Why we pay more for Brand Names

Brand Names as Status Symbols

Have you ever wandered into CVS when you were sick in search of cold medicine? If so, there was probably a point when you noticed that you could purchase CVS brand medicine or brand name products like like Advil or Tylenol. Often times, the brand name products cost 20, 30 or maybe even 50% more; they also usually contain the same mix of ingredients as CVS brand items. But regardless, we buy them.

But why? Everyone knows that brand name products are more expensive and usually exactly the same!

I think that it is about status. People want to be perceived as being successful and in America, success means having money. People want others to think that they have extra money so that they can feel good about themselves. So, when you are walking around in the store putting items into your cart, you choose brand name items that are more expensive because you subconsciously feel that others are watching you. I think that people tell themselves there are other reasons such as "I trust this product" or "I worry about the quality of generic products" but I think that much of the decision is based on image.

Take a look at this graph. It shows that the gap between brand name and generic medication prices has actually risen in the past few years. Brand names are becoming more "exclusive" while generic products are becoming cheaper.

It is hard to really say why people make certain decisions. But one thing is for sure: if you buy brand name products, you will end up with less money. It's an interesting paradox if you ask me.