We all know (and many love) the miracle of the modern age known as the Post-It note, invented at and made by 3M. There are many pretenders to the throne of sticky-note-ness, but the gleefully yellow square originals are the Jello, the Rollerblade, nay the Frisbee of the species. At my office, however, we are issued not the genuine article, but rather Highland notes. Pondering this injustice induced (presumeably) by thrift, I examined their backsides only to find that they, too are made by 3M. Ah, I thought, perhaps these are sold only in disgusting bulk, and labeled differently so as to maintain a “boutique” status for the originals. However, upon visiting yon office-suppy store, the two are available side-by-side and in similar quantities, but the Highland Self-Stick Notes are cheaper and less diverse. Any of you out there have any clue as to why 3M has 2 lines of nearly identical products?
I had no idea that the Highland notes were made by 3M. They generally work OK, but the adhesive is notably weaker.
To address the OP, don’t a lot of companies make a high and (supposedly) low end product? Like Pampers and Luvs diapers, or Tide and Era detergents? I think the advantages include:
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You are your own competitor. If a customer chooses to not buy one of your products (for whatever reason), they may buy the other.
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Customers looking for a bargain are possibly more likely to buy your non-flagship product. If you only sold the flagship product, they may buy from another company (in the case of detergent), or decide to do without (in the case of Post-It notes).
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You get more shelf space if you have multiply-branded products.
I’d agree with robby. The canonical example of this in some b-school texts is vodka. Some large vodka distributor (Smirnoff?) found itself losing market share to a “premium” vodka priced a little more. They split their product line into two brands, one priced just above and the other just below the competitor. Exact same product, but they put the high-priced version in a nicer bottle. Not only did they double their shelf-space allotment in many stores, but they recaptured lost market share among people who were shopping for a showy product.
I have no idea if this is true or not, but the fact that it’s taught in b-schools means it’s going to be reproduced in the real world by b-school grads.
It’s called “private label”.
In just about any store you go in (my experience is in hardware), there will be the store brand product (made by the name brand) near the name brand.
The manufacturer sells more product (albeit at a smaller margin), and the retailer gets to offer a lower-priced item.