Brand Name Products vs. Store Name Products

In: Business and Management

Submitted By codyapfel
Words 403
Pages 2
Brand Name Products vs. Store Name Products
Consumers in the market pay higher prices for brand name products than they do for store name products that don’t carry an established brand name. Because individuals are willing to pay extra for what some consider an identical product that’s been advertised and promoted, brand name products may appear to be economically wasteful. However, brand name products serve a pivotal role within the economy. Not only do brand name products emphasize the idea that incentives matter but they also provide consumer efficiency within the market.
Without the existence of brand name products, consumers can neither punish companies that supply low quality products by ceasing their purchases nor reward companies that supply high quality products by increasing their purchases. Consequently, if all brand name products were eliminated, unidentified producers manufacturing indistinguishable products would have an incentive to supply low quality goods. Consumer reliance on brand name products gives companies the incentive to supply high quality products because they can take advantage of superior past performance to charge higher prices. The price premium paid for brand name products facilitates market exchange. A company that creates an established brand for which it can charge higher prices knows that if it supplies poor products and its future demand declines, it will eventually lose income and the market value of the company’s brand name would depreciate. As a result, higher prices create market incentives for companies with brand names to maintain and improve product quality because they have something to lose if they perform poorly. Additionally, brand name products provide assurance which can ultimately reduce the cost of weighing the tradeoffs of competing store name products. In a competitive market, consumers collect and process…...

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