Sunday, June 26, 2005

Cost vs quality - the capitalist conundrum

Finding the balance between cost and quality is key to a successful retail operation. It is possible to compose a mental map of how different UK supermarkets stack up on this basis. Waitrose would come out at the high-quality end, with Marks and Spencer. Sainsbury's would be beneath that, then Tesco's, and Morrisons and Asda would be the low-cost supermarkets. All appeal to different markets - and this is reflected in their advertising.

All else being equal, low-cost certainly appeals. However, in a poster campaign, Asda are advertising the UK's cheapest lemonade - 17p for 2 litres. (I think that's about $0.30 or 30 Eurocents for a half gallon/2 litres). Now personally, I would expect to pay more than that for the cost of packaging tap water [Coca-cola obviously expected people to pay substantially more, but let's not go there!], ignoring the cost of ingredients. So just what can the quality of the lemonade be like?! Personally, I have to say, I'd rather not go there either. In my book, prices can get so low that they are actually a deterrent.