Shrinkflation, or the practice of reducing the size or weight of a prime commodity while maintaining its existing sticker price, has gained official recognition as an acceptable marketing strategy in our country.
Last week, the Department of Trade and Industry announced it had given some manufacturers permission to do that to enable them to remain profitable amid the rise in production costs.
It gave the go-signal after the manufacturers had, among others, shown that their products’ packaging reflect the change in weight so the consumers are made aware of the true measure of what they’re buying and that higher production costs justified that action.
To some skeptics, shrinkflation is a form of “deceptive merchandising” because the consumer is made to believe that the size or weight of the product that he or she is buying for the price it is known to be selling for is the same.
Businesses cannot be faulted for using that strategy if, in their judgment, that would be the most effective way to offset the increase in their operational costs and stay viable.
By and large, it is something they would prefer not to do because it comes with additional costs and market risks. They have to adjust or retool their equipment to reflect the changes in the specifications of their products.
The design and linear dimension, including the required product information, of the packaging have to be changed, too. That would also mean discarding the existing inventory of original packaging and buying new materials.
Then there is the risk consumers may not look kindly at the product’s changes and shift their patronage to other goods that, content- and price-wise, meet their budget.
Note that once market share is lost, recovering it may entail huge advertising and other promotional costs to get it back with no assurance that it would be successful.
And bear in mind that in this age of social media, adverse or disparaging posts about “unsatisfactory” products could have disastrous results. Social media may be likened to a forest fire that is easy to ignite but very hard to extinguish.
If going through the shrinkflation process would enable a product to maintain its market share, fine.
In the world of marketing, nobody argues against success. Instead, any strategy that has proven its worth is bound to attract copycats or is fine-tuned to make it more effective.
But what if that strategy falls short of its expectations, would skimpflation, or the practice of reducing the quality of a product to reduce costs, be an acceptable option?
Like shrinkflation, the sticker price of the product, or the price its target market has been comfortable with for a long time, remains the same.
To illustrate, if a breakfast drink has been advertised to contain, say, 20-percent pure grain chocolate and the cost of cocoa has risen, its manufacturer would reduce that percentage by one-half and make up the difference through the use of a food substitute that has a similar taste.
Or if the product is toilet paper that originally uses AAA-grade paper and the price of that paper has spiked, its manufacturer would instead use paper of a lower grade that could somehow meet its user’s requirements.
In both instances, the manufacturer may, in line with the rules of fair consumer treatment, disclose the change in the product’s quality, or if it thinks it’s an acceptable way of doing business, simply keep quiet and keep its fingers crossed its customers would not spot the difference or, if they do, would not mind it.
Considering the present high cost of production in the country, chances are some manufacturers are quietly engaged in skimpflation to keep their bottom line healthy.
The “advantage” of this scheme is it is less obvious than shrinkflation where changes in size or weight can be easily spotted. After all, most Filipinos hardly take a look at the product information printed on the packaging.
The adage “caveat emptor” (or let the buyer beware) is addressed to the consumer, not to the manufacturer. INQ
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