Packaging Perceptions: Smaller Portion, Same Price

Consumers have to worry about rising costs and prices every day. It is part of life, albeit not a pleasant one. And many understand that if they are to receive raises it is only thanks to the ability of the institution for which they work to generate more income from customers.

But companies remain squeamish about being to obvious about this. Or, if we are being completely frank, they are downright uncomfortable about even acknowledging that this is going on. Gasoline stations post prices and then in teensy print say 'cash price,' indicating that the actual cost for the majority of people who use credit cards will be higher. As if there are really such great discrepancies between the four or five options available.

This has become particularly noticeable in the consumer packaged goods and food categories. Portion control, or the shrinking size of the product offered versus the stable or rising cost has become so prevalent as to be a game. The company claims it is doing the customer a favor by offering more for less, while all the consumer can see is that prices are going up while the size of whatever is being purchased is going down. One element of this approach was highlighted in the movie Supersize Me, which focused attention on both the cost and health disadvantages.

The question that arises is what companies believe they are accomplishing with this sort of dissimulation. It is not as if customers dont see what is going on. And the damage to reputation from the sly, not entirely forthright approach does not instill trust. It may reinforce the notion that the business is out to get them, so they might as well try to put one over on the business as well. This erodes loyalty and therefore profitability, given the connection between the two. It is not clear why enterprises believe this works to their advantage in the short run, but it is apparent that it may be detrimental in the long. JL

David Segal reports in the New York Times:

Few manufacturers, it seems, ever level with consumers about what might be valid reasons for higher prices. You seldom hear explanations like: “Hey, our costs have soared by 50 percent since we last touched the price of these pickles. This isn’t a charity, kiddies. The price is going up.”

PERHAPS this has happened to you.

You’re at a grocery store and pick up your favorite jar of peanut butter — or box of pasta, or can of soup — and realize that something is a little off. Like, 20 percent off. Or maybe 30 percent off. The jar has shrunk, as though it spent a month at a fat camp.

That’s if you notice. A lot of shrinkage is so subtle that it’s hard to escape the sense — and please forgive the Haggler’s cynicism here — that manufacturers may be trying to sweeten their profits on the sly. Because rarely do these reductions in container size come with proportional reductions in price. Which can really annoy consumers.

Q. I am writing about a change to Baker’s Chocolate, a brand of baking chocolate made by Kraft. For as long as I can remember, it has come in eight individually wrapped one-ounce squares. Now the company has reduced the eight ounces to four and pitches it as a “handy” bar. Of course, the price remains the same.

Somehow, I didn’t flinch when six ounces of orange juice disappeared from my brand of choice, nor did I balk when 16 ounces of ice cream vanished in a redesign of a 64-ounce carton. But this Baker’s move bugs me. It seems over the line.

I have tried finding someone to contact directly at Kraft, but the company does not make that easy. Could you let the executives there know I’m unhappy? And could you ask how they justify providing half the chocolate for the same price?

LYNNE MACKNIGHT

Princeton Junction, N.J.

A. Let’s start by noting that the two packages — the former eight-ounce version and the new four-ouncer — should not be priced the same, according to Kraft. A spokeswoman for the company, Mary Anne McAndrew, wrote in an e-mail that the suggested retail price for the four-ounce package is $2.89, while the suggested retail price for the old eight-ounce package was $3.89.

Upon seeing these numbers, the Haggler, who is nothing if not a mathematical genius, went to his calculator — and crunched the numbers five times to make sure he got them right. In the larger container, Kraft was grossing 49 cents an ounce. With the new, smaller one, it’s 72 cents an ounce. That’s an increase of 47 percent.

So, Ms. McAndrew, isn’t this just a price increase in semi-clever disguise?

As if, she wrote, though she didn’t actually use those words. She used these:

“The change was consumer-driven. Our consumers have told us that they prefer this size over the larger size because the majority of our Baker’s recipes call for four ounces or less. The easy-break bar makes it faster to melt and easier to break apart. And they can buy only what they need for a recipe, so the product is fresher.”

Bakers of America, Kraft is doing you a favor!

Once you’re done with a hearty chorus of “thank you,” let’s ask Ms. McAndrew the obvious follow-up question: Why didn’t the company keep the price per ounce the same?

“Our packaging change for Baker’s Chocolate was driven by consumer research,” she wrote. “Our consumers have told us that they prefer this size over the larger size because the majority of our Baker’s recipes call for four ounces or less.”

Indeed. You mentioned that. Did your consumer research also tell you that shoppers want to pay more per ounce?

There was a pause in communication and then:

“Our new four-ounce size of Baker’s Chocolate is competitively priced with other brands,” she wrote.

Ms. MacKnight, our reader in Princeton Junction, confirmed that this was true. The reality is that for many items, production costs — like the price of commodities, labor and energy — have been rising. Given these circumstances, a price increase is perfectly understandable and arguably inevitable.

Instead, for some products, there is all manner of sneaky tweaks to the packaging. Tod Marks has tracked some of the more creative ones for Consumer Reports. With tip-offs from readers, he found Tropicana cartons that slimmed down to 59 ounces from 64 ounces, containers of Häagen-Dazs that went to 14 ounces from 16, and a brand of Costco paper towels that went to 80 sheets from 90.

As with Baker’s Chocolate, these reductions did not come with commensurate reductions in price. That said, in most cases, when asked by Mr. Marks, the companies had reasonable explanations for the alterations, usually related to the costs of raw materials.

The exception was Costco, which promised to look into the matter, then went silent. All of these manufacturers seem to have calculated that a bit of packaging subterfuge is more palatable to consumers than a higher price tag.

That’s a mistake, Mr. Marks said.

“It’s the masking that is the sin,” he said. “Nobody begrudges these folks their living. But nobody wants to find that the new giant size is actually smaller than the old giant size.”

Then again, if manufacturers played it straight, the whole spot-the-shenanigans side of shopping would disappear, as would the pleasure of listening to companies find creative explanations for their handiwork. The Haggler’s favorite cereal, Barbara’s Bakery Puffins, was downsized two years ago, according to the company. Why?

“The density of the cereal changed,” said Federico Meade, a spokesman for the brand’s owner, Weetabix North America, in a recent telephone interview.

Wait. You mean it became more dense? Or less dense? And either way, how does a change in density justify a smaller box?

Mr. Meade promised to look into the matter. Then he went silent.