Earlier this month, I posted on the decision of a couple consumer products companies to try to ride out the downturn by stressing the value of their higher priced products.
It now seems one of them is rethinking the idea. According to this story (free at this writing) in today's edition of The Wall Street Journal, consumer giant Proctor and Gamble will be boosting offerings of lower-priced products. This comes after P&G issued a lower than expected earnings forecast for its next fiscal year which begins July 1.
It seems that its lower priced products have outperformed the premium-priced items. Evidently, when people have less money to spend they buy more of the lower-priced items than they do of the premium brands.
I think you can even work in substitution effect, opportunity cost, scarcity, and a whole raft of other economic concepts.
What do you think?
This post relates to the following Keystone Economic Principles:
1. We all make choices.
2. There ain’t no such thing as a free lunch.
7. Economic thinking is marginal thinking.
8. Quantity and quality of available resources impact living standards.
9. Prices are determined by the market forces of supply and demand…and are constantly changing.