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How Outlet Malls Have Convinced Shoppers into Thinking They're Getting a Sweet Deal

Are America's 55 million outlet shoppers scoring great deals on expensive brandname products, or getting less than they're bargaining for?

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Do we shop at factory outlets and dollar stores and price clubs and eBay because we believe we are getting the genuine article, or is there something deeper involved? This question, Naylor said, has no sure answer, but she personally believes that most discount shoppers get something close enough to name brands to give them lasting pleasure. Apparently it is the brand, not necessarily authenticity, that discount shoppers are after. But when paying $250 for a briefcase or a handbag at an outlet, the question "When is a Coach not a Coach?" is more than a philosophical quibble.

Discounting dilutes brands, making it less certain that they are a mark of quality. This diluting effect has forced some producers to up the ante with premium versions of their brand-name products. For example, The North Face "Summit Series," designed for what the company describes as "the most demanding athletes and the most extreme conditions," is rarely if ever discounted, thereby maintaining its status. Hundreds of other brands from Levi Strauss to Mercedes-Benz slice and dice their offerings for various markets, selling different products in different types of stores for different prices under the same brand. This practice is pervasive at discount retailers. Chains such as Wal-Mart, Best Buy, Target, and Home Depot have items manufactured "to their specifications," meaning that the brand name is almost devoid of meaning. A television with a model number available only at Best Buy or Wal-Mart is -- no matter its apparent brand -- a Best Buy or Wal-Mart television. A lawn mower made to be sold only at Home Depot is -- for all intents and purposes -- a Home Depot lawn mower.

Brand dilution occurs in all the obvious places but also in the less obvious. Harvard University flaunts its brand to draw students to Harvard University Extension School, a program with no threshold to entry and a much smaller price tag than the institution to which it is tethered. Harvard University officials insist that extension school graduates receive an authentic Harvard degree, yet the education they have experienced, though presumably of high quality, is not really a Harvard education. By running a second-tier program under its name, Harvard is diluting its brand and in a sense counterfeiting itself.

Brands have become an end in themselves. Many of us who seek them have little if any idea of what's behind the name. But it is not the brand alone that entices discount shoppers; it is the high value we link to that brand versus the low price we pay that is so seductive. Spinning the wheel of low price is at best a gamble, but it is a gamble few of us can resist taking. The pull of markdowns, always seductive, has in recent years become an unstoppable force.

Ellen Ruppel Shell is a journalist, correspondent for the Atlantic Monthly, and professor of science journalism at Boston University. She is the author of three books, including most recently, Cheap (2009).

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