The Company Behind The Biggest Consumer Brands
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The Company Behind The Biggest Consumer Brands
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Re: The Company Behind The Biggest Consumer Brands
#2Not trying to be a troll but the thing that jumped out at me was the P/E listed for P&G and my mind immediately compared it to the FB P/E at the IPO.
Re: The Company Behind The Biggest Consumer Brands
#3Not trying to be a troll but the thing that jumped out at me was the P/E listed for P&G and my mind immediately compared it to the FB P/E at the IPO.
Yeah, it's the norm for most tech companies to have high P/Es. It doesn't necessarily mean it's a bad investment.
Re: The Company Behind The Biggest Consumer Brands
#4Consumer product companies sort of foreshadowed what happened to food (+), is happening to clothes, and will probably eventually happen to everything physical. The fundamental product (soap, razor blades, etc) is done. It works, involves no novel technology, and can be created at infintessimal marginal cost by any player in the industry. (Try to guess what the price of the soap in a bar of soap is. If your answer is expressable in whole cents, you are incorrect.) This suggests that prices would crater except that branding works: there is no discernable difference in any product in the hand soap aisle, so they spend tremendous amounts of money on advertising, over years, because they know that stamping that dove on the bar will dominate your purchasing decision years later.
I'm well aware of this, and I'm 30, and I haven't shopped for a bar of soap in America for 10 years. Ruriko and I were at a Walgreens on our honeymoon and needed to buy one. I immediately started looking for Dove and, when asked if I needed help, said "Try to find the white/yellow box with the bird on it -- that is the best one" before conscious thought intervened and said "Well, honestly, every box on these shelves is identical, but the difference in prices between $2.69 and $0.89 is so miniscule for the average shopper that they'll mentally respond to marketing like I just did."
+ The e.g. tomato or pasta sauce is solved, cheaper than it has ever been, and (seasonal fluctuations nonwithstanding) will only get cheaper over time. It is an observable fact that, for any particular basket of food, we pay less than our parents did. This is discomfiting to people trying to sell us food. Most discussion of food in America is values signaling. (e.g. "Don't eat that, it's not healthy/environmentally sustainable/organic/etc" is, to a first approximation, likely as relevant as the color of your bar of soap.)
Clothes are trending in this direction, too. Have you heard "You should buy X, X is quality, X' was probably created in a Chinese sweatshop?" Horsepuckey, everything is created in Chinese factories now, by the same people, from the same materials, using functionally the same designs. The only distinction is the name on the label. (This is why clothing brands are in an epic battle with counterfitters, because if it weren't for criminal penalties for bringing fake Gucci bags into the country fake Guccis would be absolutely indistinguishable from the genuine article. They're like fake diamonds. You know what a fake diamond is, these days? It is a diamond which did not begin life owned by the right people.)
Re: The Company Behind The Biggest Consumer Brands
#5Consumer product companies sort of foreshadowed what happened to food (+), is happening to clothes, and will probably eventually happen to everything physical. The fundamental product (soap, razor blades, etc) is done . It works, involves no novel technology, and can be created at infintessimal marginal cost by any player in the industry. (Try to guess what the price of the soap in a bar of soap is. If your answer is…
Thanks for the great insight. The consumer product industry only has a few players (P&G, Unilever, Kimberly-Clark, Johnson & Johnson) which essentially gives them leverage to control prices and keep other competitors away through marketing.
The effects of marketing are very subtle, as your experience clearly demonstrates that.
Re: The Company Behind The Biggest Consumer Brands
#6Consumer product companies sort of foreshadowed what happened to food (+), is happening to clothes, and will probably eventually happen to everything physical. The fundamental product (soap, razor blades, etc) is done . It works, involves no novel technology, and can be created at infintessimal marginal cost by any player in the industry. (Try to guess what the price of the soap in a bar of soap is. If your answer is…
I think you're overstating the case. I found that Ivory soap dries out my skin, while Dove doesn't. The store brand single-blade disposable razors at Duane Reade tend to get badly clogged with hair, while Bic's version doesn't clog at all. The wooden spoon from the 99¢ store snapped in half after a few months of use. It's still true that you get what you pay for.
Re: The Company Behind The Biggest Consumer Brands
#7Consumer product companies sort of foreshadowed what happened to food (+), is happening to clothes, and will probably eventually happen to everything physical. The fundamental product (soap, razor blades, etc) is done . It works, involves no novel technology, and can be created at infintessimal marginal cost by any player in the industry. (Try to guess what the price of the soap in a bar of soap is. If your answer is…
Thanks for the great insight. The consumer product industry only has a few players (P&G, Unilever, Kimberly-Clark, Johnson & Johnson) which essentially gives them leverage to control prices and keep other competitors away through marketing. The effects of marketing are very subtle, as your experience clearly demonstrates that.
Not quite so true -- the consumer product industry has many players, but only a few mega-winners. They're not largely winning because they "control prices"/"keep competitors away" (which sounds like there is something disreputable happening), they're winning because given the choice between a $3 bar of Dove and a $0.25 bar of white soap, Dove will generally win. (See e.g. house brands at supermarkets vs. branded products, though house brands are not priced quite that aggressively, in part because they know that they'll sell less at $0.25 than at $1.)
Re: The Company Behind The Biggest Consumer Brands
#8Consumer product companies sort of foreshadowed what happened to food (+), is happening to clothes, and will probably eventually happen to everything physical. The fundamental product (soap, razor blades, etc) is done . It works, involves no novel technology, and can be created at infintessimal marginal cost by any player in the industry. (Try to guess what the price of the soap in a bar of soap is. If your answer is…
I think you're overstating the case. I found that Ivory soap dries out my skin, while Dove doesn't. The store brand single-blade disposable razors at Duane Reade tend to get badly clogged with hair, while Bic's version doesn't clog at all. The wooden spoon from the 99¢ store snapped in half after a few months of use. It's still true that you get what you pay for.
I agree. But it's often a little more subtle. Here in the UK, most major supermarket chains have "own-brand" lines of major product lines; everything from bread to plastic bags. The "own-brand" products are produced in the same factories as one of the branded products (it would make very little sense to anything else), but corners are often cut elsewhere. Own-brand pizzas have skimpier and lower-quality toppings, sliced bread is poorly mixed, paper towels have fewer plies, etc. On the other hand, some products, like whole milk, are harder to cut corners on, and others, like various area cheeses etc., are unique and the product of choice is simply the one who's taste you prefer.
Re: The Company Behind The Biggest Consumer Brands
#9Earlier quoted context omitted.
Thanks for the great insight. The consumer product industry only has a few players (P&G, Unilever, Kimberly-Clark, Johnson & Johnson) which essentially gives them leverage to control prices and keep other competitors away through marketing. The effects of marketing are very subtle, as your experience clearly demonstrates that.
Not quite so true -- the consumer product industry has many players, but only a few mega-winners. They're not largely winning because they "control prices"/"keep competitors away" (which sounds like there is something disreputable happening), they're winning because given the choice between a $3 bar of Dove and a $0.25 bar of white soap, Dove will generally win. (See e.g. house brands at supermarkets vs. branded prod…
True. To clarify, I don't think it's safe to completely write off the fact that they could be doing something illegal (I'm not saying they are, but see this book of their alleged illegal practices in the 90s: http://amzn.to/5bbFuA). The reason why the Dove bar wins over the cheap generic brand is because of marketing, which stems from their financial advantage over smaller competitors. Likewise, their financial advantage is the result of increased sales from marketing campaigns (recall the Old Spice commercials). It's a vicious cycle.
Re: The Company Behind The Biggest Consumer Brands
#10Earlier quoted context omitted.
Thanks for the great insight. The consumer product industry only has a few players (P&G, Unilever, Kimberly-Clark, Johnson & Johnson) which essentially gives them leverage to control prices and keep other competitors away through marketing. The effects of marketing are very subtle, as your experience clearly demonstrates that.
Not quite so true -- the consumer product industry has many players, but only a few mega-winners. They're not largely winning because they "control prices"/"keep competitors away" (which sounds like there is something disreputable happening), they're winning because given the choice between a $3 bar of Dove and a $0.25 bar of white soap, Dove will generally win. (See e.g. house brands at supermarkets vs. branded prod…
Maybe realted, maybe not. I read somewhere a few years ago one of the DIY stores like Home Depot or what-have-you did a study and decided that swapping out the $1 paint brush for the $5 brush didn't decrease the volume sold, but 5x'ed revenues on that product. Their insight was that someone going in and buying a few gallons of paint were not going to comparison shop on brushes (and drive elsewhere) to save a couple of dollars on a cheap brush --people would pay for the convenience of getting multiple items in one place.