Why investing in popular brand names can be a winning investment strategy

Julie Brownlee, Fsp Invest, 31 Dec. 2014

Tags: brand names, power of brand names, investing, investment strategy, investing in brand names,



If you go to the pharmacy to buy some aspirin, do you opt for the generic store brand or the brand name?

A recent study shows that depending on your level of education, your choice will be different.

This research indicates that the power of brands goes a long way. And this is something you should consider when investing.

Let’s take a closer look…



The power of brand names is strong when it comes to consumers making buying decisions


A recent piece of research out of the US suggests that the choice you make when buying over-the-counter medication comes down to your level of education.

Do you opt for generic store brands or brand names?
 
The study showed that doctors or pharmacists would opt for the generic store brand 81% of the time. That’s 15% higher than the rest of over-the-counter medication buyers, economist Timothy Taylor in Conversableeconomist.blogspot.co.uk explains.

Those consumers with a science degree also had a higher inclination towards the generic store brand option than consumers with other qualifications.

The study concluded that consumers who’re less knowledgeable will most likely opt for brand names than buy generic store brand products.

This is presumably because these consumers feel there’s a difference in quality in the products.

Consumers who’re more knowledgeable tend to opt for a generic equivalent as they’re more comfortable with their judgement about the quality of the products.

By opting for a generic store brand medication, the price can be vastly lower than that of a brand name.

But the pharmaceutical industry are the ones who benefit from this. The study showed that US consumers would save $44 billion if they chose the generic store brand product as it’s the exact same product.


How you can apply the power of brand names to investing


This study shows the power that brand names have thanks vastly to the advertising that goes with them.

And this is why companies that hold the top brand names tend to do well. Consumers are content with their brand names. They trust them and tend to buy them through thick and thin.

You can read more about this here.

When looking to invest in companies that have a loyal consumer base, brand power is definitely something to take into account.

So there you have it, why investing in popular brand names can be a winning investment strategy.

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