In 2002 a maker of ice cream very quietly decreased their standard half gallon container to 1.75 quarts. This was so stealthily done that it took awhile for the public to catch on. When the president of the company was caught on this by the media his response was that this way customers could still get their half gallon of ice cream without a price increase, glossing over the reality that customers weren’t getting a half gallon. In 2008 they quietly cut the size to 1.5 quarts.
In 2006 a toilet paper manufacturer cut the paper size on a roll by 25 percent. Not only did they not publicize this, but the packaging changed to say “now improved with more sheets” without saying how much smaller the new sheets were. And we notice that packages of everything from candy bars to TV dinners are smaller than they were. Regardless of what one thinks about the morality of stealth shrinkage, it is effective marketing because it taps into the way we make decisions and plays to our biases.
Changes in price often cause us to reconsider the value of the product or service and may put us into search mode for better value. By contrast, a smaller size, less selection and charging for ancillary items that were once included in the cost—such as paying to put a suitcase on the plane you’re traveling on—generally don’t trigger search mode. You’ll continue to buy because you’re still getting the basic product.
Another way to play to our biases is to use default mode; doing nothing is easier than taking action. If nudging—as this is sometimes called—gets you to donate organs or save more for retirement, then perhaps it is serving the greater good. However, when it means you must go to three different web addresses to get removed from a dozen spam email lists that you were signed up for because you mistakenly thought the company needed your email address for the warranty, then perhaps that’s a shove and not a nudge.
Numbers can be used to help or hinder understanding. The most recognizable numbers are dollars. As an example, the surrender penalty on a $100,000 annuity might be expressed as $10,000 or 10 percent or one tenth. Using the dollar amount generates the deepest evaluation, using a fraction may not even cause a ripple.
Framing of the number is helpful too. When the ice cream maker downsized the package he didn’t say you were getting 0.875 half-gallons, he said you were getting 1.75 quarts
Shrinkage also happens in the financial industry, but it’s normally not very stealthy. When interest rates go down or the stock market drops the movement is very transparent—and that’s good—but it doesn’t mean our decisions can’t be affected by biases and that creates a great deal of responsibility.
A large stock market drop has the same effect as a big price increase; it put us into search mode. This can be a positive if it gets the person out of default mode and causes them to take a course of action that we’ve recommended in the past, but it also makes them vulnerable to misleading pitches that hide costs or distort the facts by telling the person they now have more sheets. As I said, it’s a lot of responsibility.
