What are examples of identical (or nearly identical) products sold at different price points?

In the U.S., you can generally find the most examples of identical or nearly identical products sold at different price points in chain drug stores, grocery stores, and hardware/home improvement stores. Why? Because chain stores in each of these categories almost always sell a major brand version and a private label (store brand) version of very similar products. They are known as Consumer Packaged Goods (CPG).

For example, most drug stores sell Bayer brand aspirin, but they also sell aspirin under their own name at a lower price. The same is true of hundreds, possibly thousands, of other over-the-counter and prescription drugs in their stores, from bandages, cough drops, and antacids to sleep aids, athlete’s foot treatments, allergy medicines, and more.

At major U.S. grocery stores, you’ll find Campbell’s and Progresso soups, but the store’s own brand of soup will be right beside them and cost less. And similar name brand/private label scenarios play out for other canned goods – from peaches and green beans to sliced mushrooms and infant formula – as well as for paper products, butter and milk, frozen foods, pet foods, laundry detergents, meats, breads and cookies, and more.

And at a major hardware store like Ace Hardware, you will often find national brands of house paint, bug spray, drain cleaner, grass seed, and hand tools, with Ace’s own almost identical private label versions of each right beside them, but with a much lower price tag.

How does this happen? This is a broad generalization, but usually the national or international brand is the innovator of the product – meaning that they either invented the product or they created a significantly better or different version of it at some point – and the store brand/private label version either copied the major brand or licensed it from a private label manufacturer. The major brand had development costs, nationwide advertising costs, distribution costs, placement fees, and more, requiring them to charge $XX amount if they are to make a profit and stay in business. The private label version copies the major brand almost identically, so development costs are low, plus has much lower advertising costs and no placement fees, so they can charge a lot less and still make money from it. It’s actually a mutually beneficial arrangement, but I won’t go into that here.

And here’s a twist: The lower priced store brand version of a product is often also made by the same manufacturer of the premium, brand name version. That’s not always true, because at times the store brand is made by a competitor that reverse-engineers the makeup of a premium brand to make their own, but it is true in many cases.

Why do they do that? Because major manufacturers know there will always be customers who want or need a lower price, so decades ago they figured out that they may as well be the ones who also sell the cheap version of their famous brands. Plus, when they make the cheap version as well as the premium, they can control the quality of the category, which can be especially important if you are trying to establish – and get people to trust – a new expansion category.

Hope that helps.

What Exactly is a Brand?

There are a few ways to define the term “brand,” starting with a symbol used by a person, company, or other organization to assert ownership of something. In the livestock industry, of course, a ranch burns its brand – its symbol – into the hides or horns of livestock it owns, including horses, cattle, sheep, etc. to signify ownership. It’s a strategic, clearly defined process that protects both the animals and the owners, with origins traceable as far back as ancient Greece.

Today, that tradition has been extended to packaged products, trademarked systems, and companies in every industry being offered with a brand now executed as a logo and brand position to signify its ownership, including ownership of any proprietary processes or ingredients that go into creating that product. Executing it with a red-hot iron is less frequent in non-livestock situations, but is…an option.

A brand, however, goes well beyond that physical claim. It’s bigger in that your brand is also what people think of the moment they hear the name or see the symbol representing a particular product, company, country, or person. That is, your brand is what you are known for in the world – part reputation, part expertise, part factual history, part public claims, and more. For that reason, you can influence what your brand is in the world, but you can’t actually control it. Even those ranches that literally burn their symbol onto calves’ hips can’t control what their brand is in the minds of people with whom they interact, but they can influence it.   

For example, companies spend heavily on advertising to influence what people think of their branded consumer goods, whether the product is toothpaste, beer, a car, a cell phone, paper towels, and so on. Ultimately, though, a product’s true brand – what people think of when they think of it – is formed based on a combination of user experiences, ads, product reviews, price, customer service, availability in the marketplace, and even real-world events like the Tylenol poisonings or the gas tank explosions of a very popular U.S. automobile.

It’s also notable that how a company or person responds to real-world events also influences what the brand will be. Tylenol is still popular today – and has even expanded its product line – because when those poisonings happened, the makers of Tylenol showed empathy from day one, cooperated with investigators, was cleared of wrongdoing, and changed its packaging to prevent future occurrences. The automaker, on the other hand, tried to downplay the explosions, lied about when designers knew about the problem, and blamed the drivers who rear-ended the exploding cars. As a result, that company’s brand – and sales – were hurt badly, they had to defend against lawsuits, and the model’s brand name became so toxic it had to be dropped from the line-up and hasn’t been revived even decades later.

In the end, a solid, trustworthy brand is usually the result of a good, dependable product design or honorable provision of services, telling the truth, being as helpful as possible under current conditions, and advertising its story with a positive attitude. Of course, any of these elements can come undone in many ways, and some people and companies don’t want their brand to be “solid and trustworthy,” but more like adventurous, care-free, sexy, fashionable, fun, affordable, crafty, super-patriotic, financially smart, religious, etcetera. While you can’t control what your brand will be to everyone, the first step in influencing what that will become is to decide what you want it to be.

Why Do Insurance Companies Use Lame Humor in Their TV Ads?

As it happens, we have written and produced a number of insurance company TV and radio commercials, as well as print, outdoor, and web ads. Ours were for health insurance, and largely not humor-driven, but we suspect you are thinking more of home and auto insurance. Still, w get where they are coming from.

There are actually several solid reasons why many insurance companies use humor – lame or otherwise – in their TV commercials instead of focusing on their product attributes.

1. Humor sells. It’s been proven time after time, year after year, and it really comes down to this: People buy from companies they like…and people generally like you more if you make them smile or laugh. Of course, that right there is the hardest part – knowing how to be genuinely funny, yet not do so in a way that insults your prospect or is interpreted as a “cheap shot.” The fact that you asked your question in the way you did shows that some insurance companies are NOT very good at being funny.

2. Insurance “facts” can be elusive. A friend of mine has been an insurance agent for many years, and when he is asked questions about what is covered and when, MOST of the time his answer starts with, “That depends…” Why? Because insurance is about risk and most insurance is personalized to fit the person, family, property, or company being insured. In ads, then, the insurance company needs to be relatively general about what they promise, because they always reserve the right to NOT insure you if they don’t want to risk it. Thus, it’s easier to use humor and avoid promising too much.

3. U.S. insurance laws vary from state to state. We’re not sure how car and home work in other countries, but in a country where the insurance laws can be 50 kinds of different based on geography alone, it’s often easier to make a few apropos jokes in your ads and leave the details to individual conversations between sales reps and their prospects.

4. Being forced to buy insurance rubs some people the wrong way. In most U.S. states – maybe all by now – anyone who owns a car is required to buy car insurance. Why? A car can do real damage real easily, so it protects us all. Likewise, mortgage lenders require anyone who buys a house to have home insurance. And many companies require contractors to have business insurance to do work for them. It’s good to have, but can be expensive, especially to someone who is barely getting by…thus, the resentment. So, humor can be an effective way to take the edge off of talking about something that people resent having to discuss at all.

5. Done well, humor makes you more memorable. We have good reasons for not choosing GEICO car insurance, but their use of the gecko as a “spokesperson” is brilliant. Some of those commercials fall flat, but most of them over the years have been great, and few would notice or remember the GEICO name without the gecko. In fact, the few times that I’ve seen competing insurance companies do ads insulting the gecko, the ads fail because readers remember the gecko, not whatever sales points the other guy was pushing.

As you suggested in your question, humor is not always the right tool to use, and it’s often done badly. When it’s done right, however, a humorous TV commercial can be very effective and incredibly memorable, especially for topics and products that are hard to be specific about. And effective commercials are never lame.

Do a Lot of Large Companies Advertise Their Brand Instead of Their Product? If So, Why?

The short answer to this is, “Yes!” It is literally called Brand Advertising. Yes, many companies absolutely do focus their ads on promoting their corporate brand instead of individual products, and in most cases they should. Why?

1. Most large companies create and/or sell multiple products. Those products may all be related, and may even be focused around one core product, or they can be a range of very different products. They can be physical products, like different types of canned fruit, or they can be a service-related product, like mutual funds. What these products all have in common, however, is that they all come from one corporate brand name, so by promoting that one brand name aggressively, the company imbues its entire line of separate products with the perception of possessing the same quality – accuracy, toughness, innovation, flavor, or whatever the brand is known for – even though the amount of those qualities each product possesses will typically vary.
   
   For example, the Apple corporation often promotes the Apple brand as innovative, stylish, high quality, popular, and slightly exclusive parts of a great lifestyle. That leads people to expect those qualities in ALL Apple products, from iPhones to MacBook Pros and from Apple Watches to Apple TV+ productions. And because they have spent most of their marketing dollars creating their immensely strong brand perception for Apple overall, new products and services they introduce usually sell well almost immediately, which lowers long-term marketing/sales costs while enhancing customer satisfaction.

2. Brand advertising costs less than product advertising. Think about the Colgate brand for a moment. The toothpaste people. Every national ad they put out is either mostly or completely about the Colgate brand, not an individual product. That’s because they know that, when you go to the store, the Colgate name – not the product name – will be one of the first things you see on the dental care aisle. And whatever type of toothpaste you want, Colgate will have an option – known as a sub-brand – there for you. You will also see Colgate mouthwash, Colgate floss, Colgate tooth whiteners, Colgate toothbrushes, and more. So, although they do advertise distinct products via promotions, point-of-sale (POS), dental practices, and narrowly targeted media, their ad dollars go a lot farther by focusing their major ad buys on primarily promoting the Colgate brand, which in turn shies a light on ALL of their individual products.

3. Brand advertising is essential to Direct-to-Consumer (DTC) brands – Allbirds footwear, Saatva matresses, Harry’s shaving products, Chewy pet supplies, Stitch Fix clothing, Warby Parker eyewear, and more. Many DTC brands launch as start-ups and start-ups need to be ready to alter their product offerings in their first few years as they work to establish a niche following. Focusing on the brand, not the products, in advertising does that.

4. Brand advertising supports sell-in to distributors and retailers. For large brands to sell their products to consumers, traditionally they first need to sell-in their corporate branding message to and through sales channels. It’s easier to get a retailer to carry your products, for example, if you are Proctor & Gamble or Clorox than it is if you are a small company that few people have ever heard of. That’s a vast generalization, but it’s still true. Thus, although consumer packaged goods (CPG) companies do a lot of marketing of their individual consumer products, in business-to-business venues, they are at least as likely to promote their corporate brand first in the hope that more and faster broad recognition will get them a chance to sell-in their branded product lines.

5. Most large companies are public companies, so by advertising their brand more than their individual products, they also support their stock price. This is a good practice overall, of course, but also helps protect the company during times when one of their products starts to lag in popularity or has a crisis. For example, a packaged foods company could have a product that is popular for years, then loses marketshare because societal tastes change or there is a “health scare” in the industry – even if that specific product isn’t involved. By consistently supporting the corporate brand, the company can survive a hit to one of its product brands until it can re-formulate, make some other shift to the brand, or shut it down and put resources into a different product.

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   There are also times and places when a company may want to focus its ads and other resources on products rather than on a core brand name. This is especially true if the corporate brand is already strong and positive enough to give its product lines a beneficial “glow.” But advertising your brand always has more benefits than liabilities.