Etini
Valued Contributor
Shrinkflation is simply a practice of a business organisation subtly reducing the quantity or size of it's products instead of increasing the price. Shrinkflation is often used when production costs suddenly skyrocket as a strategy to stay in business. It is always the last resort in periods of high inflation. What benefits does it hold for a business?
1) It helps a business to maintain profit margins even with soaring costs of production: Subtly reducing the quantity when cost of production is high can help a business maintain the same cost per unit as before to keep profit margins steady.
2) Helps a business stay in good light among customers: Customers are more sensitive to anything that has to do with increase in price. They would backlash the business not minding the costs of production going up. They rarely are that sensitive to reduction in quantity at the same price.
Do you think Shrinkflation is a good survival strategy for a business?
1) It helps a business to maintain profit margins even with soaring costs of production: Subtly reducing the quantity when cost of production is high can help a business maintain the same cost per unit as before to keep profit margins steady.
2) Helps a business stay in good light among customers: Customers are more sensitive to anything that has to do with increase in price. They would backlash the business not minding the costs of production going up. They rarely are that sensitive to reduction in quantity at the same price.
Do you think Shrinkflation is a good survival strategy for a business?
