Every time you shop for a toothpaste, you have the option of saving/making an equivalent of Rs 1000. Same is the case with every other product of daily use. But wait and do not rush to market with your shopping bag – this article is about intelligent saving and not reckless expenditure.
Certain brands of Fast Moving Goods are very strong that they dominate the shelf space in retail stores so much that we fail to notice the other products from good and reputed companies. Kudos to the marketing teams of the leading brands but as a consumer we have to look beyond the film and curtain created by the very efficient marketing teams. As an investor habituated to look for value in investment opportunities, I look for value also in my daily purchases for routine use.
Recently, it came to my notice that all the toothpaste brands have become quite expensive and I was wondering if there is a competitor who was taking advantage of this to get a product in the market which would bring in more value for money. With my background in engineering and business, I could tell that the retail price was way more than the production price and the firms were earning good margins on their products.
In my visit to the nearby Spencers to purchase a toothpaste (along with some other items), I noticed that most of the toothpastes were from the house of Hindustan Unilever and Colgate. So I decided to find out what are the other price points at which other toothpastes are available.
Yesterday’s visit to Big Bazaar was good where there were many brands of toothpaste available for the consumer at one section of the store.
Here’s just a few of what was available:
A 300gm Colgate pack was available for Rs 82.
One pepsodent 80gm was available for Rs 26.
Himalaya toothpaste was the most expensive one – Rs 75 for 150 gms (I do not recollect the weight properly but guess it would be a 150gm tube)
A 340gm of Promise toothpaste was available for Rs 54.
A 185gm of Babool was available for Rs 35.
Well, there would be crusaders who would point out to the benefits that the brand portrays in advertisements. But friends, ads are ads. Working in the corporate industry I do know how any study or result can be used to harp on the benefits of a product or service. So, I have to use it to believe it. I bought a small pack of the other 2 Dabur products (Promise and Babool) to try them out.
However, if the products satisfy me, here would be my analysis:
By buying a Promise, I would’ve saved Rs around Rs 40 (versus buying a colgate) or Rs 56 (versus buying a Pepsodent).
What is the value of this Rs 40 or Rs 56?
Before I answer that, here’s a question that one should strive to answer and compare to – How much money is required to yield Rs 40 safely?
At a savings rate of interest of 4%, it would take Rs 1000 a year to yield Rs 40 as interest.
So, here’s a simple guide – every rupee saved is valuable once we understand how much it takes to produce that rupee.