The
Sat. March 4, 2023 edition of the New York Times introduces a new word describing
another way companies can offer consumers a "gentrified," higher priced
product or service that accrues a higher profit margin. See https://www.nytimes.com/2023/03/04/business/economy/premium-prices-inflation.html.
While
informative, the article missed a major point: the touted higher value proposition
often results not from offering something truly better, and more expensive to
provide. Instead, the company finds a
way to reduce its costs, by substituting a cheaper, inferior ingredient such as
high fructose corn syrup. Consumers can buy
a "premium" version of the product with the restored, originally used
cane sugar, albeit at a higher cost, far above the miniscule cost difference between
the old ingredient and its cheaper replacement.
How clever: ketchup, bread, and
other common products now have two versions: 1) the inferior, high fructose
option for price sensitive consumers; and 2) a more costly,
"enhanced" product that simply continues to contain cane sugar that
originally was offered to everyone.
I
am sure well trusted companies, such as Heinz, will claim, Covid-19, supply chain
disruption, labor shortages, cane sugar shortages, inflation, higher operating
costs, etc. necessitate its deliberate reduction in the value proposition of a long-treasured
product. Maybe they can get away with
this brazen, sneaky strategy, particularly for products that consumers perceive
as not substitutable ("Accept no substitutes.")
I
used to be brand loyal to Heinz ketchup, but have migrated to an organic option
from another company that uses can sugar and manages to offer this enhanced
product for significantly less than Heinz. My
tastebuds are happy and I am pleased to "vote with my dollars."
In
the words of Nancy Reagan: "Just say no" to yet another ploy to goose
profit margins.
