Keith Lui's Blog

Gordon’s Blog talks about how companies (water-bottling companies in particular) manage to differentiate products that are essentially commodities.   I have been wondering about this myself for quite a while now.  How are brands such as Evian, Aquafina, and Dasani able to sell bottles of water for two dollars a piece when water costs virtually nothing from the tap?  After reading Gordon’s blog, I think there are some things to consider:

1.  Convenience:  Bottled water are sold refrigerated at vending machines, fast food chains, and even supermarkets and dollar stores.  For some people, it is just worth it to pay $2 for a bottle of water and avoid all the hassle with boiling your water at home and then bringing your bottle with you wherever you go.

2.  Health concerns:  Some people believe that tap water contains harmful or unwanted chemicals.  They believe that bottled water has gone through a careful distillation process and that it is safe to drink, even though research has shown that little difference between branded bottled water and tap water.

3.  Branding/advertising:  Undoubtedly, producers of bottled water do an excellent job of advertising their products.  They essentially have to, in order to get consumers to choose their product in a sector of largely undifferentiated goods.  Logos including pictures of glaciers, polar bears, and fresh mountains also create a positive impact on the consumer’s perception of taste.

These factors play an essential role in consumers choosing bottled water.  Once the habit begins, it is hard for them to switch over to tap.  This leads me to Gordon’s question:  whether these companies fabricate news stories just to get consumers to fear tap water and switch over.

We know from economics that people’s beliefs and attitudes towards certain things affect their buying habits.  While unethical, this could potentially be exploited by companies trying to sell products that don’t really offer large noticeable benefits.