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Tuesday, October 22, 2013

Offering less for more and making it look like similar..

Today we're not going to dwell on government, debt, Fed or any of the usual rot..

We're going to focus on shopping, particularly the game of keeping prices 'low' or comparable to what one is accustomed to spending while offering less product or lower degree of quality.

Today Amazon announced you're going to have to spend more to get free shipping if you're not a Prime member.

Used to be $25... Now its $35...
The big push is to get people to sign up for the annual $79 fee  (amazingly sales tax is charged on that but we will hold back that vent for another time)

It might not seem profitable but it does is steer customers to loyalty to Amazon and to spend money there vs elsewhere.

For instance, you find a particular CD you like.. Amazon sells for $14 and another online outlet sells for $13 with shipping costs the same at both places, you are likely to buy the CD from the competitor.

With Prime membership, you save the shipping so you buy from Amazon to save those costs and they get to make the extra dollar...
Everyone is thinking of ways to cut corners to keep costs in line while the depreciated dollar makes everything more expensive to purchase.

Used to be orange juice came in 64oz cartons..  Now its 59oz

Boxes of Kellogg’s cereal down that used to be 14.5 oz. are sold at similar price point for 12.1 oz.

Edy’s Ice Cream used to be 1.75 quarts.  Now its 1.5 quarts.
Oreos packages that were 16oz are now 14.75oz

Used to be Coke sold a 24 pack of soda for $6..  Now its 20-can packs

A year or so ago, we noticed Clairol brand Herbal Essence Shampoos were $2.99 regular price for 12 oz..  Yesterday we saw the bottles at 10.7oz and costing $3.09.

So the shopper thinks (if at all), "Ehh.. just a dime more.. no worries"...  Yep.. a dime more for 12% less content.

Some like to rationalize this as a good thing.. they'll say this prevents the company from mass layoffs or make some idiotic argument about how obese Americans are and its good we cut our portions...

What's that saying:  Can't have a rationalization without a 'rat' saying it..

Truth it companies lay off workers for any damned reason they feel or no reason at all.  When economic times are bad, its called 'Reduction' and when times are booming, its called 'Restructuring'

And the obese argument?  It was stated over the news this weekend that Mexico has taken over the #1 overweight nation rank and no matter, no company that makes food using fructose corn syrup reduces quantity to be health conscious.
So what can be done as a consumer?

Its impossible to stop this movement in product size reduction in a way that will make the companies change course.

But on an individual level, we do suggest the best way to fight this is to abandon brand loyalty.

Often (though admittedly not always) the generic brands taste or work just as well as the name brands at fractions of the price And more quantity per container.

If we had to take inventory of all our purchases, we'd say 60-70% are supermarket or no-name brand items.
Its really all a matter of personal preference but one thing is for certain..  These companies are not going to stop thinking of ways to cut corners to cut costs and try to do it in ways you won't notice while increasing their advertising budget and what they pay their CEOs

Only question is which products do you reward such trickery by purchasing?

Back to more financial news skulldrudgery tomorrow..