In his New York Times Magazine column this week, Adam Davidson writes about the price of baby products. Here's an excerpt.
The baby market is essentially a commodity market. And because it is extremely difficult to make money in a highly competitive commodity market, manufacturers look for ways to justify higher profit margins. There isn't much profit in corn, but a company that produces a popular organic blue-corn tortilla chip can make serious money. In the baby business, the challenge is persuading parents that a product has a unique feature worthy of a price premium. A glance at the shelves indicates just how narrowly baby-product companies have divided parents into subgroups. Some will pay extra for conveniences like a light, easy-to-fold stroller; others want aesthetic luxuries, like leather trim. Many respond to fear. (Is my child safer in Baby Trend's Inertia car seat for $179.99 or with Safety 1st's Air Protect+ system, which costs $189.99? Or should I just buy a cheap one for $50?) Others are willing to spend an extra $250 or so for an organic-cotton car-seat cover to minimize baby's contact with artificial fabric...
It's easy to feel like a sucker once you realize that nearly every dollar you've paid over the commodity price is probably wasted. But the process also has enormous benefits for all consumers. Occasionally companies seeking differentiation come up with safety features that are eventually adopted by government regulation and mandated for all competitors. The National Highway Traffic Safety Administration, for instance, has been testing Safety 1st's Air Protect+ system, along with other car seats that claim to offer special protection from side-impact crashes. If a particular company's safety technology proves effective, eventually every car-seat maker will be required to include it, and side-impact protection will go from a premium feature to part of the basic commodity.
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