Unraveling the mystery of shrinkflation in grocery stores and the practice of price pack architecture. Discover how companies strategically change package sizes to target different consumer preferences, increase sales, and maximize profits. Explore the evolution of package sizes for products like soda and shampoo, and the impact on consumer behavior and marketing strategies.
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Quick takeaways
Price pack architecture involves offering products in various sizes to attract different customer segments.
Shrinkflation is a strategy used to subtly reduce product sizes to manage costs while maintaining affordability.
Deep dives
The Rise of Price-Pack Architecture in Consumer Goods
Companies across various industries have been adopting a strategy called price-pack architecture, where products are offered in diverse package sizes to attract different customer segments. This strategy, observed in major grocery store products like chips, sodas, and toiletries, allows companies to cater to specific consumer needs and preferences efficiently, driving sales and profit margins in a competitive market.
Coca-Cola's Influence in Package Size Innovation
Coca-Cola's initiative in introducing various package sizes revolutionized the industry, especially in the US, where different sizes of Coke products like the mini can were successful in appealing to new consumer segments. By diversifying package sizes, Coke strategically captured market niches and increased consumer engagement and revenue.
The Impact of Shrinkflation and Consumer Perception
Shrinkflation, a practice where products' package sizes are subtly reduced to maintain price points, has sparked consumer backlash and raised concerns about transparency. Companies resort to shrinkflation to manage costs while maintaining affordability but risk damaging consumer trust in the long run. The phenomenon reflects a delicate balance between meeting consumer demands and sustaining profit margins in a competitive retail landscape.
There's a behind the scenes industry that helps big brands decide questions like: How big should a bag of chips be? What's the right size for a bottle of shampoo? And yes, also: When should a company do a little shrinkflation?
From Cookie Monster to President Biden, everybody is complaining about shrinkflation these days. But when we asked the packaging and pricing experts, they told us that shrinkflation is just one move in a much larger, much weirder 4-D chess game.
The name of that game is "price pack architecture." This is the idea that you shouldn't just sell your product in one or two sizes. You should sell your product in a whole range of different sizes, at a whole range of different price points. Over the past 15 years, price pack architecture has completely changed how products are marketed and sold in the United States.
Today, we are going on a shopping cart ride-along with one of those price pack architects. She's going to pull back the curtain and show us why some products are getting larger while others are getting smaller, and tell us about the adorable little soda can that started it all.
By the end of the episode, you'll never look at a grocery store the same way again.