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Companies are resorting to the strategy of Shrinkflation to reduce the impact of rising input costs.
About
- Meaning:
- Downsizing a product while keeping its price the same is called “shrinkflation”
- It is a combination of the words shrink and inflation.
- Ways of shrinking:
- Reducing size,
- Reducing quantity,
- Reformulating the products, or
- Removing ingredients from a product while maintaining the same price.
- Causes of Shrinkflation
- Increased Costs making it more expensive for companies to produce their products.
- Intense competition in the market compelling companies to maintain or reduce their prices.
- Changing demands from customers which may force companies to reformulate their products which, in turn, can lead to size changes.
- Benefits:
- Maintained profits: Downsizing a product reduces costs for manufacturers.
- More Affordability for customers.
- Disadvantages:
- It is an unfair practice for consumers.
- Loss of trust if companies do not properly communicate with their consumers.
Source: WEF
