Reasoning out brand name markups
Brand name products tend to have marked-up prices, even if the products are the same or similar in appearance to lower-priced versions. “What makes a brand name more expensive has a lot to do with prestige pricing, the development of the product where more money and research goes into it, commanding a higher price,” said Russ Brown, spokesperson for the California Department of Consumer Affairs. Sometimes, the quality of the products does differ, Brown said. “Like in name brand clothing, the cuts are nicer,” Brown said. “But you can find some (clothes) in a store brand that do not carry a major label.” The bottom line objective is for companies to establish themselves as premier companies, Brown said. “Industry today is based on repeat business, where the goal is to have people coming back to buy the products,” Brown said. Name brand labels cater more to their consumers, and often put more effort toward fixing any problems, in order to ensure that the brand’s prestige is not tarnished, he said. Similarly, in grocery stores, the price of a name brand product is considerably more expensive than a store brand, Brown said. Karen Robinette, CSUN apparel design and merchandising professor in the Department of Family and Consumer Sciences, said stores have their niches and know their customers’ demographic, which helps determine how to price their products. Products sold at boutiques or specialty shops are priced higher than those at stores like K-Mart or Target because of the brand name, and the way the products are labeled, Robinette said. “Let’s say Target, Neiman Marcus and Macy’s ordered the same exact sweater, and manufacturers just put the stores’ label in,” Robinette said. “Since Target has ordered a larger volume of the product, they can sell it for a lower value.” Brand loyalty has a lot to do with how products are marketed, since stores generally charge higher based on the association with a certain quality, Robinette said. “Some people who shop at Neiman Marcus would not put their foot in Target, and stores like Neiman Marcus know this, so they sell a lower specific number of sweaters and charge a higher price, even if it is on sale,” Robinette said. But high-end stores do not always offer high quality products, and people should examine apparel details, such as sleeves, buttons, and support interfacing, Robinette said. Psychology also has something to do with what people buy, and may also play off the fact that people want to wear smaller sizes, she said. “(Someone might wear) Donna Karan because (they) can wear a size two instead of a size four,” Robinette said. Companies do research and style their products aimed at a specific consumer target, Robinette said. One female CSUN student said she prefers name brands to generic brands. “I get Guess, Bebe and Tommy Hilfiger because of the quality,” said Suzie Zhamkochyan, junior biology major. “They last longer and fit better.” However, not all students prefer to buy high-end clothing. “I am very mixed,” said Tala Johartchi, senior psychology major who shops at Forever 21, Nordstrom and Ross. “I also buy clothes from the swap meet. It depends on my mood and how much money I have.” Robinette advises students to carefully choose what they buy. “There’s a lot of junk out there and students don’t care,” Robinette said. “They don’t want to spend money because it’s not an investment at this point.” Older consumers are more likely to consider durability and economic practicality, she said.