Consumer-Driven Watch: Smart Money Buys Brand X

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Over at Bloomberg View, Cass Sunstein has a great piece on a new study that provides insight into the behavior of today’s consumer. The central question is why do we buy brand name products instead of the cheaper store brand?

For the first time, we have solid answers, thanks to a study by Dutch economist Bart Bronnenberg of Tilburg University and three colleagues from the University of Chicago. They found a simple correlation: The more informed you are, the more likely you are to choose store brands. Pharmacists, for example, are especially likely to buy store brands of headache medicines. Chefs are far less inclined to select national brands of salt and sugar than are nonchefs who are otherwise demographically identical. In other words, national brands are succeeding largely because of consumer ignorance.

Researchers found that the difference in behavior between the experts and uninformed was significant:

In the case of pantry staples (salt, sugar, baking soda and the like), national brands accounted for 40 percent of total sales volume. But among chefs, the share dropped to just 23 percent — the smallest for any other occupation.

This article adds a new wrinkle to our previous coverage of the changing habits of consumers.

To find out even more about today’s ever-changing consumers, read the white paper, “It’s a consumer-driven world: how retailer and manufacturers are overcoming the challenge of today’s empowered consumer.


Aaron Pittman