Playing the Price Game
Last week, General Mills announced that it would be increasing the price of their cereals. The company says the reason for the price is increased costs of ingredients and fuel.
General Mills will be raising the price in an interesting way. It will lower the cost per box.
Yes, that’s right — it is lowering the cost per box.
One might wonder how decreasing the price per box increases the price of the cereal. Simple — the company will make the boxes smaller. So, even though the customer will be paying less per box, they will actually be paying more for the cereal.
I wonder if any other manufacturers will pick up on the price game General Mills is using. What if this concept were applied to trucks and SUVs? Think about it. What do you think the average truck or SUV owner is more sensitive to — how far he or she can get on a tank of gas, or how much it costs to fill it up? My bet is the latter. So, why not make the gas tanks a little smaller? That way even though the customer is having to fill up a little more often, it will cost them less each time they fill up the vehicle. It could have a huge psychological effect. Instead of thinking he or she has to take out a second mortgage to finance their fill up, they can think, “I filled up my SUV for only $60.00.”
It sounds crazy, but crazier things have been tried in the past.
What do you think?
Joe Escobar
June 14th, 2007 at 7:36 pm
I seem to remember a year or so ago a bugshield manufacturer making a bendable bugshield that would fit into a box half the normal size so as to evade the high shipping costs. And since our current problem is STILL how to control shipping costs while offering a low price to the comsumer, and yet maintaining a viable profit margin for ourselves seems to be evading us, perhaps manufacturers need to study packaging their products more closely in order to cut thier cost as well as ours and increase profits.
Paying more for the same product and liking it. What a country!
June 19th, 2007 at 2:38 pm
You know, we could do like many other countries and sell gas by the liter. It would go back to the $1 to $2 price range.
June 20th, 2007 at 9:46 am
Maybe they should look into using alternative fuels derived from renewable sources. Not that I would say no to paying more for my cheerios.
August 27th, 2007 at 6:26 pm
I drive a suburban with a 42 gallon gas tank. When it took $131+ to fill the tank it was a big bill for sure. But I had the suburban before I had children - it fit my lifestyle…
I understand the strategy behind such changes. I find it sad that all to many of us are not educated enough to understand the differences.
Now that I have three kids I need to find a new vehicle for my lifestyle. The suburban is too small. Anybody have any suggestion?