[patio11]

Not quite so true -- the consumer product industry has many players, but only a few mega-winners. They're not largely winning because they "control prices"/"keep competitors away" (which sounds like there is something disreputable happening), they're winning because given the choice between a $3 bar of Dove and a $0.25 bar of white soap, Dove will generally win. (See e.g. house brands at supermarkets vs. branded products, though house brands are not priced quite that aggressively, in part because they know that they'll sell less at $0.25 than at $1.)

[mc32]

Maybe realted, maybe not. I read somewhere a few years ago one of the DIY stores like Home Depot or what-have-you did a study and decided that swapping out the $1 paint brush for the $5 brush didn't decrease the volume sold, but 5x'ed revenues on that product. Their insight was that someone going in and buying a few gallons of paint were not going to comparison shop on brushes (and drive elsewhere) to save a couple of dollars on a cheap brush --people would pay for the convenience of getting multiple items in one place.

[HRoark]

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.

[sigkill]

I don't know why you've been down voted but this is exactly what I read yesterday in Dan Ariely's Predictably Irrational. A $2 aspirin worked better than a 50 cent one. That is to say, people who paid more for the exact same medicine were less likely to come back after a month for the same problem. It's actually crazy on how true his observations are, even on yourself.

[rmc]

With drugs there is also the placebo effect. This is where people will get better if the 'drug' is thought to be more effective. If you give people 4 sugar pills instead of 2, they feel better faster. This isn't wishy-washy 'feel better' stuff, but an actual improvement. People's brains can influence they bodies.

Real drugs are tested against placebos, and they have to 'beat the placebo' before we call them 'drugs'. (i.e. if they don't beat the placebo, they clearly don't work). And obviously although placebos work, they don't work very well, so you can't 'think yourself free of cancer'.

The placebo effect is one of the current unsolved mysteries of science today.

[pgeorgi]

And you can often still find the $1 paint brush if you're willing to look outside your typical field of vision (eg. above or below the "home row" that a normal sized human sees at first glance).

They prefer to sell you the $1 brush over selling nothing at all (because you're shopping elsewhere, after feeling ripped of once).

[HRoark]

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.