Weak economic conditions often put marketers in a situation of either raising prices or holding down costs. A common tactic for consumer packaged goods marketers is to do the latter, reducing the weight or quantity of a product item to reduce cost of goods sold. This route is almost unavoidable as these products are often discretionary purchases (e.g., snack foods or candy) that consumers may stop making if prices rise.
The Wm. Wrigley Company is opting for holding price and reducing product in its upcoming “Slim Pack” launch of its well known chewing gum brands. This approach carries with it risk in that consumers may see through the reduced offering and view it the same as a price increase. Even worse, such a move may be seen as a deceptive ploy to maintain profits at customers’ expense. A comment by Wrigley’s VP of North American consumer market- gum, reflects either important insight gleaned from market research or wishful thinking. He said, “To them the value goes up because they’re getting a better tasting product in a better package. Price is not the way the consumer is looking at this.” For the sake of Wrigley, I hope it is the former, not the latter. Link
