[joe_the_user]

I think the article is correct but phrases the lifelong customer part wrong.

The habits of a single life-long customer divorced from everyone else whose spending is absorbed by a single player might not be worth a million - EDIT: maybe 50k with interest (being very generous).

BUT if a small player has "in hand" said habits, they could be worth much more sold to the larger players. The larger players can direct the consumption of this consumer to convincing counterfeit items (margarine instead of butter, Budweiser instead of a decent beer, etc). This gives them much higher profit margin. These larger players can also us the single consumer's habits as a model for ten other people's habits.

And naturally it feels nasty discussing things this way...

So I think the "amortized" control of single consumer's habits might conceivably be worth about a million.

[AnthonBerg]

Wow, well put. There is of course no Intention of The Man to ingeniously swap margarine in for butter, but the gravity of profit margins will tend to pull reality that way. It usually does.

[lsc]

I'd bet you five bucks that whole foods has better margin on it's "whole" butter than the safeway where I shop has on it's cheap off-brand margarine.

[joe_the_user]

But that doesn't change the overall situation.

First you bought butter whose "realness" and "wholeness" wasn't in question and didn't cost extra. Then you bought margarine that "better" and cheaper. Only then you realize that you were being sold a unhealthy (trans-fat-filled) fake. So you people went and bought yet another product, "whole", "real" butter!

As far as margins go, they're being chased down by competition, which exactly there always needs to be new products, as above.

[lsc]

>As far as margins go, they're being chased down by competition, which exactly there always needs to be new products, as above.

This implies that there are usually competitors willing to accept a lower margin for a largely similar product; in food, I'd compare Trader Joe's to Whole Foods in this role.

Really, this (producing a largely similar product at lower margin and lower price) is the tactic I'm attempting to use, as well. The margins most large companies have, once you account for their economies of scale advantages, must be staggering, (that, or the inefficiencies inherent to being a large company where the people who make the decisions have no contact with the people who own the company are staggering.) which means there's plenty of room for the generics to have a go at bringing prices down.