What causes shrinkflation?? Why companies use this strategy??



What is Shrinkflation?

          Shrinkflation is the hidden form of inflation. Shrinkflation is the process of reduction of the size of the product rather than the price of the product. This strategy is mainly used by food and beverages companies as the competition in the food market is very high. 

          

Why companies use this strategy???

Companies know that customers 
 attention will more likely towards the price of the product as most of us would not see the size of the product.

If any big  company directly increased the price of the product it will be headline news in many TV channels and newspapers, but if a producer just decreased the size of the product many of us will not notice it. 

For example many companies like Coca Cola, lays, Dairy milk, Hershey's , Doritos and many companies are secretly decreasing their size of the product. 

The main benefit for the company is that they can maintain their sales margin and the market share of the company.

History:

 Shrinkflation was first discovered by a British economist Pippa Malmgren in 2009. So we can clearly understand that this "shrinkflation" term has not been there in the 20th century

What a consumer can do about it?  

As a consumer it is our duty to check the price of the product as well as the size of the product. If you are a regular consumer of a product let's say that you buy it for once a month you should first check the size of the product and verify that it has remained the same. 

If not, you are the one who is going to lose money in this consumer society.

Legal or illegal

Many of us have this question in our mind this strategy is legal or illegal??
Yes, it is legal as companies mention their product size / wt in their packet cover. 




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