By Chuck Jaffe, MarketWatch
BOSTON (MarketWatch) — Economists are worried not only about inflation, but also deflation, and now it appears U.S. consumers need to worry too.
While prices for many goods are rising, in cases where prices are steady, the packaging frequently is smaller. It’s an unmistakable trend for grocery shoppers these days: every other package seemingly has a “great new look” for the “same great price.”
The problem is that the new look is a few ounces smaller than the old packaging. Or there has been some other creative way to have shoppers pay the same money as always without recognizing that they are bringing less home.
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Mind you, the manufacturers aren’t discussing the pricing/packaging change. Tropicana is running commercials saying that their packages have “16 fresh-picked oranges squeezed into each carton” — a claim the company has made for years — but there must be some orange deflation if the carton is about one glass of juice smaller. Tropicana cut its packaging size in response to last winter’s freeze in Florida, according to Consumer Reports, after consumer research showed that people preferred to pay the same price even if it meant less juice.
That’s part of the problem, because the grocery budget is not just about finances, it’s about how far the products go.
“It’s caveat emptor on aisle 3,” said Donald MacGregor of MacGregor-Bates Inc., a Eugene, Ore.-based firm that does research into consumer judgment and decision-making. “Consumers must realize that, as a group, they are easily manipulated, and companies are counting on that. If a company reduces the price of something by 5% but gives you 10% less, you look at the price and think you are getting a bargain, but they have increased their profit margin by 5%. It looks good to you, but you’re really paying more to get less.”
The manipulation involves playing with different units of measure, a problem consumers allow because they get familiar with a certain size and then assume it stays the same. Ask people in the orange-juice aisle what, exactly, they are buying, and they will say “a half-gallon of orange juice,” even if they are picking up a carton that holds less.
That’s why people buy a “pint” of ice cream that is really 14 ounces; it may be the same sized container with more air in the product, or it might just be fancy new packaging that is a tad smaller. The issue is that the manufacturer sets up the unit price in ounces, where the competitor selling a true pint does its unit-pricing by the pint. That makes it hard for the average consumer to do a quick-look price comparison and know which is the better deal.
Keep reading here: Inflation diet: same price, less product Chuck Jaffe – MarketWatch.
