by Chris Calton
In a free market, consumer goods are remarkably heterogeneous. We don’t just buy ketchup, we have to choose between regular, organic, reduced sugar, low sodium, and umpteen other variations. Just as importantly, we have to choose between Heinz, Hunts, Great Value, and other brands. It was John Henry Heinz, in fact, who became the first person to associate his name with the unadulterated processed foods he produced, allowing his product to be distinguished from competitors.
The Economic Function of Branding
Economically, though, name brands serve an important function. In Basic Economics, Thomas Sowell explains that brand names “are a way of economizing on scarce knowledge, and forcing producers to compete in quality as well as price.”