Sunday, December 14, 2008

Addiction and the Efficient Market

I was browsing the Williams Sonoma online catalog (horrible mistake!) and ran across my favourite candy, Jordan almonds. The bold and brash marketeers at W-S are selling this popular candy treat at $19.95 for 8.8 ounces, or $36.27 per pound. That seemed a bit high. A quick search on Google yielded several alternate vendors. The cheapest of which sells them at $5.49 per pound. The priciest sells them at $24.95 per pound. One vendor sorts the candies by grade, with the costliest being priced at $6.94 per pound. Or you can simply go to the Fresh Market or the movie theatre and buy them (price unknown, but the theatre is probably pretty pricey).

The advantage Williams Sonoma has over these less expensively priced sellers is that W-S is known. They have a reputation for quality. W-S also allows purchasers to post reviews of their various products on their website. The advantage the other sellers have is they are less expensive, in two cases dramatically so.

Were I actually to buy the candied nuts, I'd go with the last linked vendor. You can choose your price point and select colours (always a feature!). But obviously the seasoned sellers at Williams Sonoma expect that there will be enough purchasers of their candy to make carrying it profitable. Is the premium of the W-S branding and quality assurance really worth $29 per pound?

There is a market out there for spendy candy, but to spend that much for a package seems just plain nuts.

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