You increasingly hear that all parts of different products are made in the same factory. Or that the private label item and the branded item come from the same factory. Branded items are increasingly made from parts purchased elsewhere, after which they are provided with a brand. What does that mean nowadays, a branded item? What are you actually paying for when you buy a branded item?
Why do consumers buy branded goods?
Branded items hold a promise. They promise the consumer that they are more sustainable and better than all other products. Moreover, a brand stands for service, reliability and a bit of status. Every brand represents a certain image, with the help of color, shape, texture and images, the brand does everything it can to maintain and strengthen its image. A brand is especially important for impulse purchases intended to boost self-confidence. This creates a positive psychological effect.
In addition, people choose a brand because they are familiar with it. We always ate Calvé peanut butter at home, so I buy that myself. My grandfather drove a Ford, my father drives a Ford, I also bought a Ford. This has been the case for years, but this is changing. People are becoming less and less brand loyal and no longer see fame as a sufficient reason to choose the same thing they always did, or as their parents used to do or still do. The reason it still happens is often convenience. I know this, I know what I’m getting and now I don’t have to think about it anymore.
A-brand items or private label items?
The difference in quality between A-brands and private labels has become smaller over time and is therefore barely noticeable to consumers. It’s just a matter of reading labels and trying them out. If the taste is the same for you and it does not contain any worse nutrients, it will really be cheaper to buy a private label product. Thanks to the above information, the private label has grown during this time of crisis. In Europe, with Switzerland (46%) and the United Kingdom as leaders, the market share of private label products continues to increase. America, on the other hand, still relies more on branded items. Data from a 2010 study by The Nielsen Company called Global Private Label Report.
All brands are the same
There is virtually no company anymore that is completely responsible for its own product. Just look at a car. It still has a brand name on it, but the parts come from everywhere. An example is the VW with its MQB (Modularer Quer Baukasten). They use one standard for the Seat, Skoda, Audi, Polo, Beetle, Golf, Jetta, Tiguan and Sharan. It is exactly the same with engines, a Ford Focus has the same engine as, for example, a Citroën Berlingo. Unique parts are no longer available and cars are becoming less and less distinctive.
Moreover, in the automotive industry a brand no longer guarantees reliability. Since it became known that tampering software was being used in solid, reliable German cars, confidence in car brands has fallen significantly. The same
applies to television sets as to cars in terms of parts. The parts are all made in the same factory. For example, Sharp not only makes screens for its own televisions, but Philips, LG and Sony also use Sharp LCD panels.
One last example: cycling. Whether you buy a Gazelle, Giant or a Union, the parts are all the same. All these brands source their parts from Sachs and Shimano. But not only they get their parts there, the small brands also buy from Sachs and Shimano. However, the small brands do supply considerably cheaper bicycles. So what is the difference?
What are you actually paying for?
Brand awareness: Chinese brands are more expensive in China because they are more popular there. People want to pay for an expensive product with a lot of brand awareness because they not only buy a product but also a piece of status. Think of Armani, BMW, Apple and Gucci. A name often stands for something. Many people would rather be seen with a cup of coffee from Starbucks than from another company. Not because this coffee is better, but because Starbucks is hip.
Location: In Paris you pay much more for most items than in the rest of France. It is not without reason that Paris is called the most expensive city in the world. There are also places in the Netherlands where items are more expensive than in the rest of the Netherlands. Het Gooi is a part of the Netherlands where they like to raise prices a bit.
Service: Many major brands, but not all, use service as advertising. They appear to really offer better service than their cheaper competitors. This can be a good reason to buy a branded item, especially with electrical items.