Thanks for the great insight. The consumer product industry only has a few players (P&G, Unilever, Kimberly-Clark, Johnson & Johnson) which essentially gives them leverage to control prices and keep other competitors away through marketing.
The effects of marketing are very subtle, as your experience clearly demonstrates that.
Not quite so true -- the consumer product industry has many players, but only a few mega-winners. They're not largely winning because they "control prices"/"keep competitors away" (which sounds like there is something disreputable happening), they're winning because given the choice between a $3 bar of Dove and a $0.25 bar of white soap, Dove will generally win. (See e.g. house brands at supermarkets vs. branded products, though house brands are not priced quite that aggressively, in part because they know that they'll sell less at $0.25 than at $1.)
Maybe realted, maybe not. I read somewhere a few years ago one of the DIY stores like Home Depot or what-have-you did a study and decided that swapping out the $1 paint brush for the $5 brush didn't decrease the volume sold, but 5x'ed revenues on that product. Their insight was that someone going in and buying a few gallons of paint were not going to comparison shop on brushes (and drive elsewhere) to save a couple of dollars on a cheap brush --people would pay for the convenience of getting multiple items in one place.
True. To clarify, I don't think it's safe to completely write off the fact that they could be doing something illegal (I'm not saying they are, but see this book of their alleged illegal practices in the 90s: http://amzn.to/5bbFuA). The reason why the Dove bar wins over the cheap generic brand is because of marketing, which stems from their financial advantage over smaller competitors. Likewise, their financial advantage is the result of increased sales from marketing campaigns (recall the Old Spice commercials). It's a vicious cycle.
patio11|13 years ago
mc32|13 years ago
HRoark|13 years ago