Archive for the ‘Marketing – Shady Practices’ Category

Yep, the candy bar is getting smaller … it’s inflation’s evil twin: “shrinkflation”

May 21, 2021

Many companies masking inflation by holding prices … but shrinking products
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I used to remind students that there are two ways to increase prices: (1) you can just increase nominal price (i.e. “sticker price”) or (2) you can hold price constant and offer less product (i.e. increase the “unit price”).

For example, assume that a 5 oz. candy bar sells for $1 … that’s 20 cents per oz.

Shrink the bar to 4.5 ounces, hold the price per bar at $1 and it’s 22 cents per oz.

Presto … an 11% “effective” price increase … with customers probably none the wiser … and the Feds reporting: “inflation in check”.

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You’ve probably noticed that gasoline and lumber prices have been soaring.

A gallon is a gallon … and an 8” board is an 8” board.

So,  those products show up clearly as inflation.

But, many companies can mask their price increases by shrinking their products by less than a “just noticeable difference”.

For example. Red Flag Deals reports that Costco has cut the size of its private label paper towels from 160 sheets to 140 sheets.

No harm, no foul, right?

Wrong.

That’s a 12.5% reduction in quantity and a 14.3% price increase

Assume that a roll is priced at $5 before and after the size change. The effective price before the size reduction was 3.125 cents per sheet … after, it’s 3.571 cents per sheet … that’s equivalent to a 14.3% price increase.

And, it’s not just Costco.

One price tracking site has noticed that the following products are among those that did the same in 2020:

  • Powerade (Was: 32 oz.; Now: 28 oz.)
  • Lay’s Potato Chips, party bag (Was: 15.25 oz.; Now: 13 oz.)
  • Nutella (Was: 14.1 oz.; Now: 12.3 oz.)
  • Puffs tissue (Was: 56 count; Now: 48 count)
  • Dawn dish soap, small (Was: 8 oz.; Now: 7 oz.)
  • Hillshire Farms Kielbasa (Was: 16 oz.; Then: 15 oz.; Now: 14 oz.)
  • Nathan’s Hot Dogs: (Was: 16 count; Now: 14 count)
  • Keebler Club Crackers (Was: 13.7 oz.; Now: 12.5 oz.)
  • Charmin Ultra Strong toilet paper (Was 286 sheets; Now: 264 sheets)
  • Hershey’s kisses, family size (Was: 18 oz.; Now: 16 oz.)

As they say in marketing circles (and sometimes in court) … caveat emptor!

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For more examples (pre-2020), see the list below…

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All the Olive Garden you can eat … for life!

August 14, 2019

For 2 years, I’ve been “punishing” Olive Garden for sleazy practice of adding $2 to my bill for the tablet computer that was on our table — even though we didn’t use it!

For the gory details (and a great read), see these prior posts:

I ended my personal boycott because I had the taste for Olive Garden bread sticks, not because the restaurant chain just announced a special promotion: the Olive Garden ““Lifetime Pasta Pass”.

The deal: Shell out $400 and you’re entitled to “a lifetime of unlimited servings of pastas, sauces, and toppings. Plus unlimited soup or salad and breadsticks.”

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Of course, there are some small print restrictions and and plenty of fodder for belly laughs …

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USAA sends active military and veterans an insulting Memorial Day card.

May 27, 2017

A couple of friends – veterans all – alerted me that USAA – the insurance company that caters to military veterans and their families has announced – on the run-up to <e,orial Day — that it’s joining with progressives and pulling ads from some Fox News programs.

Sure enough.

According to the Washington Post:

Financial services firm USAA is adding itself to the list of companies that have pulled advertising from Fox News Channel shows.

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According to USAA, its actions are completely unrelated to the progressives’ Fox boycott:

“Our policy is to run ads on news programs. There was an error which led to our ads running during opinion-based programs, and as soon as that was discovered, the error was corrected.”

Unfortunately (for USAA), there’s a major flaw in their storyline…

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More reasons to be wary of restaurants’ table top touchscreens…

May 10, 2017

Olive Garden’s unauthorized “table game fee” opened a can of worms.

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In yesterday’s post, I whined about Olive Garden’s “profit scheme”: tacking an unauthorized “table game fee” to my bill .

For the gory details and the sleazy marketing “principles” underlying the practice, see Gotcha: Why I won’t go back to Olive Garden …

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When I googled “Ziosk” – what Olive Garden calls its devices – I was served links like Restaurant guests sour on Ziosk’s “touch it and you’re charged”  and Olive Garden servers are getting shorted on tips   … they exposed the  dirty underbelly of table top touchscreens.

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Gotcha: Why I won’t go back to Olive Garden …

May 9, 2017

For a measly 2 bucks, they lost me as a customer.

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In class, we cover Customer Lifetime Value – the math that captures a basic truth: businesses are better off getting repeat business from loyal customers than by gouging them on a single transaction.

Apparently, Olive Garden – which used to be one of my favorite chain restaurants — missed that class.

Yep, for a measly 2 bucks ($1.99 to be precise) they lost me as a customer.

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Here’s what soured our “relationship” ….

 

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