Similar Products, Different Prices

Why buy an expensive brand-name item when you can buy a second-label twin for a lot less?

We want to let you in on a secret: Lots of companies offer two versions of their products -- a pricey brand-name one and a bargain second-label twin. In some cases, such as pharmaceutical brand-name drugs and their generic equivalents, the products are practically the same -- and the savings big.

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Sometimes the products aren't exact replicas, but they're similar enough that forking over big bucks for the brand-name version may not be worth it. For example, automobile manufacturers share costs by building a single platform for a couple of vehicle brands. Then the companies differentiate the twins by giving them different interiors and standard components. Take the Toyota Matrix (which won Kiplinger's Best New Wagon award in 2009) and the Pontiac Vibe. The cars qualify as twins, according to Edmunds. The vehicles have been produced under a joint venture between the two companies.(GM just announced it will phase out its Pontiac brand in 2010.)

For decades, premium winemakers have produced second-label wines that sell for less than their brand-name counterparts. These wines are essentially the same as their higher-end twins but might, for example, be made with grapes from younger vines.

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Companies produce second-label products for several reasons, says Paul Earle, of Papilion, a Chicago branding company. Most important, the practice gives companies market entry at different price points. Consumers who don't want to drop $550 on a Whirlpool top-load washer can instead choose a $350 near replica (sans a few bells and whistles) from Roper, a Whirlpool-owned consumer brand.

Some companies are even cloning the name -- not the product -- as seen throughout designer-focused industries, such as fashion and furniture. Consumers, in turn, can get a cheaper product from a manufacturer they trust, says Scott Lucas, executive director at Interbrand, a brand-management company. For example, Vera Wang, a fashion designer famous for her high-end wedding gowns, also lends her name to a line of more casual clothes called Simply Vera by Vera Wang, available at Kohl's retail stores.

However, "there are instances when the name brand means a lot," says Earle. The features that come standard with the brand-name product might be worth the added cost. For example, although that Roper washing machine costs $200 less than the Whirlpool model, it doesn't come with a noise-reduction system.

Ultimately, it's up to consumers to do their homework and determine which product better balances their aesthetic needs with their budget.

For several examples of twinned products, see our slide show, You Can Buy This ... or This for Less.

, Kiplinger's Personal Finance