The Right Way to "Shrinkflate" Your Products

Brands have tough decisions to make to maintain their margins. Some turn to "shrinkflation," but it turns out there is a right and wrong way to do it.

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The Right Way to "Shrinkflate" Your Products

Today, a special issue devoted to “shrinkflation” — from a marketer’s point of view.

Last week, I chatted with the author of a research paper that found consumers find product size decreases more unfair than price increases, as it is seen as deceptive and sneaky. However, when companies disclose the shrinkflation, consumers find it more acceptable and fair.

Ioannis Evangelidis is the author of the paper. The paper can be found at https://pubsonline.informs.org/doi/abs/10.1287/mksc.2023.0269?journalCode=mksc

p.s. apologies for the poor quality audio on my end 😞 

Key Points

  • Consumers perceive product size decreases as more unfair than price increases.

  • Disclosing shrinkflation makes it more acceptable and fair to consumers.

  • Lowering the quality of the product while keeping the price the same is highly disliked by consumers.

  • Transparency and honesty are valued by consumers, and raising prices is seen as the most fair practice.

  • Marketers should consider disclosing shrinkflation or raising prices rather than reducing product size.

Chapters

00:00 Maintaining Margins in the Face of Rising Costs
02:10 Size Decreases vs. Price Increases
03:06 Shrinkflation and Consumer Reactions
04:59 Disclosing Shrinkflation
06:56 Consumer Willingness to Purchase
07:38 Skimflation
09:32 Marketers' Dilemma

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