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  December 9, 2011
Why Do We Buy?


Many a man thinks he is buying pleasure, when he is really selling himself to it.
                              ~ Benjamin Franklin

They set up a table in the student center and offered free coffee to students who helped them to conduct a taste test.  The first sample was a simple Columbian dark blend priced at $4.29 per pound.  The second sample was a Sumatran dark roast price at $14.40 per pound, roughly three times the cost of the cheaper grind.

Forty participating students were asked to rate the two coffees on a scale of 1 to 10 and add any comments about the coffee.

At the end of the taste-test, the participating students was given a choice of a free full cup of coffee from either of the two test samples.

The results were tabulated and Dr. Santos and her students found that the participants rated the higher priced Sumatran coffee, on average, almost 3 points higher than the lesser cost Columbian coffee (8.6 versus 5.9).  In addition, of the 40 test-tasters, 37 requested a cup of the higher priced Sumatran coffee as their reward for participating in the study.

So what makes this study so interesting?

Both of the coffee samples were the exactly same!

In this experiment, the participating students perceived that the more expensive coffee was better than that of lesser costing coffee although the two were identical in every way.  The research subjects justified their higher ratings by believing that the coffee that cost more simply must be better.

I am currently searching for a new vehicle.  The one I presently drive is starting to cost more and more to maintain as it gets older so it is time to make a change (it’s now 9 years old with approximately 120K miles on it).

I suggested to several friends, family and associates that I am torn between two models both costing about the same price.  One has significantly more features, a better warranty, more horsepower, more leg and head room and gets about the same gas mileage than the other and is less costly to maintain according to data supplied by Kelly Blue Book. 

My friends tell me that I am crazy to purchase the "better car" and I should instead purchase the "lesser car".  Their reason:  The "better" car is a Hyundai and the "lesser" car is a BMW.

The popular rationale for their opinion...while yes the features, performance, and warranty of the Hyundai might be better...it’s still a Hyundai and the other car is...well...a BMW so it must be better. 

I mention to my friends that, in reality, a Lexus is really a Toyota, an Infinity is really a Nissan, an Acura is really a Honda, and an Audi or Porsche is really a VW...but this argument doesn’t hold sway with them.  A BMW is better than a Hyundai...any day...period!

Why is it that we believe that if something is more expensive, it is simply better or more valuable than the less costly item?

In some cases, the additional cost may be true, due to taste, fashion or rarity.  A "prime" steak is perhaps more flavorful to some than a regular "select" steak, a Dior Couture evening gown may exhibit more fashion to some than an off-the-rack prom dress sold at JC Penny and the 1913 Liberty Head nickel is worth a considerable sum to a coin collector (due to the fact that only 5 specimens are in existence today)...but it is still only worth a nickel if you try to spend it in vending machine.

However, I question those paying large premiums for items that have very little added functional benefit for the significantly higher cost.  These items might include Craftsman tools, Henkel knives, or Titleist golf clubs. Unless you’re perhaps a professional, these tools will not make you a better mechanic, chef or golfer. (I actually have a friend who has spent more money on his golf equipment than he spent for his current car...and he still doesn’t regularly break 100 on the course!...I have often told him that he should think about spending some of his money on golf lessons rather than on golf equipment...an act of futility on my part I suspect).

So why do we place so much value on a name brand?

Some people will argue that we simply get what we pay for...a higher price means it must be a higher quality product.  Other will tell you that name brands have weathered the test of time and proven themselves over the years.  Still others are brand loyal because their parents bought a particular brand and that’s all they know (my mom used Tide detergent and it worked for her).  

We may also be motivated to purchase higher cost items by political factors such as wanting to purchase domestically made products or those made by union labor.  My father, for instance, refuses to shop at non-unionized grocery stores even though he may pay more for the exact same items.

For many of us, displaying a brand is a status symbol.  We dress our babies in designer wear.  We order margaritas made with premium tequila even though all we can taste is the lime juice.  We send our children to expensive big name private universities, even though the education they receive there is perhaps no better than that of a lesser known school.

Status symbols show the rest of the world that we have wealth.  It demonstrates to others that we’re important.  It helps us to feel good about ourselves.

This same notion leads us to purchase expensive coffee and imagine that it tastes better than less costly brand even though it’s exactly the same.

Maybe it’s time to rethink how we spend our hard-earned money.  Perhaps if we did...we might have more of it at the end of the day.

Thank you very much for your support of OptiFuse where we try to provide our customers with big value...not a big price.

Jim Kalb

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Death of a Salesman...

Can You Hear Me Now?...

It’s the People Along the Way...

Something for Nothing...

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