more stories of value inflation

I previously wrote an article about Value Inflation.  This is the concept that a manufacturer keeps the price of a product the same but reduces the amount of product offered thereby increasing the cost per unit.  It is a stealth inflation if you are not paying attention.  For those of you old enough to remember half gallon containers of ice cream, you know what I mean.

I was recently reminded of value inflation while clothes shopping recently.  I was browsing EMS.com and REI.com and started noticing a pattern in the comment sections of some items I was interested in.

First at EMS.com the Men’s Thunderhead Rain Jacket looked nice and it was on sale.  It carried a 4.5 star review and I jumped down to the comment section where I saw some surprising reviews such as this one:

“skimping a few square inches of material to save on the mfg cost in the name of athletic fit is a mistake. the quality is down as compared to the same jacket of the past. this also limits its use over much more then a base layer. my old version was a better product. i plan on returning this item in unused condition soon. i am pleased with the other ems products which i own; this one, not so much”

I then bounced over to REI.com to check out the REI co-op Tech Tshirt.  I had visions of dressing in jeans and a t shirt to simplify my wardrobe some.  However I found the 3.5 star rated shirt also had complaints about fit and a change in materials:

“I picked up 3 of these a few days ago to supplement my arsenal of “old” Tech Ts for the summer. In the store, I did see some cosmetic changes but figured they were pretty much the same as the ones I already have. I finally got around to looking at them this morning and compared the tags with the older ones. The new ones are 100% polyester with no spandex. I also saw that they were shorter in the tails (I’m a big/tall 56 year old guy so this isn’t a good thing). I decided to look online at the reviews before actually trying one on. Sure enough, the reviews validated what I had thought and once I tried one on, I knew they were going back. They are not as “stretchy” (obviously due to no spandex) and very snug in the shoulder area. Definitely not anywhere near comfortable. REI…why did you mess with a good thing??”

I write about these examples because people will pay for quality.  When we trust brands like EMS and REI and they violate that trust in an effort to squeeze a little more money out of their consumers we all lose.  I appreciate that companies need to be aware of cost containment, but when you change a product and give the customer less value for their hard earned dollar, you will lose that customer.

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One comment

  1. dkmathstats

    The examples highlighted here show that there is a risk in cutting costs. Cutting costs usually involves scaling back on product/service quality. Once customers realize that quality has gone down despite lower costs, the probability of the customer choosing that product/service decreases.

    Profits, costs, revenues can be measured but when it comes to likelihood/probability of a customer buying something it is more difficult to measure that. The British saying of “penny wise, pound foolish” does somewhat apply.

    Like

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