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Chiecotakes

4y ago

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Inside the Inflation Machine: How Consumer Packaged Goods Companies Squeeze You for Profit
Chiecotakes

For the past 2.5 years I was inside the Inflation Machine.

As a brand manager at the worlds largest Consumer Packaged Goods (CPG) company I was in charge of finding 3-5% growth every year.

What does that mean in consumer categories that are not growing?

It means pricing.

Even before the latest inflation crisis, CPG companies were steadily raising prices year over year. It was the only way to grow.

Here's How:

1. Dosing - Making You Use More Product

The dream of every brand marketer is to get you to use more product.

Sometimes this is accomplished with marketing alone. Convincing consumers to use the dishwasher more often is one great example.

More often this is done with nefarious means.

Adding a pump that dispenses more per pump, widening the hole on the dispenser bottle, or making a "Foam" product that washes away much quicker were all tactics that I saw in action.

When all else fails - trick the consumer into using more - but tell them how it's for their own good.

2. Mark Weight Reduction - Giving You Less for the Same Money

Mark-weight reductions were incredibly popular post Global Financial Crisis.

Cereal Boxes that used to be 16 ozs are now 15.5 ozs for the same price.

Brands reduce the amount of product while charging you the same.

This could be exceptionally lucrative and easily repeatable.

10 year plans of mark-weight reduction, removing one laundry pod every other year, enabled brands to show steady predictable earnings to Wall Street.

3. Premiumization

The hardest route for pricing was premiumization.

Convince consumers your new product deserves a premium price, and you can unlock a decade of growth.

To do this though, you need something real. A new formula, new packaging, new ingredients.

Unfortunately, those building blocks were in short supply. Real product innovation is cost intensive and hard.

Making shit up is easier.

Signal ingredients, ingredients that don't actually do anything but sound good, were the go to during my time.

Add a new buzzword ingredient, and you could have the growth you seek. Never mind reality.

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