Thursday, September 20, 2012

Sex and chocolates

Good morning economists. My friends over at Freakonomics posed a very interesting question yesterday. They presented the following photo from a CVS store presenting chocolate and condoms on nearby shelves. The author wondered at the time whether the two goods were complements or substitutes.

Complements are goods that are consumed together like CD and CD players. In general, the consumption of the first good pushes consumers in buying the second. A substitute on the other hand is a good that can be used in the place of another good, for example Coke and Pepsi.

I will not actually answer the question of whether chocolate and sex are complements or substitutes as I believe the answer is rather subjective, not so clear and certainly gender biased.

What this debate made me think is the spacial competition which may exist for shelf space in supermarkets. The next time you find yourself shopping for groceries take a look around you and see whether your favorite product is located next to a complement or a substitute. For consumers, the best deals would probably be had in spots where a lot of substitutes are located in bundles. In general, we should expect the most high priced items to be located next to complements so that they attract the buyer to purchase.

Consider the example of nachos and salsa. The most expensive brands of salsa are located next to the nachos where the cheaper brands are located together with competitive products on the salsa shelf.

Food for thought, no pun intended.

I would also like to take this opportunity today to congratulate my good friend and colleague Maria Constantinou on starting a very useful and interesting blog entitled Marketing Cache. I urge you to visit her blog and start exploring the fascinating world of marketing.

Have a great day!

1 comment:

  1. Interesting post, even i started thinking about this.