Ask HN: What is the economy of cheap food lines at the supermarket?

https://news.ycombinator.com/item?id=24709702

by rambojazz • 6 years ago

1 3 6 years ago

news.ycombinator.com

Looking at products' labels they are almost always produced from the the same few companies and even at the very same plants. The nutritional value is the same. Only the brand seems to be different. Examples are tomato souce, or canned vegetables. So why <famous brand name> sells its products with <cheapo brand name>?

nosmokewhereiam• 6 years ago

Quantity is listed on the label, whereas quality of said ingredient may be inferences from the brand itself.

haspoken• 6 years ago

The same processing plant can produce many varieties of the same item, varying the recipe and quality to suit the customer or brand and cost point.

philipkglass• 6 years ago

I believe this is an example of price discrimination: https://en.wikipedia.org/wiki/Price_discrimination

A can of brand product and cheapo product cost roughly the same to produce. Both are sold at a profit.

If the producer produced only name brand products at the higher price point, some price-sensitive shoppers would buy goods made by a different producer. This would reduce the producer's profits.

If the producer produced only cheapo products at the lower price point, price-insensitive shoppers will end up paying less money than if a brand name product were available on the same shelf. This will also reduce the producer's profits.

The profit maximizing strategy is to sell basically the same product at different price points, trying to nudge higher income (less price sensitive) buyers to pay more than necessary via nicer packaging, better shelf placement, and advertising.

This is why many inexpensive store brand products are identical to more expensive brand name products, yet the store brand equivalent has not driven the brand name out of the marketplace. Companies are better approximations of knowledgeable, rational economic agents than consumers are.

Ask HN: What is the economy of cheap food lines at the supermarket?

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