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Economy or Marketing?

November 2, 2014
By

cheddarMost of the supermarkets have an economy brand. For Tesco, it’s “Everyday Value”; for ASDA, “Smart Price”; for Sainsbury, it’s their “Basics” range.

Frequently, these products are cheaper for good reason. Meat products, such as sausages and burgers, are more likely to contain more fat and mechanically recovered meat then the normal or premium labels; chicken will be factory farmed; ready meals contain a higher proportion of the cheaper ingredients.

But what is an “Basics” banana, compared to the normal range? A tin of “Everyday Value” plum tomatoes contain as many tomatoes as a branded tin.

What made me think about this is that the other day, I was shopping in Tesco, and saw “Everyday Value Extra Mature Cheddar”. Now I can understand “Everyday Value Cheese” – I would expect it to be milder than mild – but a budget extra mature? Out of curiosity, I bought a bit, and it is very nice, exactly what you would expect from a good strong cheese.

But then I actually took a look at the price. The “Everyday Value” cheddar works out at £7.00/kg, almost half the price of the branded comparable cheeses. But who ever pays full price for them? I don’t for a start, as there is always one brand or other on a 2for1 deal or “half price”. Furthermore, comparing it to Tesco’s own brand Extra Mature, that only comes in at £7.50/kg.

So, thinking about it, I think economy ranges do three things:

  • In cases where cheaper ingredients can be used, they can be sold as a cheaper option.
  • In some cases where cheaper ingredients cannot be used, they allow the supermarket to sell essentially the same product at two different prices. They can make a modest profit from customers who buy the economy range, whose budget might not reach to the non-economy product; and they can make their normal profit from customers who assume that the economy product will be somehow inferior.
  • In certain cases, it is pure marketing; the price differential negligible, but the economy label convinces people they are getting a bargain, and induces them to buy.

One Response to Economy or Marketing?

  1. David on November 5, 2014 at 9:29 pm

    Lidl do a reasonable extra mature cheddar at £5/kilo, branding on the package is Valley Spire. When you look at the small print on the back turns out to be a Wyke Farms product.

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