Beware of here today, gone tomorrow

Cadbury’s are reducing the number of chocolate in their tins of Roses, while keeping the price the same. Other well-known brands are doing the same - a tactic known as 'package shrink'. Are companies trying to hoodwink their customers, without really thinking of the long term consequences of their actions?

Package shrink is a tactic often used by manufacturers during tough economic times. Rather than increasing price and potentially alienating customers, product size is reduced instead, and price kept the same. The added benefit of using such a method is the fact that many customers may not notice the change, and will thus continue to blithely buy their products at their usual prices.

Package shrink can also come in different guises. For example, on purchasing a ‘large’ cooked chicken from a well known supermarket on Sunday (following what will soon become a regular occurrence of watching my children play football and the requirement to feed them soon thereafter), we noticed that what was once labelled as ‘large’ , in reality has become ‘much smaller!’ This leads to another example in the news whereby some supermarkets have been selling mince by the pound at the same price and weight, but have reduced the ratio of meat to fat content. In both cases profit margins are defended, but consumers are undoubtedly getting less for their money.

On becoming aware of this new information, my husband (the main grocery shopper in my household) is now deciding on the best course of action, which for him, will be to get his meat minced in front of him so that he can see what is going into it, to scrutinise the ingredients included in other products more carefully and to review size and weight as well. For him, the seeds of mistrust have been firmly planted, which will undoubtedly alter his shopping habits and loyalty towards certain products and brands.

For manufacturers, who may well be under increasing pressures to keep prices low due to increased commodity prices etc, may argue that ‘package shrink’ or similar, is a good way to increase price without irritating customers. However, as reported by Lucy Yates of the official customer watchdog Consumer Focus said: “Consumers aren’t always easy to fool – they can see that paying the same for less is effectively the same as a price increase. Companies need to remember that shrinking size but not price could damage consumers’ trust in the brands they love’.

As Karen Schofield wrote recently, companies need to prioritise honesty and openness in order to retain customer loyalty in the long term. Apart from anything else, brands that were honest about package shrink would certainly be showing up their competitors!

We may see the current trend for package shrink evolve into a race to win back consumer trust, particularly if the media are in the mood for ‘outing’ offending brands, products and services. While package shrink is a sound short-term tactic, not least so that brands can avoid continually redefining price points, it risks eroding the value of brands longer-term. As the economic bad times continue, there comes a point where honesty may be a better way to defend profitability.