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May 8, 2024
(Updated on
Apr 3, 2024

Shrinkflation: Its Effect On Marketing And Consumer Perception

People are starting to notice a trend in grocery shops and consumer goods: shrinkflation. This is when corporations decrease the size or quantity of their items while keeping or raising the costs. This trick, which cleverly hides price hikes, has big effects on both customers and marketers, creating a complicated story about how customers see value, how brands respond to inflation, and how they give value.

Businesses have been using the term "shrinkflation" for years as a way to deal with rising costs without raising prices too much and risking customer anger. This method is used a lot in chips, soups, soaps, and even ice cream, which has made people angry and caught the attention of many. Not only does this bother customers, but businesses use anti-shrinkflation campaigns, like the "growflation sandwich," as a way to market themselves and appeal to customers' sense of right and wrong.

Photo by Nik on Unsplash

From an economic point of view, shrinkflation makes it harder to measure and understand inflation. The Bureau of Labour Statistics changes inflation statistics to take downsizing into account, but because inflation is subtle and changes over time and across goods, it is a difficult thing to study from an economic point of view. Along the years 2019 to 2023, shrinkflation had a bigger effect on inflation in some areas, like snacks, home paper products, and cleaning products. There are a lot of different ways that shrinkflation can affect the economy as a whole and people's ability to buy things.

When looking at shrinkflation from a marketing point of view, it gives important lessons and chances. For starters, it shows how important buyer perception is. Businesses use shrinkflation because they think that customers care more about price changes than changes in product size or number. This idea is based on the idea that people won't notice or care about the smaller amount enough to change their minds about what to buy. One problem with this approach is that it can be risky. More aware consumers and the backlash against shrinkflation show that not all consumers are willing to take less for the same price, especially as inflation becomes a bigger issue in society.

Also, shrinkflation makes brands think about moral and business issues. It might help in the short term to keep profits up when prices are going up, but it could hurt brand loyalty and trust in the long term. Marketers need to be very careful as they cross these waters, balancing the need to keep costs down with the need to give customers value and be honest with them. In a crowded market, innovative companies that talk to their customers freely and come up with new ways to provide value, even when costs are going up, can stand out.

The phenomena also emphasizes how crucial innovation is to marketing plans and product development. Some customers may actually want smaller amounts for reasons like watching their weight, so brands can change the way they talk about shrinkflation to make it sound good by focusing on ease, portion control, or even environmental benefits.

Shrinkflation isn't just an interesting economic question; it's a key problem at the point where marketing, consumer behaviour, and measuring inflation all meet. It forces marketers to think deeply about how to set prices, offer value, and earn customers' trust. As businesses figure out how to run in an inflationary environment, they can learn from how people reacted to shrinkflation and make their decisions more open, honest, and consumer-friendly. So, the talk about shrinkflation is a very important reminder for brands to put long-term relationships with customers and brand loyalty ahead of short-term profits.

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