In the world of business, often, the lines between price and quality blur. Whether it be in terms of quantity or quality, there is a growing trend where customers pay more for less. At first glance, this seems unfathomable. How can this be possible? Well, that is the magic of marketing: It feels as though it is worth it, and the one to blame is "Shrinkflation", a phenomenon that occurs when companies reduce the size of their products while keeping prices the same. Hence, consumers pay more for a lesser quantity of a product, while companies make better profits. Do people simply not notice, or do the interplay of market forces shape customer perception? Let's look at the case of a famous Swiss chocolate bar that engaged in the practice of Shrinkflation. Back in 2016, Toblerone decided to slightly change its shape by increasing the gaps between its triangles. This allowed for less chocolate to be used, shrinking the 400g bar to 360g, 170g, and lastly to 150g. Customers, however, did not notice the difference because the packaging remained the same, and the weight reduction made no difference to the customer's perception as appearance and branding remained the same. Eventually, customers finally realised the play at hand, and Toblerone received immense public backlash. They were forced to revert to their original shape, albeit, with increased prices. Why don't customers notice when products change over time? And even if they do, why do customers continue paying for a sub-standard version of products that were once better? Here comes the business's best friend: Branding. Branding moulds how people perceive not just a product but a company in itself. It plays an integral role in attracting the target audience and even expanding the audience base. When a company brands itself as a high-quality, trustworthy company, it can fall back on its promises, as the psychological perception of the brand and its product persists despite the shift. Shrinkflation can also mislead consumers into believing that amidst inflation and stagnant salaries, the products of this particular brand provide relief as their prices stay the same. It gives the impression that a product's price hasn't increased even though the cost you pay per unit has. However, the business side views things from a different standpoint. In conversation with Rashida Khilawala, a marketing professional with over 16 years of experience in branding and communications, she offered a different perspective. With rising production costs, companies find it difficult to provide products at the prices they used to be. "Shrinkflation is less about doing injustice to the consumer but arriving at a win-win situation for all." Ultimately, businesses cannot operate without profits, and Shrinkflation is merely a compromise businesses make to maintain their market share, whilst continuing to satisfy customers. Let's go back to our example of Toblerone. For many, it holds memories of childhood, festivals and family. When customers do notice change, it often takes a backseat because of the nostalgic connotations this candy holds. Meanwhile, the company manages to retain its profits and, hence, maintain its business. As the saying goes, "That's just business, baby."
02 Nov 2024
Senaara and Molshree Kaushik
