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Are branded products really better than generic ones?

Personal finance is about compromises. If you spend a little more here, you have to cut back a little there. In the zero-sum game that is budgeting, money you spend is money that you can’t put in your savings account for tough times.

So it’s not surprising that you’d eye your purchases to see if you can spend less, without sacrificing much in terms of quality.

In general, brand-name products are better than generic products. Or at least their marketing is.

This concept isn’t very controversial because if generic and brand-name items would all cost the same, you would go with the brand name every single time.

But they are not priced the same, so you ultimately have to decide whether quality is worth the extra cost or if you should instead buy the generic product and save a few cents. In some cases, it makes sense, in others, it doesn’t.

Some people still stay loyal to their preferred brands, and they have plenty of reasons to do so. They argue that with brand products, you usually know who the manufacturer is, while many generic products don’t have that information available.

Another important factor for them is the intention behind the product. Are they selling it because they want to offer a high-quality product? Or are they selling it simply to make money? The intention of the manufacturer often mirrors itself in the products quality and the way it is produced.

Consumers also tend to stay away from no-name technological devices, since these kind of products are often most vulnerable to problems. If you are one of the unlucky people who encounters one of these problems, you can’t be sure that the generic brand company will help you fix it. Contrary to that, many name-brand devices come with a warranty, a customer helpline and sometimes even an address of one of their stores where employees of the company can assist you in person.

So if generic products are not as good as brand-name products, are they at least good enough? Would you rather pay more and get a quality product or pay less and get something lesser in quality? People often use their past experience when selecting products and services that meet their goals.

“Brand name quality assurance is especially important when consumers lack complete information about product quality at the time of purchase,” states Benjamin Klein, professor emeritus of economics at the University of California at Los Angeles (UCLA). “Companies may take advantage of this lack of information by shaving product quality, thereby lowering costs and increasing short-term profits.”

It is this level of quality differential — either realistic or perceived — between name brands and no-name labels that drive consumers to make a purchase one way or another.

Deciding on brand name vs. generic

So the question is, whether a name brand product is inherently better than its no-name counterpart.

Interestingly enough, many private label products are manufactured by trusted brands. This means that, despite a typically lower price point and sufficiently less marketing or advertising presence, a generic product can be every bit as quality as a brand name.

However, this is not always the case; in fact, Consumer Reports tested several cleaning products of brand name and off-brand variations, finding mixed results.

In some instances, the differences in performance were marginal — if detectable at all. In other cases, the off-brand product’s performance was significantly lower.

When testing window cleaners, for example, the less expensive product left streaks and did not achieve the same level of shine on mirrors and windows that the trusted name brand product did. This can be attributed to the name brand product having higher quality ingredients, having better filtered water or a host of other characteristics.

When it comes to deciding whether to buy generic products or brand name, you should usually go generic if the product is a regulated commodity.

For example, medication is regulated and so a generic version of an over-the-counter drug will deliver the same results as the branded one. Over-the-counter medication is required to list the active ingredients right on the box. All you need to do to compare brand-name products against their generic versions is to look at the packaging information on the side. According to Consumer Reports, you can save as much as 73% by switching to the store brand.

When researchers took a peek into the medicine cabinets of pharmacists, they found that 91% of them bought the store-brand headache medicine. Pharmacists, who were among the most knowledgeable about the ingredients in these medicines, were also overwhelmingly more likely to choose generics for themselves and their families.

Staple food products like flour, sugar, cornstarch, pepper and others are regulated. In many cases, the same manufacturers produce the generic products and the brand name.

Despite what the fuel stations might tell you about the additives they use, this is another regulated product with little variation between companies.

Finally, go with generic products when you just don’t care about what you’re buying. It doesn’t make sense to spend more on something, especially if you can’t tell the difference and won’t appreciate the quality.

By Catherina Arndt.


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