Saturday, August 18, 2007

Why budget brands have ugly packaging

From an article about the superior, unadvertised Starbucks short cappucino on Slate. The author claims that the short cappucino is the best one, because it has the highest espresso-to-milk ratio, yet it is not even on the menu and if you order it the cashier will not yell it to the barista:

The difficulty is that if some of your products are cheap, you may lose money from customers who would willingly have paid more. So, businesses try to discourage their more lavish customers from trading down by making their cheap products look or sound unattractive, or, in the case of Starbucks, making the cheap product invisible. The British supermarket Tesco has a "value" line of products with infamously ugly packaging, not because good designers are unavailable but because the supermarket wants to scare away customers who would willingly spend more. "The bottom end of any market tends to get distorted," says McManus. "The more market power firms have, the less attractive they make the cheaper products."

Interesting and effective. While some people will never buy value brands, there are those, like me, my wife and much of my family, who will only buy value brands of certain products, mostly commodities and non-foodstuffs. The article continues, doozily
The practice is hundreds of years old. The French economist Emile Dupuit wrote about the early days of the railways, when third-class carriages were built without roofs, even though roofs were cheap: "What the company is trying to do is prevent the passengers who can pay the second-class fare from traveling third class; it hits the poor, not because it wants to hurt them, but to frighten the rich."

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