Sir, Costa Coffee is the latest food and drink brand to announce plans to shrink the size of its products – by reducing the size of its cups in order to reduce costs. But do such strategies work?
Shrinking products to save money is always a risky move. The thought of paying more for less could persuade price-conscious consumers to buy a different product instead, especially in a saturated marketplace. The brand owner should take a more strategic look at its total cost base. For example, separating ‘good’, or variable costs, from ‘bad’, or fixed costs, makes it possible to improve efficiencies and reduce costs without impacting product value or quality.
Other cost savings could be achieved by consolidating the supply chain to reduce overheads or developing a smaller or lighter packaging solution. A focus on product innovation could also help, as consumers may be willing to pay more for less if they are purchasing a product that is perceived to be of better quality or value. The optimal solution will be hidden within their data.
Roy Williams, co-founder and managing partner, Vendigital
This article first appeared in The Grocer