Gartner: During inflation, noticeable changes that impact value of product or service are more likely to harm a brand; CMOs must turn to cost-cutting methods that don't harm perceptions of value, and if needed, cut services rather than product amounts

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STAMFORD, Connecticut , July 25, 2022 (press release) –

CMOs Must Turn to Cost-Cutting Methods That Don’t Harm Consumer Perceptions of Value

Sixty-two percent of consumers say they'll stop buying from brands who change product size (“shrinkflation”) or quality (“skimpflation”) to cut costs, according to Gartner, Inc. Only 7% said they would continue purchasing from a brand that cut costs in this way.

A Gartner survey of 252 consumers in June 2022 found that shrinkflation— when the size or quantity of packaged goods is reduced without a commensurate price cut — is viewed as more prevalent than skimpflation — an erosion in the quality of a product by using cheaper ingredients or components, or a reduction in a service, such as longer delivery times.

“Brands make strategic decisions to optimize costs by changing packaging, ingredients, suppliers and service offerings all the time,” said Kate Muhl, vice president analyst in the Gartner Marketing practice. “Not all of these actions are perceived by consumers to be deceptive business practices, or perceived to be happening at all.

“However, in a period of unprecedented inflation, consumers are on high alert and noticeable changes that impact the value proposition of a brand’s product or service are more likely to result in harm to that brand. CMOs can lead by directing teams to emphasize continuity and value. If needed, they should look to cut services (a form of skimpflation) rather than product amounts.”

The majority of consumers (75%) expect prices to continue to increase in the second half of 2022, and 65% of consumers expect to cut back on purchases or stop buying altogether in at least one product category. Consumers noticed the most significant price changes in the “food and groceries'' category (62%). Forty-one percent of consumers noted “household products” suffered from shrinkflation, while 32% of consumers noted that “personal care” products suffered from it (see Figure 1).

Figure 1: Where Consumers Notice Price Increases, Shrinkflation and Skimpflation (% of Respondents)

Source: Gartner (July 2022)

Consumers differ on what businesses should do to limit price increases, but one suggestion stands out from other ideas: 45% said that companies should stop increasing the pay of high-ranking executives. 

“Executive compensation decisions can harm brands, especially in inflationary periods,” noted Muhl.
CMOs looking to address consumer concerns around price increases, shrinkflation and skimpflation can explore the following near-term actions: 

Message on what hasn’t changed. CMOs at brands that retain product quality and quantity despite inflationary pressures should ensure that brand messaging highlights commitments to continuity in price, ingredients or suppliers. CMOs should design this messaging to combat the widespread perception that all products have been subject to shrinkflation, even if that isn’t the case for their brand. 

Amplify value proposition with functional benefits that save consumers money, such as the durability of big-ticket items, and lean in on thrift-related market product attributes that consumers increasingly care about.

Offer tech alternatives to staffed services without dramatically impacting the customer experience. Retailers, restaurants and other service-oriented brands may find that cutting back on staffed functions is more palatable to consumers than the product tweaks that consumer product goods (CPG) brands try, even though the former is also a form of skimpflation.
Gartner clients can learn more in the report: Inflation-Driven Cost-Cutting Strategies Put Consumer Sales at Risk.

About Gartner for Marketers

Gartner for Marketers provides the objective, expert advice, and proven tools that CMOs and other marketing leaders need to seize the right opportunities with clarity and confidence, and to stay ahead of the trends that matter. With in-depth research and analysis, Gartner for Marketers helps you focus on the opportunities with the greatest potential to deliver results. More information on Gartner for Marketers is available online at Follow news and updates from the Gartner Marketing practice on Twitter and LinkedIn using #GartnerMKTG. Members of the media can find additional information and insights in the Gartner Marketing Newsroom.

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