06/08/2022
Parle G, had not changed their price for over 25 long years!
Ever wondered how is that even possible? Along with many operational optimisations, Parle also applied an incredible psychological hack to achieve this fete.
In the year 1994, the price of a small packet of parle G was ₹4 and it remained that until 2021, when it was hiked by a rupee. As of today, a small packet costs ₹5.
Now, when I say 'small packet', what comes to your mind? A packet which nicely fits in your hand holds a handful of biscuits? Majority of us would perceive it that way and Parle knew it very well.
So, instead of hiking the prices they slowly and steadily kept reducing the size of portion over time, while maintaining the perception of small packet. It first started with a portion of 100 gm and a few years later they made it 92.5 gm and then to 88 gm and as of today, the small packet that costs ₹5 weighs 55 grams, which is a good 45% reduction from what they had started with in 1994.
The exact same strategy is also used by companies manufacturing potato chips, chocolate bars, toothpastes etc. This technique is called graceful degradation where something not-so-desirable happens so steadily that the consumers don’t feel the consequences of it.
There is a term in economics for this -- "Shrinkflation".
