Tumbler Competition - The Rise and Fall (?) of the Yeti

Some time last year I became aware of the phenomenon that is the Yeti brand. The company makes what appear to me to be wildly over-priced coolers and tumblers. They have successfully built a lifestyle around their brand seemingly through social media marketing and word of mouth. Living along the Texas coast, I regularly see their branding on bumper stickers, hats, and of course the coolers themselves.

The prices for their tumblers seem particularly egregious: $40 for a 30 oz. and $30 for a 20 oz. The good thing about them is that they work. Several colleagues told me that they were able to keep drinks cold all day long. I received one as a Christmas gift last year and was quite impressed.

Sometime late last year I began seeing ads for a competing product by a company called RTIC. They claimed that their product was as good as the Yeti, but at half the price. The 30 oz. model could be had for $20 and the 20 oz. for $15. A YouTube video seems to confirm that the RTIC product performs as well as the Yeti.

Today a friend shared a post on Facebook that alerted me to yet another entrant into this market. Nearly-identical Ozark Trail-branded tumblers can be had from Wal-Mart for the low prices of $9.97 (30 oz.) and $7.97 (20 oz.). Currently the prices online are higher ($14.74 and $9.74, respectively) and are sold out.

This is a fascinating case study on the effects of competition and innovation on prices. I have little doubt that Yeti will be able to maintain its high-priced tumblers, at least for awhile, because it has built brand recognition. Certain segments of the population will pay more either because they don't shop around or because they want to have that YETI logo on the bottom edge of the cup.

Those of us who are willing to shop around and aren't concerned about brands are, thanks to competition, able to get the same drink-cooling performance at a much lower price (from a big-box store often vilified for the negative effects it supposedly has on the working class).

It's important to remember that price theory is ultimately about what goes on in our heads, not necessarily the "objective" components of a physical good. Having the YETI logo stamped on the outside of the tumbler might not make it any better in terms of its objective performance, but those who buy YETI for the sake of YETI are certainly, from their own point of view, better off than if they had purchased the other brands' offerings.