Downsizing

Unfortunately, we know too much about company "downsizing." (and don't you just hate that "rightsizing" term- I'll bet the people losing their jobs don't feel very rightsized) But have you noticed the torrent of packages that have been downsized?

When my wife returned from the supermarket recently she commented on the smaller peanut butter jar, which got me to thinking that more people are starting to notice the boiling of the frog (see post of 5/59/08). When tuna fish cans went from 6 1/4 to 6 1/8 to 6 ounces a while back, few noticed. Now it's spaghetti sauce, hand soap, pet food, and on and on. As commodity prices increase, producers and distributors must make choices. They can absorb their cost increases or pass them on. As you might expect, there is a little of the former, and a lot of the latter. However, the trick is to not so strongly shock consumers with higher prices that the product will no longer be bought. To do so, many producers are downsizing packages at an increasing, if not alarming, rate. It's alarming because while some will see the increase in the price of peanut butter, not many will notice the decrease in the size of the jar, which of course is in effect a hidden price increase.

In psychology there is something known as the "Just-Noticeable-Difference" (JND) threshold, which means that something has to be different enough from the standard to be perceived. That difference is typically over about 10% or so. The savvy producers are downsizing containers or redesigning them so they look about the same but hold less, as with breakfast cereals (narrower boxes). Others, such as ice cream producers, are making more dramatic cuts to package sizes (from 64 to 56 to 48 ounces). While this is not a new phenomenon (e.g., cars, candy bars, wine bottles) and the individual changes may not be noticeable, there is a cumulative effect for we boiled frogs. People are seeing that they're getting less for more every time they go to the grocery store. And lots of other places too. A while back I thought Iraq would be the big election issue, but now I think I was wrong. It looks like another "It's the economy, stupid," election.