Which orange juice carton holds more juice?

Pricing guru Rags Srinivasan snaps two Tropicana containers that he says follow a “proven principle” in creative packaging: Changes in size do not appear as large when made in all three dimensions versus when they are changed in just one dimension.

What’s the reason for making these changes?

Customers are trained on the price they pay – more often they buy a product at a price the more they become tuned to any price changes. The price they remember becomes their reference price – any increases over reference price will be seen negatively. So brands use the only other lever available to them for better price realization : reduce their marginal cost by 10-20%.

To Rags: Are certain categories of consumer products more disposed to constant creative packaging changes? Your comment seems to suggest that staples are product where we should expect these changes most frequently. Chips are one product where the bags are always changing. Who even know exactly what size tortilla chip bag they are buying now unless they look carefully? Why aren’t pasta sauce jars changing more? Or are they?

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  • MITDGreenb

    I noticed the Tropicana container thing after trying Trop50. (I had a coupon.) I think the strategy is risky here: consumers will notice over time that they are getting less for the same money, and that will create a negative reference for the brand. Fool me once…

    One of the areas where I've seen this strategy applied most frequently is coffee. You buy “a pound” of coffee, right? Look closely at the can some time! A further version of this is one that Dunkin' Donuts applies. Specifically, a bag of coffee in a grocery store is $X and a bag of coffee in a Dunkin' Donuts shop is the same $X. The bags look essentially identical. So where is the margin for the grocery retailer? The bag in the store is >15% smaller!

    Oh, and coffee makers. You want one that brews 6 cups instead of 5? Just define a “cup” as 5 ounces instead of 6.

  • Anonymous

    I noticed the Tropicana container thing after trying Trop50. (I had a coupon.) I think the strategy is risky here: consumers will notice over time that they are getting less for the same money, and that will create a negative reference for the brand. Fool me once…

    One of the areas where I’ve seen this strategy applied most frequently is coffee. You buy “a pound” of coffee, right? Look closely at the can some time! A further version of this is one that Dunkin’ Donuts applies. Specifically, a bag of coffee in a grocery store is $X and a bag of coffee in a Dunkin’ Donuts shop is the same $X. The bags look essentially identical. So where is the margin for the grocery retailer? The bag in the store is >15% smaller!

    Oh, and coffee makers. You want one that brews 6 cups instead of 5? Just define a “cup” as 5 ounces instead of 6.

  • http://www.nudges.org/ Nudge blog

    Check out Rags's post on Ben and Jerry's pints.

    http://iterativepath.wordpress.com/2009/04/05/h…

  • http://twitter.com/pricingright Rags Srinivasan

    To your question of other consumer products, this applies to most CPGs – if the packaging has 3 dimensions then it can be packaged creatively. William Poundstone the author of the book Pricless explored more on this topic in his blog (http://priceless-the-book.blogspot.com/ )

    I saw classico pasta jar changing shape the last I noticed.
    On a related note one group – Serve your own Frozen Yogurt chains – are taking advantage of this feature by giving a wide bottom container to their patrons. They (dare I say) nudge us to cover the bottom of the container and hence pay more than what we would have paid with tall and narrow container.

    -rags

  • http://twitter.com/pricingright Rags Srinivasan

    To your question of other consumer products, this applies to most CPGs – if the packaging has 3 dimensions then it can be packaged creatively. William Poundstone the author of the book Pricless explored more on this topic in his blog (http://priceless-the-book.blogspot.com/ )

    I saw classico pasta jar changing shape the last I noticed.
    On a related note one group – Serve your own Frozen Yogurt chains – are taking advantage of this feature by giving a wide bottom container to their patrons. They (dare I say) nudge us to cover the bottom of the container and hence pay more than what we would have paid with tall and narrow container.

    -rags

  • http://www.nudges.org/ Nudge blog

    The frozen yogurt servings are a great example. A reader tipped us off to those earlier this year.

    http://nudges.org/2010/05/03/beware-giant-cups-…

  • Nudge blog

    The frozen yogurt servings are a great example. A reader tipped us off to those earlier this year.nnhttp://nudges.org/2010/05/03/beware-giant-cups-and-self-service-frozen-yogurt-machines/

  • Rweinste

    Even more insidious: Tropicana has maintained the container size proportion of their standard juices but reduced the content from 64 ounces to 59 ounces (and maintained the price, as you mentioned). The size difference is not noticeable. There is a toll-free consumer number on the container. Call them and tell them you don’t appreciate their deception and that you will now buy the competitors brand.

  • Rweinste

    Even more insidious: Tropicana has maintained the container size proportion of their standard juices but reduced the content from 64 ounces to 59 ounces (and maintained the price, as you mentioned). The size difference is not noticeable. There is a toll-free consumer number on the container. Call them and tell them you don’t appreciate their deception and that you will now buy the competitors brand.

  • http://twitter.com/pricingright Rags Srinivasan

    The nudge is not necessarily using larger containers – I believe – it is subtler. They are using wider and shorter container over narrow and taller container. nhere is PDF to the paper http://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1162151_code865831.pdf?abstractid=1162151&mirid=1nn-rags