Name Brand vs. Generic?

Imitation is the sincerest of flattery. ~Charles Caleb Colton

I commonly tell people "Be an original, not a copy". However, everything from medicines, dish detergent, cheese, even cookies, have both a name brand (original) and generic (copy) counterpart. As an informed consumer, I want to get the best value for the money that I have to spend. So the question comes down to this, "What is better, name brand or generic products?"

Well, in general, generic products are cheaper than "name brand". This can easily be seen by going to your local grocery store and check the grocery store brand of cheese to a name brand product such as "Kraft" or "Sargento". You will see that there maybe upwards to $1.00 in savings if you purchase the generic brand. If price is your only factor that you consider with a purchase, then hands down, the generic cheese wins consumer dollars.

It is a common thought that name brand products are higher quality than generic products. This could be the case, but if you look on most of the packaging for generic products, you will see that most of the time, generic products are usually made in the same factory that the name brand products are made. Of course this does not mean that they use the exact same ingredients, however it does not mean that there is not quality in both products.

Although cheese is just one example of a product, there are also other products that many consumers have to make a choice about. I personally use about 50% generic and 50% brand name. Some items (such as aluminum foil, and plastic bags) do not have any noticeable differences than the most expensive counterparts. However, there are somethings that I do not skimp on.

What it all comes down to is your personal preference. It is up to the consumer to decide whether or not the name brand product is worth the extra dollars. What products do you buy that are generic? What products do you buy that are name brand?

Stay Disciplined!

Hedging Against Everyday Expenses Using Stocks

During a visit home, while passing a gas station my father remarked "Wow, these gas prices are really going up".  After giving it some more thought, I realized that he was right.  After all, just back in December, the average price per gallon in the United States was $1.65/gallon.  (Citation)  Now consulting the same source, I see that gas on average is $2.30/gallon and rising!  Well, there is a silver lining in every cloud and this blog article will provide you with information on how to see it.

Definition of Hedge (Hedging)

In finance, a hedge is a position established in one market in an attempt to offset exposure to the price risk of an equal but opposite obligation or position in another market. (Citation)

In plain English, all it basically means is to have an equal but opposite position to offset the risk taken with an investment.  This procedure was used massively by many investment groups to short sell many stocks.  Many critics point the finger at these funds as a key contributor to the recession that is currently being experienced.  Although "hedging" takes a negative aspect in this situation, it can be used on a smaller scale to benefit the average consumer.  Let's take hedging against an everyday expense for example.  

It is a requirement that you have gas for your car.  In order to hedge against the rising gas prices, one would invest in a index or mutual fund that invests in gas and oil.  The way that the hedging process works is that as the gas prices continue to rise, the oil/gas stock would rise also allowing the owner to offset the added expense of paying more at the pump.

It is good to know, just as hedging can work for you in a positive way, the opposite can happen also.  In the case that the gas prices go down, the stock that invests in oil/gas can go down also.  Although you are paying less at the pump, there is a higher chance that the oil/gas stock will decrease in value.

Although this one particular example uses gas as a means to hedge, one can also use many different industries such as housing, groceries, technology to perform the same type of strategy.  What are some industries that you think will be good to hedge against?  Stay Disciplined!

Power of Negotiation at work

Well, I just wanted to report in that some of the readers of the blog have had outstanding results using the information in the previous post.  Below is a comment that I have received:

Just called comcast and got bill reduced by twenty [dollars] a month.  I'm a negotiating beast!  Lol.

As mentioned in the previous post, although it may be a bit difficult to step out of your comfort zone, you may find that the rewards are worth way more than the cost.  On top of that, the worst that could happen is the company could say "no" and you would be in the exact same place that you were in prior to the conversation.

I am very curious to hear that results you receive from trying the steps in the previous post.  Please send in your comments or leave them in the field below!

Using the Power of Negotiation

Let us never negotiate out of fear but let us never fear to negotiate.  ~John F. Kennedy

One lesson I have learned during this recession is that prices that are advertised are not set in stone.  Everything from major appliances to contractor work is willing to take a reduced price in order to get the business.  It seems like the price that we are given at a store is merely a "suggested" price, but not necessarily the price that you have to pay.  This leads to the use of one of the most powerful tools that we have as a consumer.  The power of Negotiation.

By definition, Negotiation is the following:

A dialogue intended to resolve disputes, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests.  (Citation)

Although negotiating may seem like a very trivial task to some, it proves to be very complex to most.  According to wikipedia there are six different negotiation styles.  Personally, I probably fall into the category of "accommodating" as I typically like to avoid conflict and will sacrifice of myself in order to get past the issue (or just the uneasy feeling of tension).  This has not always proved to be beneficial for my best interest as I have found myself paying more for items that I have regret at a later date.

I rarely had confidence in my negotiation ability due to the fact that I did not know what I was doing.  However, recently I made a decision to begin reducing my bills further by cutting back on the money I spent for luxuries such as cable and Internet access.  Since my satellite company just increased the amount that they were charging me, I naturally started with them first.  

I made a call to my satellite provider and called to see if they could do anything to reduce the amount that I was paying for my current channel listings.  Unfortunately, when I called, I did not have a good reason as to why I was requesting this reduction in price except for the fact that "money was tight and I was not sure if I was going to be able to afford the service".

The customer service representative offered the options of a $5/month reduction for six months or changing to a cheaper package that did not contain all the channels I wanted to see.  At the end of the phone call, I politely told the customer service representative that I was going to research my options and probably cancel the service.  It is my thought that he probably thought that was an empty threat due to the fact that he allowed me to get off the phone.

At this point, I began what I believe to be the successful negotiation procedure listed below:

1. Research your options
   
• Immediately once I got off the phone with the satellite provider, I began my process to research with my other options.  Fortunately I found a very comparable option with another provider that was $10/month cheaper (even after the promotional period was up).  
  
2. Have good reasoning to support your argument
   
• In addition to the new option being cheaper, I also had more channels as well as free HD options that were not provided by my satellite provider.
• The speed of my Internet access was greatly increased.
3. Look to see how both parties can benefit from the negotiation
   
• During the initial phone conversation with the satellite provider there was not really an effort from the customer service representative to see a real benefit for both parties.  In my opinion, he seemed fine with me discontinuing my service with their company as well as them losing the revenue.
4. Stick to your guns
   
• During the initial phone conversation, I laid out the terms that I felt were reasonable to have fulfilled in order to continue service with the satellite provider.  There were multiple times when the customer service representative wanted me to downgrade the channel listing (giving up TNT and TBS) which was unacceptable to me.  I never conceded on reducing my channel listing.
5. Do not be afraid to walk away
   
• Ultimately, as a consumer, the most powerful weapon in negotiation that you have is the ability to walk away.  The most important thing that I have learned during this process is that no matter how bad we want something, it will not be the end of the world if we do not get it at that particular time.

So on the day that I called DirecTV to cancel my service, I got a different customer service representative who wanted to know why I was canceling my service.  In addition to the same reasoning I explained to the previous CSR, I provided her the information on their competition and the deal they were providing (without any loss of channels and features).  

Immediately she began to bring out her arsenal of discounts and added channels to try to keep my service.  I kindly explained to her that the opportunity had passed and that I was still switching to the other provider.  At this point I realized that I had an "upper hand" in the negotiation process due to the fact that the satellite provider did not want to lose one of their customers with perfect payment history.

Although I did switch from my previous provider, I learned some very valuable lessons during the negotiation process as noted above.  I really recommend stepping out of your comfort zone and trying to use the negotiation procedure when making your next purchase where prices are not set in stone.

Where are some of the other places you have received success in negotiating?  What are some of the techniques that you have used to successfully negotiate in your favor?  Leave your comments below.

Stay Disciplined!