Buy one, get one free! Another marketing ploy to tempt consumers to buy more than what they need!

What is the big difference between the consumer and the retailer? Very simple, one wants to buy best quality goods at lowest price possible and the other wants to sell as much as possible at greatest profit! Thus every day we can see this war of wits taking place in the market place all over the world. Government is a side player working to ensure that citizens are not cheated through its policy interventions and make the selling as transparent as possible. There are established regulatory frame work for the food industry to abide by and violation will attract punitive measurements including closing the shop for defaulters and fraudulent players. The labeling regulations can be an effective insurance against misrepresentation and facilitate consumers' right to know what he is buying. But in spite of all the safeguards marketeers constantly device ways and means to mislead the unwary consumers through doubtful but legal tactics.

A classical example is the manipulation of the packaging size and shape in such a way that most consumers are not able to perceive that they are being taken for a ride at the super market isles! It is perfectly legitimate to use any size or shape for designing packaging units as per the convenience of the industry. Theoretically it is the responsibility of the consumer who has to be watchful while buying his needs from the market for which sufficient guidelines are available. Transgression by the industry can come in many ways against which no legal recourse may be available. For example there is no law which says that industry must use only particular shape or size or unit prices should be stamped on each packet. "Maximum Retail Price" or MRP can indicate the recommended sale price of a particular pack size and it cannot be compared easily with another brand with different pack size. Of course smart consumers can always calculate the price per kilogram and compare the same among competing brands but most consumers have neither the time nor the inclination to spend too much time in the market for doing such elaborate arithmetic jugglery.

MRP declaration can be very deceptive as it can be easily manipulated by the industry for its gains. By introducing packs of sizes not used by others, MRP can be stamped with a higher figure and retailers can be given higher margins to push their products aggressively. Many manufacturers use bigger looking pouches and bottles while keeping the content size same to give an impression to the consumer that their packs contain more materials than that of their competitors. Of course a diligent consumer can call this bluff by carefully reading the label. Another area of misleading packs is in the declaration of ingredients which are not as transparent as many think. For example if wheat is a component of a particular formulation, the manufacturer has the liberty to use the terminology "whole wheat atta"  or "maida" and in these days of great awareness about health most consumers will prefer a product with whole wheat flour rather than maida. Similarly in multigrain products one particular ingredient may be more than 90% while others may be present in "trace" amounts. Even the list of ingredients supposed to be in descending order can be inaccurate as there is no way to determine, especially by a lethargic enforcement regime, the presence or absence of a particular ingredient and its concentration. 

Expiry date stamped in many packs can be misleading because no one is certain as to what it means! In India "best before" date is being insisted by the food safety authorities but the question remains whether what happens if one buys products beyond this date? Technical problems do exit in this area as adequate data regarding the real shelf life of food products are not readily available. Besides various formulations, presence of different ingredients, varying processing parameters followed by different manufacturers and the variations in the environmental conditions in different geographical areas make it difficult for any one to predict when a product can become unsafe to consume. Unnecessary wastage of foods, especially in wealthy countries which can support a significant number of poor people in the poverty ridden countries in Asia, Africa and South America, is receiving the attention world over these days and many politicians and social activists are suggesting that consumer should not throw away date expired foods. Though there is a demand for printing a date beyond which the food is not safe, there does not appear to be any takers from the industry for this demand due to logistical and practical reasons.   

One of the most elegant strategies now being adopted by the industry is to tap on the gullibility of human beings to temptations of buying at bargain prices more than their actual requirement which possibly drives them in hordes whenever a price slashing sale is announced. The native instinct of pursuing activities that is economically advantageous makes man fall into the trap of marketing pundits who constantly devise and design promotional programs to satisfy this instinct. The memory of the public is too short to remember and recall bad experiences associated with a particular product and economic consideration outweighs all other emotions in going for another product by the same manufacturer. Probably this is at the core of the spate of cases in the market where a few manufacturers are positioning their products promising free supply of a food packet for every purchase of the same product. Whether this is a straight forward situation or there is a hidden agenda in such schemes will have to be carefully examined.

"Buying one and getting another one free" is a practical way of liquidating stocks of products which are slow moving or for products nearing the "best before date". What the consumer feels about it is not very well understood and the experience of the industry in undertaking such schemes is also not in the public domain. But unquestionably every consumer must be wondering why these products are being sold literally at half the price and their suspicion about unjustifiable price tags of many of the products in the market gets strengthened. A common sense consumer always debates the rationality of a product like Corn flakes commanding prices as high as Rs 400 per Kg while the basic material used in the process viz, Corn is available at a relatively low price of about Rs 20 per Kg! Another dimension to this tangle is the eternal distrust of the industry by the consumer vis-a-vis quality and a dramatically reduced price can raise doubts regarding the real quality of the product offered for sale.  

Offering newly launched products at reduced price is a genuine marketing strategy by a new player or by an established manufacturer but the natural price or "viable" price is subsequently recovered once the product or the brand attains critical sales volume. Similarly giving "free" another product from the same company or from another known company is very common as both get almost free publicity. After all during these days of high sound bite electronic media, promotion does not come cheap and diverting a part of the advertisement spend on schemes involving "giveaways" is quite normal benefiting mutually. Though consumer stands to benefit from such periodic schemes, it is imperative to be on guard to ensure that the product has still significant shelf life as per declared expiry date. When ever a consumer buys these products, it is better to keep in mind that food products tend to lose their quality progressively with time and too much of stocks may eventually end up in the trash can due to signs of spoilage!    

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

"SHRINKING" FOOD PACKS AND RISING PRICES-THE NEW INDUSTRY STRATEGY

How to beat the need to raise the prices of food products without antagonizing the consumer? This is a crucial issue that is confronting the industry world over and if the the product is not price sensitive the manufacturers may not be averse to increase the retail price to keep up with the rising inflation. But what about those products which are more or less staple foods for most of the consumers who will definitely feel the pinch when the family expenditure shoots up significantly? In western countries and many affluent communities the share of processed foods in the daily diet can be as high as 80%, any upward movement of prices is easily discerned.

In the retail market there are broadly two types of packed foods which consist of branded ones and the generic ones usually marketed by the retailing store under its own label. Invariably there is significant price difference with the branded products costing much more compared to generic or local store brands. One of the choices for the consumers is to switch over to local products in preference to established brands and stay within the family food budget. This is where the big processors find it difficult to compete and maintain the business volume. Naturally the main stream industry has to evolve effective strategies to survive and grow in such an environment. Playing around with the human weakness vis-a-vis appearance is exploited to "deceive" the consumer, giving the impression that products prices are not increased in spite of inflation.

It is true that commodity and energy costs have been climbing continuously with no respite and the organized food industry cannot escape from increasing the prices of their products to keep in step with the rising input costs. Whether one calls it ingenuity or plain deception, industry has hit upon the idea of downsizing their pack size without the consumer knowing about it unless the product labels are closely scrutinized. Probably the credit for this strategy must go to the wily package designers who are able to evolve suitable packs containing lesser quantity of products inside which cannot be discerned so easily. The result is a hidden price increase that has gone largely undetected by the average shopper. Recent studies in some of the markets in the Western world have brought out the fact that most popular products were able to to shrink their effective delivery by as much as 20 percent. In a few cases, even after reducing the quantity in the package the products actually appeared larger after downsizing!

One of the reasons why the consumer is not able to find out this deception must be due to the non-standard sizes of packs with each manufacturer using odd sizes which are difficult to remember. There was a time when standard weights and measures were specified and made mandatory by the authorities which helped the consumer to more or less pick up products based on comparative price analysis. But industry has been handed over a convenient route to deceive the consumer by using any pack size provided a declaration is made on the pack that it is not a standard size! With computer aided design capabilities, manufacturers can make a pack look bigger while actually reducing the content size and what is being witnessed to day is the result of such "intelligent" manipulation by the industry to protect their bottom line.

Probably it may be a pretty smart way of "having your cake as well as eat it"! It is a pity that most consumers buying any product do not have the faintest idea as to how much product is contained in a pack and a few pieces missing when the pack is opened at home are unlikely to be noticed. At least this is what the industry thinks. In contrast even a marginal increase in price is immediately noticed which can invite adverse reaction. This is the cardinal basis as to why food manufacturers feel that they can retain customers if they reduce volume instead of passing along price increases. Since this trend has more or less succeeded in almost all parts of the world, it is not unreasonable to expect the same to continue in light of a recent surge in prices of basic food commodities like wheat, corn, coffee etc.

International market prices for foods rose for eight straight months before peaking at a record high in February as per the monthly index figures put out by the United Nations' Food and Agriculture Organization, which tracks data for sugar, cereals, dairy, oils and meat products. This has been attributed to rising oil prices and extreme weather conditions in countries like Russia, which banned grain exports after experiencing its worst drought in a century. Naturally this puts food manufacturers in a fix as they know that most consumers are hyper-sensitive when it comes to price hikes at the supermarket. While in a country like the US consumers may be spending about 10% of their income on food purchase, this figure can be as high as 50% in countries like India. Further erosion of the purchasing capacity through all round, uncontrolled price escalation, at a rate faster than their income levels, is unlikely to be tolerated by the citizens. The new down sizing strategy by the industry, though understandable and considered perfectly legal, cannot be condoned from the ethical angle. Indirectly reducing serving size through shrinking pack size may be a blessing in disguise in countries faced with obesity problem as food intake gets automatically reduced.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com