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In: Accounting

Explain why many people are willing to pay more for branded products than for unbranded products

Explain why many people are willing to pay more for branded products than for unbranded products. What does this tell you about the value of branding?

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Expert Solution

Brand denotes an automatic level of quality and consistency that the customers have experienced in the past or heard about through word of mouth or other sources of information. An unknown brand or a product without a brand may be a quality product, but it is not recognized as such (for example, store brand vitamins versus One A Day®). Most people seek value for their money and therefore would rather pay a bit more to secure the satisfaction of an expected result rather than try and experiment with something which may turn out to be unsatisfactory. This illustrates that while there are many significant costs to launching a brand, the returns will more than recoup this initial investment.

Junaid answered 8 months ago
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