Product Pricing

I had the good fortunes of spending half a day with a savvy pricing guy from a local retailer. In the short time that I spent with him, he opened my eyes to how ignorant and gullible a consumer I am, and how retailers make use of that fact quite frequently to con me into parting with more of my money for their products. Enough ink has been spent about all these practices, so I am just gonna give you very short examples that have stuck in my head. Mind you, I am not even talking about the silly promotions that they run all the while. This is the hard-core regular bread and butter stuff:

1. We don’t really know the exact prices of the consumables that we use everyday but don’t buy that frequently – e.g. – Shampoo, Soap, Toothpaste, Dishwasher etc. We are either brand loyal or we just go by the advertising on the shelf to do our purchases. The retailers use the knowledge of this fact to keep changing (mostly increasing) prices of all their consumables very frequently. The demand for these things is pretty inelastic and unless there is a crazy price increase we hardly bother or even realize.
2. Besides prices, the other thing that they frequently play with is the packaging (net weight/ volume). This is because for items that are purchased frequently, we really know the prices quite well, and any movement in the price is easily noticed by the consumer (e.g Milk, Biscuits, Yogurt, Cereals etc.). But we are not that cognizant of the quantity of that item that we buy. So they trick us by changing (mostly decreasing) the volume while keeping the price of the product same, there by increasing the per unit cost.

After listening to his sermon, I was pretty sure that now I have “awakened” and have become a smart shopper till a few days ago I got conned again. A “health” drink that I frequently purchase (I know the price right down to the cents) just went through a huge rebranding and repacking exercise (yeah the “new and improved” trick). My local neighbourhood chemist was running a promotion on it and was selling the old product and new product side by side. Using my age old trick, I picked up the rebranded product (from the back) and went to the check-out counter. Luckily, that guy pointed out to me that to maximize my purchase I should buy the old packaging cause the new packaging actually offers 50gm less. Off 900 gm, it’s a decrease of 5.6% weight keeping the price same.

I don’t have an opinion about whether it is ethical or not. But I just feel as a consumer, we need to be more aware and not this gullible.