new phenomenon is taking hold across world - "shrinkflation". This is when companies reduce size of their products or range of services while maintaining prices. It is in reaction to rising prices of raw materials needed in production process. Another tactic being used is to place smaller numbers of items in larger boxes, providing illusion to shoppers that they are getting more for their money. Shrinking size of products is in effect cost-cutting strategy. Manufacturers are relying on psychology here. They know that consumers are more sensitive to price than quantity or quality. Most shoppers will still make regular purchase, even if it has shrunk, as long as price has not risen.
The chocolate bar maker Cadbury has resorted to shrinking size of one of its flagship products by 10 per cent to maintain its bottom line. company spokesperson said: "We look to absorb costs...in this difficult environment [so] we've had to make decision to slightly reduce weight of [chocolate] bars for first time since 2012, so that we can keep them competitive." The service industry is also being inventive to try to refrain from raising prices. hotel chains Hilton and Marriott have made daily housekeeping services "opt in". This means that guests must now request cleaning of their room. Many other free services we have taken for granted are on wane and being shrunk.
