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Where are the Economists now?

Supply and Demand is complete hocus pocus

     
1:19 pm on Jul 9, 2007 (gmt 0)

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Just went to a major supermarket.

750 ML bottle of Highland Spring: 69 pence
1.5 L bottle of Highland Spring: 58 pence

1:23 pm on July 9, 2007 (gmt 0)

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I am not an economist and have no answer for you.

Where are the Economists now?

Through hocus pocus is how they make money :) You made me smile there.

1:31 pm on July 9, 2007 (gmt 0)

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coplete! You shouldnt be asking 'wheres the economists' but where dictionary is!
1:39 pm on July 9, 2007 (gmt 0)

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The economists made your "m" disappear with their hocus pocus.
1:39 pm on July 9, 2007 (gmt 0)

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It seems to me that things are working as they should.

Most probably 1.5 L has lower demand hence lower price.

750 ml is more popular, hence higher price.

2:00 pm on July 9, 2007 (gmt 0)

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The 750ml bottle is convenient to carry around and drink directly from (?), the 1.5L not.
5:20 pm on July 9, 2007 (gmt 0)

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I understand why this happens, basically because supermarkets are illogical and some still use cost plus pricing. Whatever supply and demand tells us is irrelevant when you are talking different quantities of the same product. They are foolishly creating a false pricing structure and competing with their own product.

Many times if you compare the price per 100gm of things like ketchup, mayonaise etc then the smaller pack is better value than the larger one which means it is often cheaper to but 2 x 750ml bottles than 1 x 1.5L bottle.

In this case if I really wanted to buy a small quantity of fizzy water I would pay 58p for the large bottle then throw half away.

5:31 pm on July 9, 2007 (gmt 0)

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Whats the old saying?
" If all the economist in the world were laid end to end,
they wouldn't reach the same conclusion" KF
5:35 pm on July 9, 2007 (gmt 0)

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Just went to a major supermarket.

750 ML bottle of Highland Spring: 69 pence
1.5 L bottle of Highland Spring: 58 pence

Skeptic's economic theory:

Buy one 750 ML bottle - do not throw away container after consuming contents.
Subsequently buy only 1.5 L bottles and use them to refill your saved 750 ML container.

5:47 pm on July 9, 2007 (gmt 0)

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Was this an everyday price or a special discount on the larger size?

Also, it could be a mis-labeled price.

5:59 pm on July 9, 2007 (gmt 0)

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Was this an everyday price or a special discount on the larger size?

Well - to be honest, I was in the sandwich section and looked at the price of water (small bottles) and thought "that's crazy" so I went to the "i'm a mum with a weekly shopping" isle. Hey presto - there was the rip off for all to see.

So - it happened because the supermarket knows all too well that the blokes going in for a sandwich and drink at lunch time aren't half as savvy as the mums doing the weekly shop.

All to do with marketing - zero to do with Economics.

Actually - whilst I'm ranting, another chain keeps on saying "have you got a 'Spend and Save' card, sir?"

Well that's a contradiction in terms I must say!

And to think webmasters coined the term Black Hat. We know nothing :)

6:02 pm on July 9, 2007 (gmt 0)

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750 ML bottle of Highland Spring: 69 pence.
750 ML of tap water, 0.02 pence.

Extensive blind-testing shows that most people cannot tell the difference in taste between tap water and bottled water. So the insanity is in the prices of both bottles. ;)

All to do with marketing - zero to do with Economics.

Exactly!

6:13 pm on July 9, 2007 (gmt 0)

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In the US, the top bottled waters are Dasani (Coca-Cola owned) and Aquafina (PepsiCo owned) - both are filtered tap water from whatever municipality they are sold in, to save shipping costs.
6:44 pm on July 9, 2007 (gmt 0)

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Any Brits remembeer Delboy's Peckham water business? It was really funny at the time.
9:10 pm on July 9, 2007 (gmt 0)

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It strikes me as utterly irresponsible to spend vast quantities of energy/fuel filtering, bottling, shipping, and delivering small petrochemical-based containers of the most plentiful liquid on earth -- Or to actually buy it that way.

I'm not indignant or self-righteous on the subject, but rather just baffled... It seems such a waste, really. Absolutely brilliant marketing, though -- Almost like convincing people to buy bottled (but plain) air.

Jim

10:05 pm on July 9, 2007 (gmt 0)

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I've been mulling selling freeze dried water, that way the shipping costs are minimized. Just add water.

Can anyone spell Evian backwards?

11:08 pm on July 9, 2007 (gmt 0)

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I've been mulling selling freeze dried water, that way the shipping costs are minimized. Just add water.

Almost there- just sell 2 products: freeze dried water and the "activator" (which is really water) that is needed to re-constitute the freeze-fried water. :)
9:43 am on July 10, 2007 (gmt 0)

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Delboy's Peckham water business - Sure do, whenever I see bottled water I stil giggle
1:05 pm on July 11, 2007 (gmt 0)

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Receptional
So - it happened because the supermarket knows all too well that the blokes going in for a sandwich and drink at lunch time aren't half as savvy as the mums doing the weekly shop.

All to do with marketing - zero to do with Economics.

This would definitely be discussed in economics... maybe just not intro type classes. Maybe it would be discussed in behavioral econ.

Looks like market segmentation to me, the theory being that you can extract more "consumer surplus" by dividing groups and pricing according to those groups. These groups happen to be divided by where they are in the store and what they are there for. The classic example of this sort of pricing behavior is senior citizen discounts.

Seems like a pretty extreme and unlikely case, though. Given the technology supermarkets are working with now, they either already know it's working out for them or they'll know soon. At least with large supermarket chains, they can plot pretty accurate information in a short period of time, without a large cost to do it.