[tweetmeme source=”pricingright”]The most common type of price realization method employed by CPG brands is using creative packaging to reduce the amount of product for the same price. We seen examples of this from Cadbury and Haagen Dazs. If you walked by ice cream aisle and looked at Haagen Dazs (14 oz) and Ben and Jerrys (16 oz) you would not be able to tell the difference. What is the best possible way to change package size so the customers won’t notice it? Chandon and Ordabayeva, researchers from INSEAD, did experiments on customer perceptions of package size changes and conclude that, “Downsize in 3D, Supersize in 1D” (pdf). From the three experiments they conducted they found
that changes in size appear smaller when products change in all three dimensions (height, width, and length) than when they change in only one dimension
There is another not so uncommon practice of creative packaging for price realization that seem to have taken the lesson from Chandon and Ordabayeva and applying it to extract more revenue per customers. I came across a frozen yogurt chain called Tutti Frutti that in theory does unbundled pricing, selling yogurt and toppings per ounce. They charge a flat price of 35 cents per ounce. They give you a choice of containers and ask you to serve yourself any of the flavors and toppings available. The fun is in letting each customer serve themselves and in the container design (shown left).
Their intention, I surmise, is to maximize price paid by the customer every time they make a purchase. One way is to get a customer to purchase more than they intended which can be achieved with a container with wider cross-sectional dimensions (radius) and shorter height.
Does this work? In a 2003 study, professor Wansink of Cornell did experiments “to determine whether people pour different amounts into short, wide glasses than into tall, slender ones.” He found that “both students and bartenders poured more into short, wide glasses than into tall slender glasses”. So it does work. Professor Wansink is also the author of the book, Mindless Eating and writes a blog on healthy heating habits.
Won’t consumers figure this out? Is this a viable way to increase customer revenue per visit? No, definitely not. Judging from the comments in Yelp on Tutti Frutti people figured this out. The first time a customer buys she is going to be shocked to see the bill, as one Yelp reviewer noted her surprise from a $8.5 charge for a container. But from next time on they are bound to be more careful in pouring yogurt into their cups.
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