So what are some of the things that make well established brands so valuable? Generally speaking, aren’t brand named products more expensive than generic products? If that’s true, why do typical well-recognized brands dominate market share–some by very wide margins of 4x to 5x greater than their next closest competitors in some cases?
It might seem counter-intuitive at first, but if you think about your own buying habits for a bit, you’ll probably identify with several behaviors. First off, a brand represents a known quantity. The basic nature and quality of a well established brand product is assumed, and you are comfortable choosing it over the possible “unknown” characteristics of a generic product. The generic might be good, but it may not be. So, instead of taking that risk, you are more comfortable paying more for a brand that you “know.”
And there is another very powerful element involved in your decision-making process of deciding between a brand product and a generic. Time. The one commodity that everyone values even more than their money is the time they have available. So, rather than taking the time required to conduct “research” into the qualities and value of a product that may be unknown to you (the generic) you will choose the brand name product because it saves you time. You’ll gladly pay more for “Charmin” toilet paper because you “know” it’s soft and strong, and you don’t have the time or desire to find out if the “no name” TP is worth the risk. After all, if you buy the cheaper generic and bring it home, only to discover that it’s neither soft nor strong, you’ll end up having to return to the store to buy a brand that you “know” is good–you will have wasted all that time (and money), so why risk it?
Approximately 80%+ of consumers will select a brand named product that costs more, over a lower-priced generic of comparable quality.