Price Change from $3.49 to $2.99: The Value of a Brand Part 2.


Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published August 3, 2010

How much is a brand worth?  For Whole Foods, a premium grocer, it represents the difference between a $3.49 canister of Quaker Oats rolled oats and $2.99 canister of 365 store brand oats.

While many consumers of oats may conclude Quaker Oats are of superior consistency, taste, texture, and nutrition, others are unconvinced.

It is important to realize that there is no discernable difference between the two brand designations prior to eating.  In both cases, the canister contains rolled oats, and hence the same bowls of porridge, plates of cookies, or form of breading could be produced. Hence, the difference in the valuations should be attributed directly to the brand association and nothing more.

It is not uncommon for the price of a consumable product to be related to the name associated with the product.  Oats, like other consumables, are experience goods.  One does not know the quality of the food until one has consumed the food.  Once consumed, the eater can evaluate the value.  Prior to consumption, the eater must infer value from the brand.  After consumption, the eater will rely upon prior experience to anticipate the value of future experiences.  Likewise, this instance of pricing a canister of oats does demonstrate the value of a brand.

For Whole Foods, the ability to designate a canister of rolled oats depresses their price from $3.49 for Quaker Oats brand to $2.99 for 365 brand.  Simply put, brands have real value.


Anjali Cordeiro, “PepsiCo Pushes Breakfast in Bid to Heat Up Oatmeal,” The Wall Street Journal, (28 July 2010).

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About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.