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Unravelling the Secrets of Today's Pricing Tactics with Shrinkflation, Price Pack Architecture and Surge Pricing

You know that quote by Oscar Wilde about fools knowing the price of everything but the value of nothing? It seems highly appropriate for today's world. Things are getting pretty interesting, especially with all this talk about inflation and what it's doing to the value of the stuff we buy.

Over the last few years we have been introduced to "shrinkflation". It's when companies sneakily shrink the size of their products but keep the price the same. CEOs and marketing folks are even calling it "price pack architecture" these days. According to the grapevine, lots of companies are hopping on this bandwagon to deal with inflation. Nestle, Kellogg's and Cadbury... they're just a few names in the game.

There's more! Ever heard of "surge pricing"? It's not just a tool for making money out of flights and theatre tickets, fast food joints like Wendy's are getting in on the action too. Not everybody is happy with these surges (which always seem to be with normal at the bottom and rip-off at the top).

There is a lot going on underneath the surface. When you dive into the nitty-gritty of supply chains, things get more complex. In the commodities market, prices for raw materials like sugar, copper, and cocoa are influenced by global production, geopolitical events, weather conditions, and investor sentiment. Here, the law of economics plays out: when demand exceeds supply, prices rise, and vice versa. It's a roller-coaster ride for prices but these fluctuations are expected and are often manageable for businesses that deal directly with these raw materials.

So, what's the deal with all these price games? Well, it's all part of the dance that goes on in the industrial markets. Businesses have to juggle risk, cost, and stability like they're in some kind of circus act. Some use fancy financial tricks like hedging, while others play the field by sourcing from different suppliers. Others simply reduce the pack size and keep prices the same.

But fear not! Knowledge is power, especially when it comes to understanding why that cola drink costs a fortune one hot day and reverts to normal when the weather cools down. By getting savvy about pricing strategies, we can make smarter choices and make sure we're getting our money's worth. As marketers, we may even be tempted to apply some of these concepts ourselves.

So, in a world where prices are constantly in flux, let's remember what really matters: the value we get from the stuff we buy. After all, it's not just about knowing the price tag; it's about knowing what it's really worth to us.


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