When the Name Brand Purchase is a Bad Deal
January 26, 2010 by Mr. ToughMoneyLove
Filed under Fools of Finance
Paying more for a “name brand” product is a tricky proposition. A few high-end or luxury brands are worth the extra cost because they legitimately provide a valued upgrade in performance or durability. The cost-benefit analysis is favorable to the consumer. But that is not always true and the trend may be downward.
The worst reason to buy a name brand is to fulfill the purchaser’s desire to impress others and to create feelings of self-importance. There are plenty of consumers who play that game and the expensive name brand merchants are happy to oblige. We see a lot of that in the constantly changing world of high fashion. (Sorry ladies, but I think you are the primary players in that money-wasting area.) Today I learned of an extreme example of a “name brand” manufacturer taking advantage of careless consumers.
The average consumer has never heard of Lexicon because its target market is the high-end home theater business. You won’t find Lexicon products sold at a big box retailer or even online. A professional home theater designer will sell you a Lexicon component – for a lot of money. Presumably, this means that you will be receiving the very best in quality and performance.
Not so fast.
Recently Lexicon introduced its BD-30 Blu-Ray player. You can pick one up for a mere $3,500. What do you get for your money? The same player that a value-conscious buyer can get from Amazon for $500.
Lexicon has taken the concept of product re-packaging to the max. If you open up the fancy aluminum enclosure for the Lexicon BD-30 Blu-Ray player you will find inside an intact $500 OPPO BDP-83 player. Seriously.
The full re-badging expose is in this article from Wired magazine. It’s funny, sad, and upsetting all at the same time. Sort of like popping the hood on your Porsche, scraping away the engine paint, and finding a Chevy V-8.
To compound the brand name value deception, the Lexicon ”product” is THX-certified while the OPPO player stuffed inside is not. The “different” products tested the same so how can this be? Check out the comment from THX after the article. Totally lame. The THX brand takes a hit along with Lexicon.
Does a consumer who pays $3,500 for a Lexicon BD-30 Blu-Ray player deserve this outcome? Perhaps. Who pays $3,500 for a standard video component that you can get at Best Buy for $150? Do they check the specs and compare them to units costing 1/10 as much? Probably not. Instead, they assume (wrongly in this case) that the Lexicon brand name brings important features and huge benefits not attainable by the lowly masses at Best Buy. Actually, the list of features found in many high-end A/V components far exceeds the ability of the average consumer to perceive a benefit from them.
The Lexicon re-badging makes you think again about buying brand name, doesn’t it? It should. Gosh, that Kirkland brand at Costco is looking better all the time.
P.S. Thanks to our first born son and tech guru who alerted me to this.
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On some things like over the counter medicine I would say generic, but a lot of times name brand does mean quality. Especially with electronics, there is a different between a named brand and a generic brand.
Agreed.
With a lot of deep research you can find out what TML illustrated. But few of us have the time or technical ability to know the difference.