Or at least we should all know that:
The report – which scrutinised the labels of 54 ready meals from Asda, Morrisons, Sainsbury\’s and Tesco – says that while the difference between premium lines and standard lines are noticeable, the difference between budget and standard ranges are less obvious, with the ingredients often appearing remarkably similar. Often the only difference is extravagant wording on the packaging.
Tesco, for instance, says that its standard bolognese is "produced in the UK using beef from a welfare-assured source". In fact, its value bolognese contains exactly the same meat, but refrains from boasting about it on the packaging.
Segmentation I think it\’s called. Or is it price discrimination? You as a producer know that there are some people who are happy to pay a higher price for your products than others are. What you want to do is keep the low priced business (which is after all profitable) but find a way to shake those extra pennies out of those willing to pay more. So you charge more for silly things and see what happens. It might be the above, telling people about some feature. It might be Starbucks offering, for a fee, to shake and stir the sugar into your iced tea. It might be, in the metals trade, labelling your alloy "aerospace grade" and "commercial grade", even though they\’re the same. But of course the aerospace grade is higher priced because you "guarantee" that it meets certain chemical standards, while commercial grade simply meets them (true story btw).
Now you can look at this two ways: one is that suppliers are trying to rip off customers. The other is to look a little more deeply. It\’s a standard assumption that in a perfectly competetive market there should be no profits over the cost of capital: any that did exist would be competed away. This sort of segmentation is the response to being (or thinking that you as a supplier are) in such a competetive market. Yes, perhaps it is true that this is "ripping off the consumer" but what it tells you is that the suppliers think they\’re in a competetive market.
It\’s a slightly cock eyed manner of looking at it, I agree, but interesting as well: the very fact that people are doing these things to avoid being in a perfectly competetive market shows their underlying assumption, that they are in one.