Interesting development over the last few years with the Beer market. Most people have their consideration sets pretty much set in stone when it comes to beer, and these consideration sets are almost entirely based on price. There are two main categories I will discuss. The first is the low-priced domestic beers:
- Natural Light
- Pabst Blue Ribbon
- Milwaukee's Best
- Keystone Light
- Coors light
- Bud Light
- Miller Light
Now, some will tell you that the high priced beers taste better than the low priced beers, but in the end, they are all very similar. Pabst Blue Ribbon realized this, and decided that they wanted to re-position their product into the high priced beer segment. This was an interesting strategy, and one that figured to make a lot of loyal PBR drinkers quite angry. It also brings up an interesting marketing issue: how does the price of a product affect a customers perception of a product?
Interesting question. Unfortuntately, I don't have any data to suggest this, but I'd be willing to bet that 90% of people would rate Coors Light, Bud Light, and Miller Light ahead of all of the low-priced alternatives in a taste test where they knew the brands. I'd also be willing to bet that if the same taste test was done blindly, they would only rate the higher priced brands better about 50% of the time. This is clearly what PBR figured out. They realized that they could reposition their brand, charge more for it, and do all of this without having to change their product at all. Indeed, they could make customers perceive that their brand tastes better and is of a higher quality by just increasing the price of it.
This is a phenomenon that is not limited to beer. Many generic products in grocery stores are exactly the same as their brand name counterparts, and some are even manufactured by the same companies, but many consumers swear that the brand name simply tastes better. In automobiles, there is an assumption that the more expensive car is the better car. While these assumptions are sometimes true, they are not universally true, and show how prices of items affect the perceptions of the products by consumers.
Interesting question. Unfortuntately, I don't have any data to suggest this, but I'd be willing to bet that 90% of people would rate Coors Light, Bud Light, and Miller Light ahead of all of the low-priced alternatives in a taste test where they knew the brands. I'd also be willing to bet that if the same taste test was done blindly, they would only rate the higher priced brands better about 50% of the time. This is clearly what PBR figured out. They realized that they could reposition their brand, charge more for it, and do all of this without having to change their product at all. Indeed, they could make customers perceive that their brand tastes better and is of a higher quality by just increasing the price of it.
This is a phenomenon that is not limited to beer. Many generic products in grocery stores are exactly the same as their brand name counterparts, and some are even manufactured by the same companies, but many consumers swear that the brand name simply tastes better. In automobiles, there is an assumption that the more expensive car is the better car. While these assumptions are sometimes true, they are not universally true, and show how prices of items affect the perceptions of the products by consumers.
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