Name Brand vs. Generic: Is there really a difference?

2017-09-18T12:40:08+00:00

According to eHarmony, the top reason users struggle to find dates is because their profile photos are low resolution and poor image quality. In case you’re wondering, next on the list are shirtless photos where it’s not necessary to be partially clothed, pictures of the user with mounted dead animals, and photos of user with their ex cut out of the frame.

As you might assume, people viewing these profiles make harsh judgments upon the user based on the poorly chosen photos. They tend to arrive at the conclusion that Mr. Blurry Photo Guy has something to hide. If he didn’t, why wouldn’t he choose a higher quality image?



Consumers might ask a similar question when they come across a bland, unremarkable generic product in the supermarket. And the packaging looks even less appealing when placed directly beside its stylish name brand counterpart. You might wonder, “If the generic brand packaging looks this hideous, then what can I expect from its contents?”

For example, look at the difference between the packaging for these two products:

Name Brand vs. Generic

Most people would agree that Honey Nut Scooters don’t look too appealing.

But unlike the dating profile with pictures of blurry dead animals, it might be in our best interests to give Honey Nut Scooters a chance. Why? I’ll explain.

Generic vs. Name Brand: Is there a difference?

For starters, you can save roughly 30% by choosing generic products over the national name brand option. Beyond the savings, once you take away the fancy packaging most consumers can’t distinguish between generic and name brand products.

So, is there a difference? In most cases, the difference between the products is negligible at best and sometimes even non-existent. But yes, there is a difference. The price!

Putting it to the Test

Researchers conducted a study comparing a brand name coffee with the store brand version. The researchers served coffee to the study subjects in two different types of cups – a Styrofoam cup and a fancy mug. They found that the vast majority of the time, the subjects claimed that the superior coffee was the one they drank from the fancy mug rather than the Styrofoam cup. Of course, half the time the subject was served store brand coffee in the beautifully designed mug.

I didn’t realize it at the time, but I unintentionally performed a similar experiment during my college days.

Top Shelf Tastes

Name Brand vs. GenericI had a friend in college who always purchased Ketel One vodka. Apparently it’s charcoal filtered and triple distilled and said to have a smoother taste than store-brand spirits. Most importantly, it comes in a fancy bottle.

All in all, my friend was spending about three times as much to buy Ketel One instead of the cheapest vodka available at the grocery store.

After my friends and I nagged him enough we got him to agree to host a few parties using the cheapest brand of vodka. You can probably see where this story is headed.

After we purchased the cheap stuff, we poured it into the empty Ketel One bottles. When our guests arrived, they exuberantly expressed their gratitude that we would serve them such a fine vodka at our own expense. As we repeated this process over the next few weekends, I noticed that our visitors would swear that their next-day headaches weren’t as bad, the shots went down easier, and that the vodka mixed better with their pairing liquids.

All this because we changed the bottle that the vodka was served from.




Now that we know the power of the placebo effect, let’s explore some other reasons you might consider buying generic.

Higher Cost Means Better Quality, Right?

Many people are hesitant to buy generic products because they think the generic product’s ingredients may differ from the name brand.

Let’s dig into this concern, by considering the possible disparity in quality in generic medicine. According to Melissa Stoppler, M.D., concerns about quality due to the cheaper price are generally misguided. Here’s what she had to say:

Actually, generic drugs are only cheaper because the manufacturers have not had the expenses of developing and marketing a new drug. As the patent nears expiration, manufacturers can apply to the FDA for permission to make and sell generic versions of the drug; and without the startup costs for development of the drug, other companies can afford to make and sell it more cheaply.

In essence, one company puts in an exorbitant amount of effort into creating a successful drug that in a short period can be produced in the same quality and sold for less. Furthermore, when a company produces a generic version of a drug, they must prove to the FDA that their drug is just as effective. This is usually done scientifically by comparing the ingredients in the generic version to the active ingredients in the original formula. Nine times out of ten, the active ingredients are exactly the same.

If you have any remaining uncertainty about generic medicine versus name brand consider this: 91% of pharmacists purchase store-brand headache medicine, rather than the name brand.

A Few Final Thoughts

When you are spending your hard-earned money on name brand items, it is important to make sure the name brand offers you value that the generic version can’t. In most cases the name brand does not.

In the case of popular food and household items, many generic products are manufactured by the same company that manufactures the brand name product. With name brand products, we are often agreeing to foot the bill for their higher marketing and startup costs when we buy their product.

As I’ve taken a closer look at this topic I’ve found that there’s considerable upside to buying generic products, while the downside is limited and almost nonexistent. While this shopping strategy won’t make you rich, it could certainly make a huge difference in your budget.

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About the Author:

Darian
Hi, I'm Darian! I am a twenty-something insurance professional working on my ultimate quest for financial freedom. I hope you enjoyed this article. Stick around to learn more about financial strategies to manage debt, save more, spend less, and live the life you want.

4 Comments

  1. Miguel (The Rich Miser) September 13, 2017 at 7:45 am - Reply

    I generally agree; my wife and I buy generics whenever possible, even buying dollar store generics for things like cold medicine. However, I swear by Tito’s Handmade Vodka, which I think is smoother and less alcoholic-tasting than any I’ve ever tried 🙂

    • Cato
      Cato September 13, 2017 at 7:52 am - Reply

      You make a good point! I’ll admit, alcohol is one product where there can be a significant difference in quality and taste between the top-shelf product and the cheap stuff that comes in a plastic bottle. Probably a case where you can easily rationalize paying the premium to enjoy what you’re drinking and to minimize or completely avoid the aftereffects.

  2. Froogal Stoodent September 16, 2017 at 3:31 pm - Reply

    You’re 100% right–the generic stuff (medication, food, etc.) is usually exactly the same as its more expensive name-brand counterparts! I buy generic food and other supplies whenever they’re available, with a few exceptions (like paper towels, because the generic versions usually have inferior quality).

    • Cato
      Cato September 17, 2017 at 8:01 am - Reply

      Thanks for stopping by! You’re right, most of the time it’s the same quality for much less money. It’s tough to justify paying more just for a label and nicer packaging!

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