Name-brands vs Store-brands...the truth revealed! What you probably didn't know (and should!). From FunCheapOrFree.com

I was recently contacted by a food science major at NC State University who was doing a thesis paper on buying name-brand vs off-brand, or store-brand, items. She found me online and asked for a quick interview via email to help her with her research. I was happy to oblige. I thought I would share our Q&A in case it helps any of you! I'm fighting every urge in my body to re-write the whole thing and make it a very Jordan-esque megapost…but I won't. I'm fighting it. And it hurts. So here it is, in the raw, my personal opinion and knowledge regarding name-brands vs store-brands.

Just to give a little background, these answers are NOT based solely on opinion. I've made it my job, my mission, to become a frugal-living expert over the last few years. My knowledge and answers are based on research and info, in this case mostly coming from getting a private tour of how Costco works by a Costco GM himself! So take it for what it's worth…but I'm guessing he knew what he was talking about 😉 Enjoy!

1. What is your take on off brand grocery items vs. brand name items?

The secret that most people don't understand about off-brand items is that they are often made by in the same factory as the name-brand products! Take Costco for example. They don't have their own Kirkland diaper factory…or light bulb factory…or battery factory. That would be expensive and inefficient. They simply outsource the manufacturing to the name-brand guys!

Take their batteries, for example.

They outsource the making of their Kirkland batteries to Duracel (the other brand they carry in their stores). Duracel is willing to do this because they are now making a profit off of Duracel batteries AND Kirkland batteries, even though Kirkland batteries are so much cheaper. It allows them to get a bite out of both consumers – the ones that prefer name-brands and the ones that don't care. Kirkland is happy because they are also making a profit on both items. So at the end of the day, the Kirkland batteries are literally identical to Duracel…just with different packaging and pricing!

The other thing you have to understand about name-brands is that you aren't paying more for quality…you're paying more because they spend millions of dollars on commercials, advertisements, packaging, marketing, and market testing. That's why their prices are higher…not necessarily because they are filling their products with better ingredients or materials.

2. When shopping, does appearance of the product (packaging) affect your purchases? Why?

Yes, packaging makes a difference to humans in general. To me personally? Nah, not any more, because I've done my research and know the tricks that are used against us. For example, off-brand companies purposefully make their packaging and labels as plain, simple, and “old school” as possible because it appeals to the frugal consumer; it triggers something in our brains that lets us “know” we're getting a better deal on a product.  On the flip-side, the packaging on name-brand items is flashier, more professional looking, and is made to appeal to those who are willing to pay more for “higher quality”.  Everything – from the colors, fonts, labels, and shape of the packaging – is intentional, and it all makes a difference (or else they wouldn't do it!).

3. Being a bargain shopper, do you automatically go for the off brand products even if it doesn't taste the same as the brand name products?

Yes, always. I will almost ALWAYS go for the off-brand items. There are very very few things that make a difference in taste and quality, so I start with the cheapest and go up from there if I'm dissatisfied.

4. Do you think there is a big difference in the way males and females grocery shop? Based on price/appearance? Why?

Interesting question…but I would say yes. I think men tend to be less frugal. Maybe I'm wrong on this. But I think a guy would rather grab exactly what he needs, regardless of cost, just to get in and out of the store quicker. Women are willing to fuss and take time weighing options. So I think men would be more likely to grab the first thing they see and go…which would be the name-brand since it catches the eye better usually.

5. Do you buy off brand medication or brand name medication?Why?

Yes, absolutely. I got a personal, private, behind-the-scenes tour of how Costco works from an actual Costco GM (yes, it was fascinating!). He is the one that explained to me first-hand how their Kirkland products work (how they are outsourced to the name-brand guys and just packaged differently). He gave a great example of why we should buy off-brand medications:

He said Prilosec OTC is the most popular OTC heartburn medication, and is a top seller for them in Costco. The secret is that Prilosec is the company that makes the Kirkland off-brand of OTC, which also sells well. But the interesting part is that Costco was actually able to go to Prilosec and have them tweak and change some things in the Kirkland brand, so now the Kirkland brand actually works BETTER and is cheaper than Prilosec!

Why didn't Prilosec make the same changes to their product to get it to work better? Two words: red tape. It costs Prilosec so much money in market research, marketing, packaging, R&D to change a product, it can't happen overnight like it can with off-brands. Plus, the relationship Prilosec has with Costco is so valuable, they are willing to let Costco's product be better because it will only help their sales at the end of the day.

It's the same across the board: off-brand medications are nearly always as effective as the name-brand ones, because they are often made by the same companies or have nearly identical ingredients and effectiveness. When it comes to medicine people are more likely to buy name-brand because meds are something you don't want to mess with; you stick with the brand you trust, because you want it to WORK and you want it to WORK FAST. That's why they can charge so much; they know we will pay it.

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It was a fun interview, hope you found it helpful in some way or another!

Are you a name-brand shopper, or store-brand shopper? Why or why not? I'd love your insight, so share with a comment below!

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