Why do Firms Make some Goods Unattractive / difficult to buy?
It may seem strange but sometimes firms purposefully want to make a good unattractive. Why is this?
Tesco value products have unattractive design. It shouts out “I’m cheap and low quality”. What happens is that customers with inelastic demand, – people who give importance to looks and packaging will avoid it. They will happily spend 3 times as much for a similar product with nice packaging. Therefore, the company can get the best of both worlds.
- Customers who are price sensitive (elastic demand) and don’t care about packaging will shop at Tesco to get all the value products. However, customers with inelastic demand will keep paying the higher prices and bigger profit margins for Tesco’s
- If the Tesco value products were attractively designed, the inelastic customers would buy the cheap food and have no reason to buy the expensive varieties with a big profit margin. Therefore, Tesco would lose consumer surplus from these price inelastic consumers.
Another reason for offering cheap goods is that it encourages people to shop there. They equate Tesco with cheapness because you can get a loaf of bread for 7p. However, when you go shopping you don’t only buy bread for 7p, you also spend £40 on other more expensive food.
3 comments ↓
[...] Tesco Value goods – Why are they unattractive – an example of price discrimination in practise [...]
Tesco Value products might look unattractive, BUT I think its a good Idea looking like they do because it is easier to spot on the shelf.
Tesco Value Baked Beans-Not too Good
Tesco Value Beans & Sausage-Better than Baked Beans
Tesco Value Sweet & Sour Sauce – Spot On!!
Tesco Value Tin Custard – OK
Tesco Value Orange Juice – Great
Tesco Value Apple Juice – Great
Tesco Value Eggs – Same as any other Eggs
Tesco Value Chopped Tomatoes – Good
Tesco Value Bourbon Creams – Same As others
Tesco Value Custard Cream – Same as others
Tesco Value Malt Loaf – Good
My opinion on these differ
Tesco Value Baked Beans-ok
Tesco Value Beans & Sausage-great
Tesco Value Sweet & Sour Sauce – never tried it
Tesco Value Tin Custard – never tried it
Tesco Value Orange Juice – Great
Tesco Value Apple Juice – Great
Tesco Value Eggs – Same as any other Eggs
Tesco Value Chopped Tomatoes – not enough tomatoes in them
Tesco Value Bourbon Creams – Same As others
Tesco Value Custard Cream – Same as others
Tesco Value Malt Loaf – Good
im an obsessive value shopper. and the beans and saugage is my 2 year old little girls favourite. lots of sausages in there and the juice is a good consistancy!!
Leave a Comment