Managing food prices by Adjusting package sizes

A New York Times article (March 29, 2011) describes package size adjustment as an approach to maintain prices at the grocery store.  Examples cited include whole wheat pasta packs with 13.25 ounces instead of the usual 16 ounces, baby wipes boxes with 72 instead of the usual 80 wipes, 4 lb bags of sugar instead of the usual 5 lb bags, 15 % fewer graham crackers in a pack etc. These changes are sold to customers as environmentally friendly, or lower calories or fresher (because they use more individual packaging).  Will such adjustments to manage prices survive the recession ? Is it optimal for an individual firm to indulge in such adjustments in a competitive environment ? Will customers remain brand sensitive as they figure out these changes ?  Would the manufacturer be better off decreasing the package size and the price to coordinate with consumer willingness to pay ?

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About aviyer2010

Professor
This entry was posted in Operations Management, Service Operations, Supply Chain Issues, Sustainability and tagged , , , , , , . Bookmark the permalink.

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