Saturday, September 02, 2006

Branded or Local?

This post aims to help you decide between a branded product from a showroom and an unbranded item in a street side shop when you go out to buy something. 

This post is not for rich people who have enough money to spend on branded items. This post is for middle class people who operate under a constant pressure to cut cost but do not want to compromise on quality of the goods and value for money aspects.

For the purpose of brevity, I restrict myself to two types of products- apparels (dress materials and related accessories) and electronic goods/consumer durables. Other products will not be discussed in specific but whatever said about above two will apply by and large to other products as well.

When you go out to buy a dress or an electronic item, you have by default two options: Go to the showroom which sells the item you want or go to a local market and pick up an unbranded product from a road side seller.

Let us examine the merits and demerits of the two:
Branded Goods from company showroom or authorized retailer:


1.You get the bill or proof of purchase. This way you pay tax, fulfill your obligation as a citizen and the receipt will be of great help if your product proves to be defective.
2.Branded goods generally (not necessarily always) go through a quality control process and hence they’re generally more durable
3.Most of the branded goods come with warranty, theoretically ensuring that you get piece of mind for a given period if something goes wrong. They’ll have nationwide network of sales and service centers and generally you can get your product repaired/replaced anywhere if something goes wrong
4.The probability of cheating in terms of price and quality is less. Most of the time (I repeat, most of the time, not always) the prices are fixed and all customers, irrespective of their bargaining abilities, pay the same amount. 

5.Discounts if any will be well publicized and everyone knows about it.
6.Lots of value added services like-telephone/internet inquiries and purchases, door delivery, after sales on-site support etc will be available
7.Branded goods give you better recognition in your peer group
8.You can use credit/debit card or cheque and keep a better proof of payment.
9. Finance option may be available
10.You get a bill, hence pay tax (in ideal conditions) and contribute to nation building.
11. Some shops might offer reward/loyalty programs, which might be beneficial at times.
Cons:1.When you buy at a showroom , without your knowledge you pay for these operating overheads in addition to production and distribution cost of the product:
a. Advertisement cost-Both of local shop and that of manufacturer
b. Royalty paid for brand ambassadors of the brand
c. Salaries of sales men and sales girls in the shop
d. Electricity, rent and other expenses of running a shop
e. Profit margins-of local shop as well as that of manufacturer
f. Tax amount on all these
g. R & D cost of the product (If you’ve observed, the product cost comes down once sufficient number of units are sold and manufacturer recovers his R & D expense on the product)
h. Brand cost (Some of the companies outsource manufacturing to other companies, buy from them, put their own label and sell under their brand name)
i. As an end customer, I’ve no interest in making likes of Sachin Tendulkar and SRK richer by paying more money to the product they’re endorsing. If I can save on these above costs I’ll be happy.
2. Branded goods will always be expensive, even after heavy discounts they boast of, compared to price of a non branded item.
3. Most of the branded items comes with fixed price tag and are non negotiable in this aspect.

Unbranded Goods at street side shops:


1. More you can negotiate more you save
2.The expense and profit margins of these sellers will be low, hence they can sell real cheap.
3. Most of the overheads mentioned in Cons section of banded items are avoided in non branded items and the most of the advantage is passed on to you (usually)
4. I’ve found many (not all) people in unorganized market who give more value to customer satisfaction than money. These people are real hard workers, committed and their product/services are more reliable than branded shops.
5. If you’re a regular visitor, owners of unbranded shops treat you with more royalty, personal attention and discount, than a famous branded shop that has thousands of visitors daily
Cons:1. No bill, no warranty, no assurance. Though mutual warranty is provided that he’ll replace the product if defective, to what extent they fulfill their obligation varies.
2. Different people pay different price for same product depending on their negotiation ability. You’ll feel cheated when another person buys it for a lesser amount.
3. No branches or service network. You’ll have to go back to the same vendor where you bought it, for any problem
4. No quality assurance, No legal action can be taken against the vendor as you’ll have no proof of purchase.
5. These vendors are irritating to avoid. Once you ask price they’ll insist that you buy. Often use lots of cheap tricks to convince you into buying.
6. If you do not know much about the product and price range, you’ll fail to check the product thoroughly before buying and won’t be able to bargain to a reasonable price. This makes you more susceptible to cheating.
7. Chances that a second hand/defective/stolen product is sold as new ones are high.
8. No tax goes to government


There’s no conclusion. After analyzing above pros and cons you can judge where you want to go. It often depends on situation and your wallet size.
Relative analysis:

In my experience, during past one year, I’ve observed that un branded footwear that I bought at local shops for price range between rs 250 to 350 have served me well for more than six months (extended to few more months with minor repairs). So, if I have to buy a branded shoe at Rs 800-900 Rs, the expected relative life span should be around 18 moths. If the branded shoe doesn’t last 18 moths, it makes more sense to but 3 pairs of un-branded shoes instead.

In situations where we need after sales service, say a suitcase which you’ll be carrying along when you travel, a branded product will give you more peace of mind as its less prone to damage and service centers will be available in all city

When it comes to cloths, if the sole objective is to cover your body, any ordinary one will do. But we buy cloths for various occasions and purposes and one may expect many more benefits from your cloths
(like clearing an interview, impressing someone, making everyone envy about the new design or fashion etc etc). Money can take backseat when these expectations are to be met.

When you don’t know much about the product, choosing a branded one will be lot more useful. This’s true mainly for electronic items. A branded showroom is less likely to cheat you with a defective product and you can approach a consumer forum if needed. The additional amount you pay can be justified this way.

When there’s a quality/legal issue: buying illegal CDs, DVDs, or vehicles without proper documents or poor quality food products will create lot of complications hence not recommended.

Tell me what you think about it

Similar posts: Brands that have worked for me and brands that didn't *  
Big Bazaar: things you would like to know | SuperMarket Supersavings- A word of caution |iMint reward Program

Other posts where I've compared different things:Soft Drink vs Natural Drink
Hyderabad, Chennai, Bangalore: A comparision of 3 cities


Raveesh Kumar said...

Hi Nidhi,

Good review of the branded and local items.

Raveesh Kumar said...

Hey Nidhi,

Catching up with nowadays trend, u can add one more: whether to watch movie in a multiplex or in a conventional cinema house.

Shrinidhi Hande said...

Thanks for the comments Raveesh,
but I'm not a regular movie watcher, that too at theatre. All my life I went to theatre only 5 times. Never to multiplex. I mainly watch movies in PC. Will try to write something about these.

Nrbhat said...

In my opinion buying from a showroom is recommended.
I have purchased shirt from un-branded shop and I see them fade away!
Also places like Big bazaar and Metro should be avoided. When they offer for such a low price this means there is some trick! I have heard people say products are seperately manufactured to sell in Big bazaar. I mean same product has different quality when purchased from big bazaar and from outside.

When thinking of cost, if you still want you can go to factory outlets were you get lot of discounts.

good post..

Shrinidhi Hande said...

Thanks for the comment Bhatta.

When you get goods for low price you have to take some risk. But its not mandatory that low price means low quality and high price means good quality.

Big Bazaar and Metro provide goods at low price because of high volume. When you can sell thousands of units u can operate with less profit per unit. If you're selling only few pieces the overhead can't be distributed evenly and prices will be high.

But its true that even big shops use cheap tricks to make money. Only our awareness and alertness can protect us.

AB said...

i like the articles on this blog...
but i am sorry to say...this is by far the most stupid article ever on this blog...!!!!!!!!
just nothing new in what u told mate...!!

Shrinidhi Hande said...

Sorry that you found this post very stupid. Will try to improve.

To me it was a collection of pros and cons involved with both aspects of buying, so that readers can decide before buying...

Mridula said...

I agree on one thing completely, I have no wish to make the likes of Sachin Tendulkars richer by buying branded goods they endorse. I mean tea any day over Pepsi!

Shrinidhi Hande said...



Deguide said...

Unbranded category of products which thrive in the market are Sarees, Jewellery, Opticals, etc While buy such categories one has to be careful. Where branded players are present, like kitchenware items too profit margin by intermediaries are quite high. In case of Cameras very few unbranded cos are present.

Shrinidhi Hande said...

Thanks for the insights Umesh Sir