Question

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?

Solutions

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 10 months ago
Next > < Previous

Related Solutions

HIgh-income people are willing to pay more than lower-income people to avoid the risk of death....
HIgh-income people are willing to pay more than lower-income people to avoid the risk of death. For example. they are more likely to pay for safety features on cars. Do you think cost-benefit analysis should take this fact into account when evaluating public projects? consider, for instance, a rich town and a poor town, both of which are considering the installation of a traffic light. should the rich town use higher dollar value for a human life in making this...
Skin care and cosmetic products are necessities for ladies nowadays. People are more than willing to...
Skin care and cosmetic products are necessities for ladies nowadays. People are more than willing to invest in these items to increase their charm. In the meantime, cosmetic companies strive for better ways to deliver product information to potential customers and arouse their interest in purchasing. Besides offering discounts there are many other ways to trigger sales. Evelyn Lauder, an executive at Estée Lauder and member of the Lauder family, created the Clinique brand name and developed its line of...
people with a higher opportunity cost of time are more willing, ceteris paribus, to pay a...
people with a higher opportunity cost of time are more willing, ceteris paribus, to pay a higher money price for goods that save time than people with a lower opportunity cost of time. First, provide an example of a product where an important part of the true cost of the product is the time price. Can you think of something that seems to be a bargain at first because of its low money price, but that isn't as much of...
Term paper 1909 and 1927. Consider how these prices compare to the price of a car today. Why are people willing (and able) to pay more for a car today than they were in the early 1900s?
Term paper 1909 and 1927. Consider how these prices compare to the price of a car today. Why are people willing (and able) to pay more for a car today than they were in the early 1900s? 
Describe the behavior of the marginal utilities of such products. Does this explain why many people...
Describe the behavior of the marginal utilities of such products. Does this explain why many people choose not to smoke, but those who do usually consume ten or more cigarettes per day?
Describe the behavior of the marginal utilities of such products. Does this explain why many people...
Describe the behavior of the marginal utilities of such products. Does this explain why many people choose not to smoke, but those who do usually consume ten or more cigarettes per day?
Explain why college students are willing to pay for classes? Include a discussion of the ten...
Explain why college students are willing to pay for classes? Include a discussion of the ten economic principles in this context.
Assume there is a city of 1,000,000 people, 60 % of whom are willing to pay...
Assume there is a city of 1,000,000 people, 60 % of whom are willing to pay $1 maximum (each) to clean up pollution. The rest of the population is wealthier and is willing to pay $100 each to clean up pollution. Pollution clean up will cost $2,000,000. It has been proposed that each person be taxed equally to pay for the pollution clean-up. Will that pass a majority rule vote? Is it desirable from the point of view of the...
Many authors find that wages are more flexible in the US than in Europe: explain why...
Many authors find that wages are more flexible in the US than in Europe: explain why this might be the case.
Explain why risk-averse individuals are willing to pay an insurance premium to remove risk.
Explain why risk-averse individuals are willing to pay an insurance premium to remove risk.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT