Contemptuous of Customers

Many people blame a culture of greed, deception, and short-term-ism in the financial industry for the predicament we are in.

In reality, that view is a tad simplistic. Plenty of people were at fault, including the so-called victims, who failed to educate themselves about the realities of what is, in fact, a gigantic selling machine.

That said, the critics do have a point. What kind of industry views its clients in such a poor light that they are willing to sacrifice profitable long-term relationships in the interests of short-term gains?

Well, as it happens, such an ill-advised perspective is not confined to the shark-infested waters of Wall Street.

According to the following Los Angeles Times report, "On Store Shelves, Stealthy Shrinking of Containers Keeps Prices from Rising," many consumer product makers appear to be equally contemptuous of their customers.

Quantities of peanut butter, soap and other products are reduced to keep up with rising costs. Shoppers may not know they're getting less for their money.

It is hard to spot what happened this year in the peanut butter aisles of local supermarkets.

But a careful look at the jars of Skippy on the shelves may reveal a surprise. The prices are about the same, but the jars are getting smaller.

They don't look different in size or shape. But recently, the jars developed a dimple in the bottom that slices the contents to 16.3 ounces from 18 ounces -- about 10% less peanut butter.

The only way to know you are buying less is to look at the weight on the label and recognize it's lighter than before Unilever, owner of the Skippy brand, switched out containers.

Across the supermarket, manufacturers are trimming packages, nipping a half-ounce off that bar of soap, narrowing the width of toilet paper and shrinking the size of ice cream containers.

Often the changes are so subtle that they create "the illusion that you are buying the same amount," explained Frank Luby, a pricing consultant with Simon-Kucher & Partners of Cambridge, Mass.

To shoppers it may seem like getting less, but companies say cutting quantity is a common way to avoid raising prices.

It's an age-old dilemma for manufacturers juggling prices, container sizes and profits -- at the same time coping with rising prices for ingredients and greater competition on supermarket shelves.

At international food giant Unilever, "we have chosen to reduce package sizes as one of our responses" to rising commodity and business expenses, said spokesman Dean Mastrojohn. He said the new smaller sizes are clearly marked on labels.

Shoppers understand the manufacturers' dilemma but also say they feel deceived at times.

Kathy Yukl of La Crescenta says she's tired of going to the store and finding dimples in the bottoms of jars -- she buys Skippy only when she has a coupon. She is annoyed that containers that once held half a gallon of ice cream, or 64 ounces, now have only 48 ounces. And she's frustrated that cereal boxes are shrinking.

"What these companies don't realize is that their chronically deceptive marketing ploys tell us loud and clear that we absolutely cannot trust them for anything," Yukl said.

Other shoppers agree. "I think the whole thing is deceitful, and yes, it does irritate me, and I do feel they are tricking the consumer," said Bill Stone of Long Beach. "This practice, however, has been going on for many years and apparently the manufacturers feel it is to their advantage to try to slip these changes by the customer rather than announcing it."

Asked whether the new packaging is deceptive, Mastrojohn said only that the lower weight is clearly listed on the package.

Unilever also changed the shape of its Breyers ice cream containers, reducing the contents to 1.5 quarts from 1.75 quarts. Competitor Dreyer's Grand Ice Cream did the same, shortening its carton.

Reducing the size of the Dreyer's and Edy's Grand Ice Cream cartons was not an easy decision, spokeswoman Kim Goeller-Johnson said.

"We understand that consumers don't like to pay the same price for a smaller container," she said.

But the division of food giant Nestle had seen large increases in the cost of milk, cocoa, sweeteners and energy during a period when the average price of ice cream had "not really changed much," she said.

"We looked at raising prices to cover these costs, but at some point it just doesn't make sense to raise prices too high. . . . The ongoing feedback from our customers is that they aren't ready to pay $7 or more for a carton of ice cream," Goeller-Johnson said.

In June, Kellogg Co. reduced the weight of many popular cereals -- including Cocoa Krispies, Corn Pops, Apple Jacks, Froot Loops and Honey Smacks -- an average of 2.4 ounces per box to offset rising grain and energy expenses.

The reduction wouldn't be obvious to shoppers walking down the cereal row. From the front, the size of the box remains the same; only the depth was reduced, Kellogg told The Times.

Dial shaved its soap bars to 4 ounces from 4.5 ounces but kept the size and look of its packaging the same, spokeswoman Natalie Violi said.

Dial didn't want to increase the price of its soap but needed to do something to maintain its profits because of the skyrocketing cost of tallow. Made from beef and chicken fat, tallow is one of the primary raw materials of bar soap. Its price has doubled over the last 18 months, in part because of increased demand for it as a component of biodiesel fuel, Violi said.

Consumers are confronting similar packaging changes in the toilet paper aisle.

In its promotional materials, the Quilted Northern brand likes to talk about its history of innovation. In the 1920s, it was among the first bath-tissue brands to be sterilized. Quilted Northern went "splinter-free" a decade later and upgraded to two layers in the 1960s.

This year's innovation was to shave half an inch off the width of its Ultra Plush product. Quilted Northern owner Georgia-Pacific said the savings allowed it to make the tissue three-ply instead of two, but it means consumers are getting fewer square inches of paper.

Shoppers on the candy aisle will find that the formerly 8-ounce Hershey's chocolate bar is now 6.8 ounces, a 15% reduction.

Luby, the pricing consultant, said the move allowed Hershey's to keep the price from rising above 99 cents. The company worries that crossing the $1 threshold could hurt sales, he said.

Many of these changes were made when food commodity and oil prices were surging to record highs. It's not clear what the companies will do now that the cost pressures have eased. Oil has fallen from more than $145 a barrel in July to about $61 now. Wheat futures are down from $12.82 a bushel in March to $5.21 now.

They're not likely to go back to the larger sizes because of the expense involved in changing packaging. And they are not interested in setting off a price war with competitors, Luby said.

"If the focus is on profit, food companies would be better off accepting flat volume or even a slight loss in market share in their more stable, mature products in order to make money," Luby said.

The big question is whether consumers who notice they are getting less for their money will stop buying the product. Any backlash is likely to be small, Luby said.

"Many people notice the change but they don't protest and stop buying their favorite brand of cereal," he said. "These brands are strong enough to overcome any backlash."

Stone, the shopper from Long Beach, agreed.

"If it is an old favorite, maybe from a highly reliable source, you will probably continue to buy it, especially if the price has not changed," he said. "In the case of bathroom tissue, one has to have a decent-quality product or else your hand goes right through it, and no one really wants that."

Comments

[Guanacaste]

Most companies in most industries are contemptuous of customers.

Airlines are contemptuous. They load people onto planes like cattle, think nothing of keeping them in a sardine can without AC on the tarmac for hours and then have them arrested if they have the audacity to complain.

Insurance companies are contemptuous of customers. They collect premiums for years and then if the customer has the terminal audacity to file a claim, they sue him.

Cell phone companies are contemptuous of their customers. What other industry offers 20 page bills, backloads all sorts of charges and moves customer service offshore?

Oh wait, most companies do that.

I could go on, but you get the point. Most corporations view the customer as an inconvenient nuisance. Try this. Pick a company in any industry. Call sales and see how long it takes to get connected to the right person. Then try the same thing with customer service.

The defense rests.

[ArtE]

Yup, smaller packages abound for the same old price. It sure mucks with recipes to have all cans go from 16 oz to 14 oz, etc.

We have switched exclusively to store brands where we don't have any loyalty (including OTC medicines).

We only buy brand name when it's on-sale or 2 for one. Period. Breyers comes home when it's 2 for $6 and not one for $6.

The marketing people that are doing this really think we are all a herd of dupes. We notice and adjust our behavior PERMANENTLY.

[Omitted Kingdom]

Absolutely I noticed when the ice cream containers shrank. Haven't McDonald's Big Macs shrunk in diameter? They're more like a large hors d'oeuvre rather than the Big Mac I remember. I never eat them; I just noticed they'd shrunk when someone in my family left a container lying around. My family rarely eats out and I made a pledge to do as little shopping as possible, in order to speed the collapse of every business until the credit card companies feel the loss. I shop at WalMart for motor oil for my automobile. My family's second car, a truck, stopped running recently, so for the foreseeable future we are a one car family.

Sam's Club sells a 25 lb bag of flour for ~8 dollars, so I bake bread. Completely agree that toilet paper seems to run out sooner than usual. The local Carmike Cinema sold a bucket of popcorn at the Memorial Day opener, and you can return with the bucket for 50 cents a refill throughout the rest of 2008.

Whole Foods in my area allows you to bring your own large mug and fill up with coffee for 81 cents.

[roger]

GO METRIC....
1000 grammes = 1 kilo
500 GR. = 1/2 kilo
250gr. =1/4 kilo
EASY-NO CHEATING- SIMPLE
"Same as decimal" trow out this middle Age crap,restore honesty in
advertising,remember when it comes to money we are all crooks.

[Peter of Lone Tree]

It's been so long ago that I read it I can't remember the source, but I think the "fifth" of liquor was created for the same reason you mention above. It might have been back in the 30s after Prohibition was repealed. Distillers previously had sold booze only in quarts and the government wanted to increase taxes on the booze so the distillers created the "fifth" which is close in size to the "fourth," or quart, and left the price about the same to try and give the customers the impression they were getting the same amount for the same money.

[duane in Nor Cal]

I'd LOVE to see more media coverage of this blatant rip-off! I noticed this trend of "silent" inflation at least five years ago when manufacturers began to quietly modify product sizing. Seems to me that this not only serves to cheat consumers, but I believe it also allows the government to collude in keeping this price inflation out of the Consumer Price Index by sticking with the price-per-unit-of-measure rubric. Thus, not only do citizens get bent over by multinational corporations, but folks on an fixed CPI-indexed income are getting doubly screwed.

"Customer Help" at E*Trade is so extremely dumbed-down that it shouts 'Contempt'.

[unhappyCakeEater]

most groceries calculate the price per ounce for you- its on the little tag on the shelf. Just pay attention to that per oz. price and you will see through the bullshit. take a calculator with you if necessary.

[Rocky]

This is old news. Kleenex used to come in standard boxes of 200 tissues to a box. Now the company sells its product in boxes of 184, 160 and 120, as well. It also has its old large size of 280 to a box. It is up to the customer to figure out the cost per tissue and make the appropriate comparisons. Watch for specials and keep your impulse purchases to a minimum. The manufacturer and the retailer are hoping that the average shopper can't keep track of prices. Manufacturers may end up seriously damaging their brand reputations built up over many years.

[Richard]

A few months ago I in a WalMart and stopped to look at a freezer case that had ice cream on sale.
2.50 not a bad price for Edys I thought. Something didn't look right, and as I looked closer I realized they had shrunk the container size!! Good price...for the former size.

[Abraham]

Vote with your dollars. The day of the smaller manufacturer and retailer is coming back.

[Black Star Ranch]

....you can't fight it....The only solution we've found is to grow/produce as many of the products (you normally purchase) as you can. You can't imagine how much can be saved with a small garden, a few chickens, and a milk cow. OK, maybe a milk cow isn't allowed in some backyards, but you sure can't beat the milk, cream, cheese, butter, yogart, food for the other critters, and don't forget the fertilizer...

[robert]

Andy Rooney was on to this stuff ten or fifteen years ago. It's just like politics... dishonesty practically built-in to the system.

Like other posters said: read the shelf tags, buy more when items are on sale, etc.

[Steve]

It doesn't stop with quantity. Two items come to mind: socks and cleaning sponges. I used to buy Gold Toe mid-calf, black socks made of a mix of nylon and fabric. Ten to fifteen years ago, they were truly mid-calf, with a greater component of fabric, generally robust. The price was around $2. Lately, the same brand isn't quite mid-calf, with a greater part of nylon, that doesn't quite stay up the way the older ones did. They don't last as long, either. They're the same price, though.

Cleaning sponges with the green scrubbing material (whatever it's called) that used to be as tough and effective as steel wool. No longer. The ones available now contain a green wool-like material that isn't as tough, doesn't last as long, and doesn't clean as well. The sponge part falls apart rather quickly, too. Same price.