Smart people always buy this brand

By dkl9, written 2023-230, revised 2023-230 (0 revisions)

Products from well-known brands tend to be more expensive than equal-quality products presented generically or from obscure brands. Thus, "smart people" will favour generic products or obscure brands. (By "smart people", I mean people who want to pay less for the same product quality when possible. This doesn't quite match the typical meaning, but I don't think the difference matters here.)

But if these smart people find the optimally low-priced obscure brand, then many smart people, by word-of-mouth, will come to buy that same obscure brand. When that happens, the once-obscure brand becomes famous as being "the one smart people buy", and can then charge more by being a well-known brand.

Thus, that you hear of a brand as price-efficient is evidence that it's one that many have heard of as price-efficient, which suggests that it may no longer be so. You cannot be told what the smart brand to buy is, or it's no longer the smart one.

(In reality, this negative feedback loop wouldn't play out so efficiently, or perhaps at all. Businesses might not be that ruthless to exploit brand recognition as it first develops, or they might recognise that raising their price would destroy their demand.)