife and 2 dogs quietly enjoying their time together. As with many other members of the blog squad, Jeff is fascinated by the latest and greatest technologies. He is also a self-professed Air Jordan addict and is willing to talk about shoes at any time. You can connect with Jeff on Google+.

Comments

  1. Chase

    Good one! I am sure that I am a sucker for name brands…

  2. KB

    You bring up so many great points. I’m a penny pincher myself. In some (be it rare) instances, I do believe that there are some brand names who hold very high perceived value because of the quality behind the name. In those cases I’m very loyal and willing to pay the higher price. Most times though, I’m definitely for the savings. In either case, no major purchase goes without research and with a little bit of time invested it is very easy to find the best deals, even on the name brand items. And, with all of the venues on the internet to find used items, you can buy very high end products in great condition for a fraction of the price. No matter the value or price of an item, it definitely pays to shop around!

  3. QLP Jill

    I know exactly what you mean! Certain name brands carry a sense of elegance or superiority, but they aren’t always better quality than their generic or “cheaper” counterparts. When it comes to brands like Tylenol, NyQuil, or any other medicine, I will ALWAYS buy the drugstore-generic equivalent because it’s made from literally the EXACT same ingredients – and it’s always a few dollars cheaper! That adds up to a fellow penny pincher like me!

    I’ve never been a designer purse or clothing type of girl, but I can definitely see the appeal behind some of these expensive name brands like Prada, etc. They are considered fashionable and exquisite because of their names…I don’t know about anyone else, but when I see someone with a designer purse I automatically think they have a lot of money. Maybe that’s part of the appeal – “if I carry this purse, people will think highly of me.” Just like you can’t justify the Gibson SG Standard, I’ve never been able to justify hundreds of dollars for a purse or a pair of shoes. I always go generic with this as well – I can’t even tell you how many times I’ve gotten complimented on some of my fancier purses and I’ve never spent more than $50 on one in my life! :)

    Pretty guitar, by the way. I can see why it’s so appealing to you!

  4. Laura Porretto

    I love name brands because to me they must be good if I know of them, right? Once I get educated on the difference between generic and name brand there really is no difference. That does not mean I will start buying the Walmart purse instead of Coach, sorry honey :) Sometimes a girl just needs the perceived status boost from owning a purse with the signature Coach C all over it ;)

  5. Scooby DOO!

    Perceived value IS the real value of an item. Since money is an instrument, not value, something’s “worth” is operationally defined by the individual. As classic economics teaches us, the lower the supply, the higher the demand. Simple, right? Now combine that with the notion that, all things being equal, the lower the supply, the more expensive an item is and walla, you have a recipe for profits through exploitation! By playing their cards right on the production side, and by marketing to a group of people who value having items that others cannot afford, companies like lacoste, Rolex, Bentley, and so many others have created market in which they can exploit value and enjoy extreme profits from it. Companies like Rolex know people who buy their brand, buy it NOT because it makes sense, but because when use their product, that they feel in a way, better, privileged, you name it. So what’s the price of such privilege? I guess you have to ask yourself… how much would you give up to get that item? And when you have that answer, you know what the true value is.

    Now as it relates to promo products: Our goal at QLP is ALWAYS to provide the highest possible perceived value gift at the lowest price. Nike polo shirts is a great example. Since people value Nike shirts and they are relatively low cost, we combine a great price for an item that the customer will perceive to be higher than what you paid. If the theory of reciprocity works, that should mean more business for you and QLP!

  6. Cybernetic SAM

    I understand why people are swayed by brand buying; I however very rarely have brand preferences. Never really cared enough, I understand quality recommendations for certain brands but for things like clothing it drives me nuts to see people wearing name brands that clearly serves no purpose other than the name on the shirt, I feel like a walking advertisement. We have all at some point fallen for brand favoritism but I can’t see being so absolutely disappointed for not having the brand I like. Brands that developed good reputations for quality products are perfectly fine; such as guitars, appliances etc… But spending $600 on a purse that will fall apart in a year, or $1000 sunglasses so that it has a plastic D&G on the side, come on! This is the perfect time of year for this post, for instance I can’t tell you how many times during the most hectic gift giving time of the year children are clearly disappointed for not getting their name brand crap for x-mas and it’s ridiculous the lengths parents will go through just to get their kid the exact brand they want. This has been another rant from Sam the cynic.
    Que sera sera, I guess.

  7. GBDUDE

    That guitar is sweettttttt!!!

  8. Doc

    This is great advice…especially at this time of year. When I do my Christmas shopping, I start with Kohl’s, Target, etc. This is the best place to find the deals. You can get twice as much for your buck if you don’t get starstruck by the name brand and are an efficient consumer.

  9. JJ "Suite G"

    I’ve been known to opt for name brands over generics in many cases, usually when it comes to my grocery shopping. While it’s true that MANY generic food products are identical in taste to their brand-name brethren, SOME simply pale in comparison. Oftentimes, it’s difficult to know what to buy, particularly when you haven’t had had the chance to try some of the alternatives to name brands. It always feels like a risk unless you know for sure that the alternative is at least equal in quality.

    For example, Cheerios are my favorite cereal. But Toasted Oats are god-awful–as are Toasted-O’s and Crispy Oats, and any other variation thereof. I flat-out refuse to buy them. I’ll spend the extra dollar on the brand name, in this case, without a moment’s hesitation. And those knock-off names sound ridiculous. I want to be “cheery” when I eat my O’s, not “toasted.”

  10. LK

    I TOTALLY agree about grocery shopping brands. I will not eat any other mac and cheese besides Kraft! I wont even pick up ketchup that isn’t Heinz, and I only like Hidden Valley Ranch. There’s a restaurant/bar I go to that serves Rold Gold ketchup, and I’m starting to consider bringing my own travel size bottle of Heinz.
    Guess I’m more brand loyal than I thought.

    • Bret Bonnet

      Darn I’d hate (and couldn’t afford) to be married to you – JK! :)

  11. Bret Bonnet

    JEFF – This is a VERY well written post.

    I don’t think there will EVER be a “final answer” when it comes to the debate over BRAND NAMES vs. generic, but I’d still like to share my two cents here…

    For starters… Purchasing brand name products can turn into a slippery slope. As Scooby Doo pointed out:

    “Companies like Rolex know people who buy their brand, buy it NOT because it makes sense, but because when use their product, that they feel in a way, better, privileged, you name it.”

    … but where does this stop? I mean… when does ANYONE stop desiring the affection and admiration of their peers – you know – the act of being privileged?!?!?

    I don’t mind paying for a brand when I know (or at least “feel) the additional cost/money is going towards a product that is higher quality (less likely to break or fail) and when I know the extra $ I’m paying isn’t going towards the brand name – but instead the incremental cost associated with creating such a superior product compared to that of the competition.

    Look at Google. They spend barely ANY money on advertising but they have the most recognized and most valuable brand in the WORLD. Why… because they offer a superior product. Apple is also another good example; granted there is still a lot of “fluff’ built into their pricing model to cover their brand building… I recently bought a MAC Book Air… I love the thing. It’s the best laptop I’ve ever owned. It SMOKES my Dell XPS 16 laptop that I paid nearly $2,000.00 MORE for just few months back. I bought the laptop totally blind, pure impulse, I saw the computer on TV and I bought it right then and there while sitting on the couch (on my Dell – JK!), but knowing what I know now, I would have easily paid $3,000 instead of $1,000.00 for the thing. It’s that GOOD.

    Going back to my point though (when does this brand madness stop?)… If it’s not Coach – then it’s Luis Vuitton. If it’s not Luis Vuitton it’s Armani Couture Collection, and the list goes on (just take a stroll down the mall at Caesar’s Palace in Las Vegas if you want to witness this ever EXCALATING insanity first hand). I personally think it’s getting out of hand.

    I work hard. I make a decent pay check – but you’ll NEVER see me spend any money on crazy expensive jeans or a “designer” accessories… I’m with Doc, Kohls and Old Navy all the way…. I mean… I’m married after all, who the hell do I have to impress. I’m already “locked-in” – JK! :)

    My ONE caveat… you’ll never see me shopping at ALDI for my groceries because there is point in time when to many artificial flavorings and preservatives becomes HARMFUL to one’s health and outweighs the cost of eating health(ier).

    Last but not least – generic batteries suck. Take my advise or learn the hard way… those 9V batteries you spotted at Walgreen’s and are considering putting in the smoke detectors in your home are NOT worth the savings… that is unless you want to hear CHIRP, CHIRP, CHIRP 2 months later once the batteries are dead and you need to replace them again – JK!

    PS. When I see people with Luis Vuitton suit cases at the airport I just want to walk over to them and slap the sh*t out of them!

  12. Tim G

    Great post… I feel that Apple has done a great job in making their products seem superior to all others in the industry. I personally am a sucker for what Apple has been able to do. If I am going to purchase a new computer I am 100 percent going to buy a Mac. Although the purchase may take a hit on my wallet, I can be reassured that I made the right investment because of their quality reputation.

  13. Brian

    When a brand has a good reputation to it, i think most people would generally stick to it. Sony flat screen tvs are crazy expensive but in my opinion you are getting a high quality tv. When companies get their brand name out there and have a good reputation of producing a good product they can afford to bump up prices so they can make a larger profit. Its a great idea and it works with alot of companies, just hard on our wallets!!

  14. liz

    I agree with Tim G, and I really enjoyed this post. I’ve often wondered the same things!

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