HRoark
Joined 15 years ago
Karma
32
Submissions
22
Member since
Jun 16
Engineer who's interested in entrepreneurship and value investing
View on Hacker NewsRecent submissions
Comment · 14 years ago
Compounding inflation over 30 years is much greater than the cost saving measures implemented by the consumer goods companies (supply chain optimization, improvement of packaging techniques etc.).
Comment · 14 years ago
Interesting, this is psychological misinterpretation. People have a tendency to think that price = quality. There was similar scenario presented in the book Influence: The Psychology of Persuasion that had to do with a jewelry owner.
Comment · 14 years ago
True. To clarify, I don't think it's safe to completely write off the fact that they could be doing something illegal (I'm not saying they are, but see this book of their alleged illegal practices in the 90s: http://amzn.to/5bbFuA). The reason why the Dove bar wins over the cheap generic brand is because of marketing, which stems from their financial advantage over smaller competitors. Likewise, their financial advantage is the result of increased sales from marketing campaigns (recall the Old Spice commercials). It's a vicious cycle.
Comment · 14 years ago
Thanks for the great insight. The consumer product industry only has a few players (P&G, Unilever, Kimberly-Clark, Johnson & Johnson) which essentially gives them leverage to control prices and keep other competitors away through marketing.
The effects of marketing are very subtle, as your experience clearly demonstrates that.
Comment · 14 years ago
Yeah, it's the norm for most tech companies to have high P/Es. It doesn't necessarily mean it's a bad investment.