Who Buys Brand-Name Products?

Less informed consumers buy brand-name products when a less expensive equivalent is available, according to a National Bureau of Economic Research study. NBER researchers came to this conclusion after analyzing a Nielsen Homescan database of 77 million shopping trips, zeroing in on who buys store-brand versus brand-name pain relievers.

Knowledgeable shoppers are more likely to buy store-brands. Pharmacists and physicians, the most knowledgeable shoppers in this instance, are most likely to buy store-brand pain relievers, choosing them over the branded equivalent 91 percent of the time. In comparison, the average consumer chooses the store-brand just 74 percent of the time. By field of study, college graduates with science degrees are more likely than other college graduates to buy store-brand pain relievers.

Extending their analysis to the purchase of cooking ingredients, the NBER researchers find that chefs—the most knowledgeable cooking supply shoppers—choose store-brand pantry staples 80 percent of the time while the average consumer chooses store brands only 60 percent of the time. Conclusion: the less consumers know, the more likely they are to pay the premium for a brand-name product.

Source: National Bureau of Economic Research, Do Pharmacists Buy Bayer? Informed Shoppers and the Brand Premium