In an article I was reading it has this picture:
It claims and rightfully so that one looks cheaper than the other. However the explanation says,
My old direct-mail client was correct in his assessment of whitespace for his particular product, because direct-mail packages need to appear down-market to work—and adding whitespace to his design would have lent his package an undesirably upscale quality.
But is this a correct outlook to have? Should a product deliberately use an advertorial style that looks like they have a small marketing budget?
Sometimes yes. It so happens that companies sometimes hedge their bets by selling products both in bulk to chains and as premium under their own brand. According to Tim Harford (The undercover economist page 51 second paragraph in particular) the reason for cheap look is to get most out of the customers money. By selling same product at a premium to not so price sensitive buyers. This is called price targeting.
So basically the only difference for example between certain breakfast cereal and store brand cereal is in the package. So it stands to reason that the cheaper product needs to differentiate somehow. Usually the mechanism is to use a package that looks less glamorous, so that more brand conscious buyer buys the more expensive product, with more profit, while at the same time also getting money for those that couldn’t afford the premium. Conversely some people might assume a premium on a product that looks too well branded.
So for me at least this was a eye opener. Stores are full of such products if you care to read the labels. Sometimes cross pollinated across store chains. There are also other interesting psychological effects such as not being able to ascertain price efficiency of products that have no competition.
Edity: Now that I’m home I see that my memory fails me a bit the book was not Freakonomics but rather the undercover economist instead. Fixed my reference and added page number. I stand corrected.
Source : Link , Question Author : Ryan , Answer Author : joojaa