Wednesday, November 26, 2014

Brand vs Generic: When To Go Generic & When Not To

People always worry about what product brand to buy. Should I go with a more expensive popular brand? Or should I save some money and get the cheaper brand that seems to do the same thing. I wanted to discuss some of my own experience and what I have learned. Most of what I'll discuss will pertain to devices, but the same knowledge can be applied to other purchasing areas.

What's In a Name?
Companies, big and small, are after one thing only, consumer money. So, one way to do that is through branding. Some businesses launch brilliant marketing campaigns to boost their branding, or to create a name for themselves. Others depend on word-of-mouth. In either case, the hope is to build a strong enough brand to have potential customers buy their product or service solely on their name. And while that is how many people buy items, the goal should be so much more research-intensive.

Brand Tiers
While most will consider only two categories (brand and generic), I feel there are at least four that come into play. I will describe each tier and give them a name that I use to differentiate between them.

Top Brands
 A "top brand" is what everyone refers to as just a brand name. However, a top brand is really a bit different from others. They are usually mid-to-large size companies that have spent tons of cash (or not if they are lucky) to build up their brand name and become common in popular culture. Brands like these have power, money, and the sway to take in large percentages of their consumer-base compared to competitors. Such top brands include Coca-Cola, Ikea, Samsung, Intel, etc. They are the top of the top and normally have little to fear from their competition. Conversely, there are top brands like Pepsi that ensure that Coca-Cola works hard to stay on top. Any brand can become a top brand, it doesn't only take a lot of work to get up to a top position, but to stay in a top position.

Base Brands
"Base brands" are still well-known brands, but would be considered to be at the lower-end of the totem pole. They have a name that is recognized, yet, they are not what people would normally consider a great or best brand. Some companies in this arena are Zotac, PowerColor, Garuda Indonesia, and Transcend. Zotac and PowerColor are both graphic card manufacturers that make decent cards but fall short in comparison to their competition. While there are many who will praise their products, sometimes they just fall short. PowerColor comes up short as they come out with graphic cards that have little-to-no frills. While Zotac tries to be a power player but can't quite dig it's way out of a base brand (which may be because of the lack of pushing their brand, or when they have horribly overpriced and low-performing products like the the GTX 980 Extreme). Garuda Indonesia is an airlines that has built itself up brick-by-brick to be a much better airlines than it was a decade ago. Unfortunately, there are still many other foreign airlines that are just better (for additional incurred costs). However, in terms of domestic airlines in Indonesia, it could be argued that it is a top brand... Transcend manufactures USB flash drives among other things, and has slowly built a good base of consumers while increasing their drives build quality and maintaining an inexpensive price.

Base brands can become top brands, and there have been many cases to support this. Acer was an okay base brand years ago. They were cheap, but they seemed to be of low quality, so there was some risk involved in buying one of their laptops. As of late, I would classify them as a top brand because they have become extremely popular due to their cost-to-performance ratio.

Generic Brands
Generic brands are common in any country you go to. Is there a tablet you want but it's too expensive? Try a generic brand! How about some expensive jewelry? Try a generic brand! How about that a new flat-screen TV? Try a generic brand!

The main issue with generic brands is build quality. Many of these items will be outsourced to cheap companies that cut corners or use inferior materials, increasing the chance of getting a faulty or flimsy product. Sometimes you can get a winner, sometimes you can't. These companies are trying to make a name for themselves, usually in an already saturated market. Their game plan is to flood the market with cheaper, similar items in order to boost their brand.

What is interesting about generic brands is sometimes they have superior internals. Case in point, I bought an external Fantom Drive many years ago. It was relatively cheap, and had power-saving features that I wanted to try. I have never had a problem with it and use it to this day. While running some experiments I realized I had a Samsung drive connected to my computer, but I have no Samsung branded hard drives... On further inspection, I discovered that the Fantom Drive was actually using a Samsung hard drive. What becomes really intriguing here is that I got a cheap Samsung drive, but (until recently) I really never considered a Samsung drive a good drive. Ever moreso, I was really just relying on its brand name to believe it is a good product. However, experience with it has proved it to be a good product.

Another quick example is the Indonesian brand, Polytron. They produce fridges, washing machines, and televisions. What many people do not know is that they use Phillips parts for their own TV's. Their televisions are normally cheaper than Phillips, likely due to the branding. However, as one might think that it is hiding quality, I don't believe so. I bought a Phillips flat-screen about a year ago and in comparison to LG or Samsung, it is vastly inferior. There are a lot of missing features, and even the comparable features are just weaker. So sometimes hiding a top brand within a generic isn't always a win for the consumer.

No-Name Generic Brands
When most of us think generic I believe we really are talking about "no-name generic brands". These are the items that have no branding on the actual item. Sure, they may have some packaging with some brand name on it, but nothing on the product itself to distinguish it from others. Think spoons, scissors, or other common household products that really have no name on them. This happens in other realms too, for example, USB flash drives. You can find thousands of cheap USB flash drives without branding. These may be companies trying to make money through cheap USB flash drives, or more likely selling these to companies with some brand that can profit off of their cheap costs. These are the items to be wary of as they can seem great, but will usually have very low quality build regulations.

When you think of no-name brands, we think China, Indonesia, Thailand, Vietnam, India, etc. And there are many items made there that do fall suspect to poor performance or simply bad quality. As I see it, it is all about the manufacturing process and quality regulations. Take iPhones, they are made in China but come out great. This in large part due to serious regulations that need to be followed in order to deem an iPhone and iPhone.

Many of the great and bad products are outsourced to countries with inexpensive labor to make their products more lucrative. Other brands avoid outsourcing their work and make better quality products for it.

Samsung creates almost every part of their Android phones in Korea, allowing them to better control input and output. Because of that, when I hear Samsung, I usually think great quality. But it should be remembered that it doesn't mean all their products are made in Korea. They assemble (and possibly create) their televisions for the USA in Mexico, because it is much cheaper than building them in Korea and importing them [NAFTA].

The Play
Now I'll go through the motions of what to do and consider when choosing between a top brand and a no-name generic brand. Recently I wanted to purchase a new USB flash drive, so I checked on Amazon for prices and deals. I immediately came across a 128GB USB 2.0 flash drive for about $10! It was a no-name brand and it shipped from China. After a bit more research the best top brand I could find was a PNY 128GB USB 3.0 flash drive for about $35. Both are a great deal and the only major (apparent) difference is that one uses a newer and better USB revision.

The Used
The next thing I wanted to look at was a used price for the PNY USB flash drive. There was no used drives, so I could not take this into account when purchasing. A used top brand will usually still be better than a no-name brand in most of my experiences. Even though it is used, you may still get better bang for your buck.

The Reviews
For top brands and base brands this may be easier to accomplish by finding articles and forums that delve into experiences with the product. For no-name brands I normally have to rely on the reviews given at the site I am purchasing from.

In Amazon, the PNY reviews were quite good. For the no-name generic drive the reviews were about 50/50. You also have to remember that some of these no-name generic brands are sold under companies that have generic brands. Pouring through some of those reviews brought the no-name drive down to around 40/60, 30/70 (in favor of not getting it).

The Support
The PNY drive comes with a limited 1-year warranty. The no-name drive comes without a warranty. You could get Amazon to refund your money if the product becomes defective within a month's time.

The Risks
So my first thought was the no-name generic brand USB flash drive is cheap because it was made in China, which in turn means it also runs a high risk of being built poorly. If the no-name drive dies, I am out $10. The PNY has the warranty, so I can always send it directly to them for a replacement. While not a true risk, I should consider whether or not I want to use USB 2.0 or 3.0 for my flash drive. If just for use at home, then the USB 3.0 would be the way to go. I would gain no benefits outside my home as many computers I would use are only USB 2.0 capable. The reviews lend a lot of weight as most people aren't trying to post fake reviews for these type of things, which are against the no-name in majority. The last and most important risk is price. Ultimately, $10 is not a lot for a USB flash drive of any size in this day and age, which helps minimize the other risks involved.

I decided to incur the risks and buy the $10 no-name generic brand USB flash drive. An extra $25 for a top brand product was not enticing enough as I travel a lot and would not likely be able to use the warranty if necessary. And a $25 discount for the risks involved seemed worthy of an investment.

Once in my possession, I immediately noticed some quirkiness in speed and stability when I finally started using the USB flash drive. I could ignore that for the most part since it was for a bargain. A month went by and things were going okay, but then the USB flash drive died. I was upset that it had perished so quickly, but satisfied in knowing that it only cost me $10 for the risk. Had it been $35, I would have been angry for not trying the alternative first.

Money Well Spent?
I had taken the risk and paid the price for it. $10 wasn't a lot to lose, but on the other hand, it could have gone towards a good deal. This should not deter people from taking a risk every now-and-then. I often buy used items and have great success with them while saving a lot of money. I generally stay towards generic brands if I do choose to spend my money on something I have no basis to trust, and they normally work out.

Who knows? You could find that cheap deal and end up buying a whole lot more of that item if it performs well.

Consider This
There are lots of things to consider, brand name, build quality, price, affordability, and even support. Each one should be in your mind when purchasing a product or service from someone. And while my experience did not end well, consider this: Bigger companies make more products that statistically reduce the risk percentage of creating faulty products. That is to say, that companies big and small can and do make inferior products from time-to-time, so don't consider a brand name to be the best way to seek out something.

No comments:

Post a Comment