Thursday, April 26, 2012

Toilet Paper Economics

Let's start with a very short article I read this afternoon:

The science behind Costco's No. 1 product
The big-box retailer spends a lot of time studying the quality of its biggest-selling item.
By Kim Peterson
Costco shoppers are very particular about their toilet paper. They post reviews online. They make funny YouTube videos about it. They debate endlessly whether Kirkland is better than Charmin.

Toilet paper is Costco's top-selling product, in fact. And the company takes it seriously. It even studies the quality of Kirkland toilet paper in its laboratory near Seattle, as the following video shows.

Costco sells $400 million worth of toilet paper every year. Any loss in quality can mean hundreds of millions of dollars in lost revenue. No wonder Costco scientists are so focused on it.

Technicians measure the whiteness of the paper. They squeeze the heck out of it -- breaking an old Charmin rule. And they pay special attention to softness and the way the paper bunches up in your hand.

I've never bought Kirkland. I always go for Charmin. What do you think, readers? Is Costco's toilet paper worth all the attention?

You can watch the story on video as well right here.

I think that for anyone that has ever questioned the value of the social sciences in business, this short article should clear things up. I can't help but envision some dude on a job interview to work on the house brand toilet paper quality control team. The staff meetings must be full of...

I had to stop myself, this stuff is very interesting to me.

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