…consumers find reductions in product quality significantly more unfair than reductions in product size or price increases. In fact, the vast majority of respondents in my studies judge skimpflation as unfair, which is not always the case for shrinkflation. I label this phenomenon “skimpflation outrage.”
How should companies deal with rising costs? Some consider reducing product size, others decreasing the quality. The thing about shrinkflation and skimpflation is they don’t affect the price. Both practices have become increasingly prevalent. Yet, there is not much research on understanding consumers’ views of skimpflation. Researchers Ioannis Evangelidis decided to investigate consumer perceptions of fairness regarding strategies to deal with rising costs: decreases in product quality, product size or price increases.
In the first of a set of online studies, respondents were asked to judge a chocolate manufacturer’s decision to make one of three decisions in response to cost increases, either increase the price, decrease the size of the chocolate, or decrease quality. The fairest according to participants were price increases (80% to 15%). Size decreases were considered fair but by a slimmer margin (57.5% to 42.5%). Conversely, quality decreases were considered unfair by almost all the respondents (83.5% to 16.5%).
The second study replicated the first. The only difference was that, instead of a chocolate manufacturer, the company was a streaming platform. This study found similar results. Participants rated reduced quality of its movies far more unfair than reducing their number in the catalog or increasing the price of the service.
The third study used a more concrete skimpflation manipulation. Consumers confirmed that raising prices or downsizing was far more acceptable than decreasing the quality of an olive spread. A fourth study generalized the findings by testing participants’ reactions to changes in size, price and quality to two products in each of five categories: food and beverage, personal care, household cleaning, snacks and office supplies. The results provide convincing evidence that decreases in a product’s quality is seen as much more unfair than decreases in the product’s size or increases in the product’s price, with skimpflation seen as even more unfair than shrinkflation.
Two more studies examined what factors might mediate consumer responses to lower-quality or smaller-size products. The first of these focused on orange juice. It asked participants to rate four statements about the difficulty in detecting manufacturers’ practices to offset increased costs. Participants judged skimpflation and shrinkflation as deceptive and unfair practices because they are less likely to be noticed compared to a price increase.
A final study asked participants the extent to which manufacturers’ practices change the product itself. When the quality rather than the size of a moisturizing cream decreased, they felt as if they were getting a different product. These findings help explain why skimpflation is judged to be less fair than shrinkflation. While both practices are seen as less transparent compared with raising prices, skimpflation is regarded as even more unfair than shrinkflation because it involves more profound product changes.
Read the full report: Skimpflation Outrage: Decreases in Product Quality are Seen as Much More Unfair Than Decreases in Size and Increases in Price.