Smart People Buy Generic Brands
Sudafed or Wal-Phed: Which would you choose?
Nine times out of 10, pharmacists and doctors will buy the generic version of aspirin, rather than a brand-name like Bayer. Likewise, professional chefs prefer store-brand sugar, salt and baking powder instead of brand name ingredients.
In short, the most informed consumers usually buy generic products, claims a new paper by economists from Tilburg University in the Netherlands and the University of Chicago.
Their research estimates Americans are wasting about $44 billion a year on name brands, when they could be buying the exact same products if they switched to cheaper store brands. Store brand products cost on average about half the price of national brands.
They both have the same dosage, directions and active ingredient. But about a quarter of sales on headache remedy drugs in the U.S. go to brand-name products. So why then are some consumers paying so much for Bayer?
The paper suggests ads are more likely to mislead all but the most knowledgeable consumers. College-educated shoppers, for example, are less likely to get duped into buying the more expensive brand-name than the broader public. Meanwhile, the experts — like pharmacists and physicians — are the least likely of all to buy the brand name drug.
Whereas the average household buys brand-name pain killers like Bayer, Advil and Tylenol 26% of the time, pharmacists buy brand names only 9% of the time.
A similar trend turns up at grocery stores.