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Pills and jeans ... worth the price?
It's not just gas. Consumers see less value in costly medicine, cell phone plans and cereal, too.
August 9, 2005: 8:16 AM EDT
By Parija Bhatnagar, CNN/Money staff writer

NEW YORK (CNN/Money) - Prescription drugs, designer jeans, basic cable service, breakfast cereal and magazines. What do they have in common?

These are among a set of products and services that are making consumers pause and ask, "Is this a good use of my money?" according to a new report from New York-based marketing and retail consulting firm WSL Strategic Retail.

"It's about value perception and what's worth consumers' money and what isn't," said Wendy Liebmann, president of WSL Strategic Retail.

According to latest results from the "Pulse Report" -- the firm's bi-monthly national online survey of 1,107 consumers conducted between May 12-15, gasoline topped the "too expensive" list, followed by designer shoes, designer jeans and prescription medication.

Topping the list of product categories considered to be on the brink of being overpriced were basic cable service, cell phone plans and breakfast cereals, followed by greeting cards and over-the-counter medications.

Manufacturers and retailers, Liebmann said, need to pay attention. When branded products lose their perceived value, shoppers will make a quick switch to another product or stop buying that brand product altogether.

Said Liebmann, "The fact that over 58 percent of shoppers over the age of 55 think prescription drugs are too expensive while another one-third think OTC medication costs too much is not only a dangerous situation for consumers but should be of concern to the manufacturers, too."

"Lots of people in this country have medical coverage yet many among them think prescription drugs are pricey," Liebmann said. One reason is that co-payments are climbing. "You may have paid a $5 co-pay in the past but now you're paying $15."

Another hypothesis, she said, would be that actual price increases coupled with bad press, as in the case of Vioxx, has eroded the perceived value of prescription drugs to consumers versus their price.

Consumers frown on cell phone services and cereals

It was a close call but cell phone plans narrowly outranked breakfast cereals -- 49 percent to 41 percent -- in the list of name-brand products who price exceeds their value to consumers.

"Retailers have an opportunity here, especially with the cereals. If 41 percent of consumers think branded cereals cost too much then maybe retailers can look into offering their shoppers lesser priced private label cereals."

Finally, the category voted the "best value" for the buck didn't necessarily feature the "cheapest" products. For instance, consumers gave a thumbs up to hair color kits which typically can cost $10 or more.

"Even though hair color is much more expensive today than it used to be, it's still perceived to be great value because consumers know that they would be paying substantially more in a salon to color their hair," said Liebmann.

Rounding out the best value list were household cleaners, bandages, deodorants and mouthwash.


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