You pay what you are willing to

A few days ago at work, somebody had brought some food over -  a mix of cakes and biscuits – some own brand and some branded. Somewhere from there a conversation began on the difference between the two varieties. It was interesting to see the reactions people had to this – with some like me swearing by own brand, others either refusing to buy own brand if possible, and still others, generally ok with own brand but not on certain specific items .

Of course, it is perfectly acceptable to have some brand choices and choose to go with certain products over others. And as items become more expensive, the downside of a bad decision becomes higher and the trust a brand gives becomes more important.  But on most consumables, I genuinely believe there is very little that a brand tends to add over the generic. There is only one product where I have consistently gone for a brand over the generic –I would argue that my experience makes it understandable.

I started shaving in the early 90s, when Gillette, I think had not yet been introduced in India. The gillette readyshaver was launched shortly afterwards but did not seem worthwhile at that time. I started working in 2000 and, without any idea of quality, bought the sensor excel –purely on brand. By this time the company had already launched the Mach III, at a much higher price point but with my usual disdain for “better improved” products sold at a premium, I went for the sensor excel. It did not disappoint-  while the wiltech edge (if I remember the name correctly) lasted me a week, the sensor excel lasted a month.

I quite happily continued with the sensor excel, happy to pay the premium over other double edge cartridges but not willing to pay the premium for the Mach III. In 2003, my brother visited India and he gifted me a Mach III razor with a set of around 20 blades. I switched over when my existing sensor excels finished and I found that each blade was lasting me 3 months or so – much superior to the Sensor excel.

In 2007, as I got ready to leave for the UK, I closed down my Indian credit card and used up the remaining points. Among the things I bought was a pack of 5 sensor excel blades. The 20 Mach IIIs lasted for around 5 years and wound down at some point in 2008. By this time, Gillette had introduced the Fusion 5 blade razors – which I viewed as a gimmick to get the customers to pay even more. I still had the 5 sensor excels to use up so I started using those and these were almost done by the end of 2008.

A friend of mine strongly recommended the Fusion-  but I was hugely sceptical. I was happy to pay for Gillette over a generic but not convinced of Fusion over Mach III. After spending Christmas at his place during 2008, on the way back home, I did need to buy new blades-  either the Mach III or the sensor excel. When about to leave his place, he again strongly urged that I switch to Fusion. With that ringing in my ears as I went to the  supermarket, I succumbed in a moment of weakness and bought a pack of 8 fusion blades- sometime at the end of December 2008.

I am still using that pack!

I am almost at the end now – in fact, I probably will be done with it by sometime in March. But I have used that 8 pack of blades from December 2008 till March 2018. Admittedly when I travel on holiday I prefer to take an electric razor rather than the Gilette. And, if I am in India, I will often get a shave done at the barbers rather than at home. But even adjusting for that I suspect that I have used that 8 pack of blades for more than 8 years. I don’t know if I just got an exceptional pack but I have already bought the next 8 pack of fusion blades – whatever the premium on the price. 

Of course, this decision has involved some amount of usage before reaching it. But that is the magic of the marketers -  they have managed to convince a lot of people that if you are paying a premium on the price, then you are getting a better product-  automatically. The refrain “you get what you pay for” is such a common thing. The facts suggest the complete opposite but, at least, in this country, it is widely accepted, often as gospel truth. The evidence exists to show that this is not true but people almost seem to be willing to be hoodwinked.

A classic example of this is vintage wines. You might have read of the wine fraud committed by Rudy Kurniawan. But just think of it for a minute – he replaced vintage wines with non-vintage wines and sold them as vintage. Definitely not acceptable. But why exactly are some wines vintage and others not - only because experts say so! Can you think of any other food product where a third party tells you what is good and what is not. Compare say with mangos, with their varieties of alphonso, dashera, langda, etc etc. An expert is not going to come and tell you that you must eat alphonso and the others are not as good. People make up their own minds and act as per their own preferences. That resultant demand may then set price…but not an expert’s judgement. But wine is this thing where somehow we have been sold the idea that a vintage wine is better than a non-vintage one simply because an expert has said so (and guess which is more expensive) .

But why are the vintage wines better and is there any objective benchmark for that. Ok, so for some things there can’t be an objective measurable benchmark but is there at least consistency? The answer is no. (look at https://www.theguardian.com/lifeandstyle/2013/jun/23/wine-tasting-junk-science-analysis and some of the follow up links from there) – experts can’t agree, not just among themselves but with their own self. A judge could rate the same wine as excellent or good or acceptable within minutes of each decision. Studies have shown that experts cannot even distinguish between red wine and white wine dyed red in colour. But the industry sells itself on this basis and vintage wines can be sold for huge amounts, because they are deemed to be better. A massive fraud, in my opinion.

Examples like these abound where price is used to indicate quality with no objective standard-  the same product is segmented and sold to different segments at different prices-  completely justifiable. But we have managed to imbibe that the more expensive one is better. Interestingly when different supermarkets sell the same product at different prices, no one has any issue – no one is going to say that the Tropicana in Tesco is better than the Tropicana  in Sainsburys even though one may be cheaper than the other. Similarly, when a company cuts its own prices, we don’t immediately say it is poorer quality – it is only when we compare it with something else that the relative price seems to impact the quality perception. 6 years ago, Huggies wipes used to sell for around two and a half pounds a pack. Today you get them for 80p a pack (and if you buy 10 or 12 of them, you can get them for 50p a pack- though I think the pack size has reduced from 64 to 56).I don’t think their quality has worsened nor do I remember that people are now complaining of that. It has happened primarily because supermarket own brand wipes are now available for 60p. But imagine the margin Huggies had originally…and why therefore price in itself is no measure of quality.

Irrespective of brand vs generic, the other social change in this area is one which is often discussed – the throw away culture. People consistently buy new all the time and just get rid of old stuff. At one level, this does not work too badly…e.g old clothes which you donate to  charity inevitably are recycled… and not on the high street. Rather they are sold in other parts of the world forming a good bit of a roughly USD5 bn second-hand garment trade that spans the globe (http://www.bbc.co.uk/news/magazine-30227025, https://www.theguardian.com/sustainable-business/sustainable-fashion-blog/2015/feb/13/second-hand-clothes-charity-donations-africa) . But while UK exports around USD 600 m of second hand clothes, around USD 200m goes to land fill. Similarly, the UK throws away USD8bn of white goods every year which can be repaired. . But unfortunately that 8bn does not get repaired or even recycled, it gets thrown away.

Part of the problem of course is that repair is often so expensive that it does not make economic sense to do so. I am sure there is a model whereby old stuff can be exchanged for a cut off the new price and parts from the old piece can be reused. We have always had a similar model for cars and we see it for stuff like laptops and phones but somehow it does not seem to exist for washing machines and dishwashers and microwave ovens and so on. I don’t know why. But while it might be difficult for an individual to repair a washing machine, it is not that difficult to mend/salvage clothes which cannot be donated to charity, probably because of a rip or some such thing, but which could still be mended/salvaged. But nobody will do it…because mending clothes is so infra-dig and uncool. Much easier to just throw it away and buy new ones.

And the most amazing thing of this all – if you are a person who is particular of these sort of issues – who prefers to mend things rather than throw them away, who waits to buy on a deal rather than pay full price, who is happy to shop around to buy at the lowest price- socially we have reached the stage where that is now seen as stingy and mean and niggardly. It is no longer socially acceptable to be able to say that you buy consumables on price…because that, by definition, means that you are willing to accept low quality…even if that is not the case. It has taken many years for Aldi and Lidl to become even semi-acceptable and even now a lot of people I know will not be willing to accept buying anything from Poundland…even if it’s the same items as that you would get at Tesco or Sainsbury’s.

Of course, the data does not reflect that…Aldi’s and Lidl’s market share keeps rising, the other supermarket’s shares keep falling and for 2017 Aldi topped the Which supermarket ratings with Lidl coming in at 3- suggesting a high degree of hypocrisy. Which of course, makes the initial point moot…maybe people do buy generic stuff, in spite of whatever they say. They just refuse to own up to it.

Ultimately, all individuals will decide on their own buying patterns – if you want to buy a more expensive product, that is perfectly acceptable – just as I do with Gillette. If however, you believe that a more expensive product is automatically better quality, then I would urge you to think again. And if you think someone buying a cheaper product is being stingy, you might want to consider that it is possible that they genuinely just like that product better. And please, please get the notion out of your head that you get what you pay for…instead remember that you pay what you are willing to pay for!