The present study is going to venture in the shrinkflation as it is becoming more popular in the European Union and more specific in the United Kingdom. These markets are the ones that are majorly affected by this trend. The producers have tended to lean much in this act as a way of maneuvering in the market. This present study is aimed at investigating the shrinklation factor and determines the possible reasons why the producers are majorly moving to this trend. The study will also try to understand the beneficiaries of this trend and the losers. The UK is chosen as it is the place where this act is highly practiced in the confectionery markets.
1. Introduction
1.1.Background Information
The word shrinkflation comes from the words shrink and inflation. Inflation is when there is sustainable increase in the price of goods and services in a country over time. This also happens when there is consequent drop in the value of money hence lowering its purchasing power. Inflation at times can be bad news to the consumers since they are the most affected by this phenomenon. The causes of inflation can be linked with Government policies and unavoidable production patterns. Therefore when inflation sets in the producers would tend to use shrinklation to avoid the customer complains hence the goods will be sold at the prices they were before. There will be no noticeable change in the products.
(Besier, 2015) states that shrinkflation now is the act of reducing the size of the goods and selling them at their prices as it was without increasing the prices. This act of shrinkflation tries to save the consumers by leaving the prices at their level in even when circumstances force the prices to hike. The size of the product and that is the quantity will be consequently reduced to avoid going into loses. The shrinkflation seems to be an invincible move that if one is never keen it will be unrealised. This act is majorly seen in the European Union countries and United Kingdom forms the basis of the study.
The shrinkflation practice is only limited to some goods and products since not all products and goods can be reduced in size such as the vehicles. The confectionery market is the type of market that enables the producers to heavily rely on this act. The confectionery market deals with production of food stuffs. They can be divided into two; the sugar confectionery and the baker’s confectionery. The sugar confectionery deals with the production of items such as sweets, chocolates and chewing gum while the baker’s confectionery is in line of production of items such as sweet pastries and cakes. ( Blanchard, 2016)
The present study is aimed at investigating the need of producers to venture into shrinklation method in the market and establish reasons why they avoid the inflation way. The study will also try to establish reasons why this trend is becoming popular in the market. The current study will also establish facts to understand who the beneficiaries of this act and the losers are as well. The study will use questionnaires and surveys conducted for the purpose of research and data collection.
1.2.Need and Significance of the Study.
The present study will aim at presenting the conditions that allow the shrinklation to occur. There must be factors that lead to this phenomenon. The study also tries to study the dynamics arising from the shrinklation and the trend can be used to further predict the country where this phenomenon will be applicable in the near future.
1.3. Objectives of the Study
The present study is aimed at getting answers to some questions relating to the shrinklation practice. The objectives will be;
Identifying the reasons why producers are using this method in the market
Relating the reasons why this trend is applied majorly in the confectionery market
Identifying the advantages of this trend and also its disadvantages
Determine whether the consumers will be comfortable in a decrease in size other than rise in prices.
1.4. The Scope of the Study
The scope of the study will understand this new and emerging issue in the market. The study will establish the benefits of this trend and whether the consumers are less susceptible to the reducing in size of the products. The study will also analyse to determine the next country to adopt this trend as its becoming popular.
2. Research Paradigm
(Mann, 2017.)States that present study will use the pragmatic view whereby there is acknowledgement of the truth that is from many people and not a singular source. This approach will establish what works behind the said truth with factual evidence. The study will aim at getting into a consensual believe that the facts were established by a group of many sources. The research paradigm relates to the ontology of reality, the epistemology of the truth stated and the methodology used to gather the information that was analyse to come to the surfacing of the said realities. This will therefore employ the use of questionnaires in the study and surveys carried out. (Fischer, 1981)
3. Literature Review
The literature review will cover the main part of the present study. This part will in detail give a better understanding of the concurrent problem under the study. There will be need to deeply enroot at the shrinkflation factors to determine the objectives of the current study. This is the accompanying explanations below.
3.1.Reasons for Shrinkflation
The issue of the trending act of shrinkflation has been reasons that made the producers to opt to this way. The consumers have got no direct influence in the production of goods and services. The consumers are considered as the ultimate goals of production. They are after getting the maximum utility from consumption of certain products and goods. As already mentioned earlier the confectionery market is the most vulnerable victim of this trend and is majorly done at the United Kingdom.
The producers would want to keep their profit margins high and therefore would never tolerate the idea of loses. The main cause of this shrinkflation is the Government policies. The Government makes policies in a bid to manage the economic sector in terms of recession in an economy. The government may decide to increase the taxes paid for the production of a particular good. This in turn means that the cost of producing the good will go high hence a need to increase its price. The producers will then decide to reduce the size of the product and leave the price at the same level. This is in attempt to save the customers the burden of paying high prices for as particular product.( Gourville and Koehler,2004).
There are factors that can lead to scarcity of the natural resources used in the production of the product. A real example is in the confectionery industry where it requires the use of raw materials to enable the complete production of its products. The natural resources for a product like chocolate are milk and coffee. The growth of coffee maybe affected by adverse weather conditions that may lead to unsustainability in the farms. This in turn will mean that the produce of coffee will be less. The demand for the raw product maybe high than the supply. There will be no equilibrium in the market. The few produce will be used for the production. This will in turn affect the producers making them not to completely meet the demand of their respective consumers. This will force the producers to employ the need of shrinkflation where the size of the product and in this case the chocolate bar will reduce in size. This will in turn enable the producers sell the product at normal price but the quantity will have reduced.
The other reason is the greed of producers to make enormous profits in a short period. The modern market is influenced by a lot of incredibility as the business people tend to gain high profit margins by the use of ill methods. The main reason for any business formation is to make profits. There are some producers who engage in the illegal act of deliberately stealing from consumers by reducing the size of the products such as chocolates and selling them at same prices and the prevailing market conditions are favourable. This in turn will be shrinklation but in a forceful way and ill motivated minds. However the Government in the UK is on the watch of this act and if one is found violating the act will be charged by law for fraud.
3.2.Consumers Knowledge and Take on Shrinklation
Shrinkflation is majorly an act of the producers and consumers are indirectly linked to it though the consumers act as a variable in the process. The producers have full knowledge of it and know when to apply it. They as well understand widely the impacts of this act and its consequences. The consumers therefore are the direct victims of shrinklation. (Sawyer, 2011).
The study reveals that many consumers are after getting the maximum utility out of a product. The consumers in this line may fail to pay attention to the quantity of the products they purchase and consume as long as they are satisfied by the product. The confectionery products at times like chocolates can be easily noticed when the size reduces adversely. The reduction of its size in small ranges may be unnoticed by many people. The consumers may at first tend to get substitute goods to the ones they initially wanted to consume. The advantage of confectionery products is that their tastes are unique and the substitute goods may not be of any significance to the consumers who will resolve to use the confectionery items.
The study reveals that consumers are rational in nature. They get the full knowledge of the market before making a decision to go for a particular product. There are at times when the consumers may resist the idea of applying shrinklation by raising alarms to the relevant authorities to take charge over the act. The consumers have been legally protected by registered bodies and organisations in the UK like the United Kingdom Consumer Act body. This protects the consumers from any harm caused by the producers. The consumers tend to feel like they are being overexploited hence a need to gang up against the idea.
However there are certain circumstances that consumers have no control over. The Government might have given a directory of raising the costs of production hence the need for producers to comply with this act. The producers will have to enact the shrinklation to avoid the collapse of their businesses. This will be effected and thereby the consumers have to abide by the act. This creates a good conducive atmosphere for the businesses to operate smoothly. The shrinkflation in many circumstances goes unnoticed as many consumers do not pay keen attention to the products. The few who are keen are the ones who notify the rest of the consumers hence creating the awareness.
3.3.Impact of Shrinkflation
Shrinkflation may have effects to both the producers and consumers at large hence affecting the whole market structure. The report from the ONS indicates that 2259 products have been shrinked in the past 5 years. The impact of shrinklation is linked majorly to the consumer. Consumers are the scope of the shrinklation issue and it affects them adversely. (Nellis and Parker,2004).
The first impact is the exploitation of the consumer. The consumers are subjected to pay for the same price of goods but with reduced quantity. This in turn influences their purchasing power s some may resolve to stop consuming the products. The confectionery products are not essential for sustainable healthy living hence they tend to ignore these products. The other impact is that there may be problems of under utility. The consumers will be getting less utility from a product as its size will have reduced.
3.4.Beneficiaries and losers of Shrinklation
The shrinkflation benefits both the producers and consumers. The producers benefit from this act by maintaining their profit margins and figures even if business conditions keep prevailing. The producers will be producing the goods such as the jam in normal ways but reduce the packaged quantity and sell at the initial prices to the buyers. They will have incurred no additional costs and their profits will remain as they were. This acts as a measure of safety of their businesses to survive through thick and thin in the lines of the market. (Veljanovski, 2017)
The consumers on the other side are both beneficiaries and losers. They benefit through the continuous purchasing of the product hence not making the products be extinct in the market. This enables them benefit continuous consumption of the good. The consumers on the other side are also losers since they pay for the quantities they never receive when they are consuming the product. This makes them feel deprived some part of their income.
4. Methodology
4.1.Research Question
The previous studies conducted on the inflations in the United Kingdom have intended to ignore the research on shrinklation. This is a trend that is becoming popular every day and needs to be studied on. The present study will undertake a deep research on this trend. It will bring to the surface the facts about this trend and establish reasons behind its emergence. The study shall aim at answering the questions like; are consumers less susceptible to size decrease as compared to increase in price? Does the Shrinkflation have an impact on inflation? What are the possible reasons behind its emergence and what are the benefits to producers and consumers?
4.2. Research Hypothesis
The present study will result to formulation of hypothesis for the study. The hypothesis formulation will take the example of;
H0: The adoption of Shrinklation by confectionery market in the UK does not concern the inflation
H1: The adoption of Shrinklation by confectionery market in the UK has a concern on inflation
4.3.Research Method
The method of research to be used for the present study is the use of questionnaires and conducting sample surveys across the United Kingdom. The open ended and closed ended questionnaires will be used. The open ended questionnaires give then consumers space to comment about what they feel of shrinklation.( Lewis and Thornhill,2012)
The questionnaires will be given out to 25 consumers across the whole of the United Kingdom. The consumers to be issued with the questionnaires shall be from different areas, age and gender. For the present study the consumers who are female shall be given 15 questionnaires and the male shall be dished out with 10 questionnaires. The female tend to be keener when purchasing goods hence they are the most ideal. The questionnaires will be having queries regarding to the objectives of the study.
Question one in the questionnaire will be; do you know what shrinklation is? This is important to get the number of consumers who understand what shrinklation is all about. The second question in the questionnaire will be, do you support the prices to be increased or the size of the product to be reduced to meet the market conditions? This question is important as it gains the basis of consumer susceptibility to size versus size. This present study will also have other questions in the questionnaires like what consumers feel about this trend. This is to determine whether the trend is of benefit to them or of loss to them. The present study is to give the respondents ample time to answer the queries without hurrying.
The other method of data collection tom be used will be use of surveys. The surveys to be used will have to cut across the whole region in the UK whereby the consumers chosen will have to represent some areas of interest. The type of survey tom be used will be sampling technique. The sampling technique will allow the interviewing of small groups of people who cut across the UK. The sampling will be undertaken in different ways such as the face to face whereby individuals will be asked queries and their responses noted. The UK is a larger region therefore there will be need tom use the mail services and other questions will be administered via the telephones.
4.4.Sources of Data
The source of data for this present study will be mainly the primary sources. The primary sources will be the consumers who will be directly involved in the study. Their information and details have to be kept private.
5. Analysis of Data
5.1.Data Gathering
The results of the questionnaires will be analyzed to determine the category that they will be placed in. the answers given will be presented in tables that will contain weighted scores for each of them to help in the analysis. The analysis of different types of data regarding the size under which the extent of reducing should be up to be provided utilizing the qualitative methods. The yes and no answers will be calculated using percentiles. Additionally, a Likert scale to measure the strength of the responses provided will be used to assess the information obtained from the respondents.
5.2. Results
Analysis of data from the questionnaires will be conducted through the classification of different factors and interventions in a systematic form. The results of the survey will be analyzed and inputted electronically. Demographic data will be analyzed using SPSS for all the participants to get a variable that affects the study. The sampling will be analyzed using the same way. Additionally, analysis of the quantitative data will be carried out using both SPSS and chi-square to get the correlation between the impact of this trend and the ability of this shrinklation to be able to be treated as inflation. All the collected data will be computed using specific statistics and percentages, and average scores will be organized and analyzed.
Charts and graphs will also be utilized in the clarification of the statistical data. Tables of the quantitative data from the survey will be created for easier analysis of the data while using the statistical packages. The results of the study will then be used to answer the research questions. Conversely, the analysis will then be compared to secondary sources used to ensure that the results are related to previous studies.
6. Discussion and conclusion
The present study on the shrinkflation is deemed at understanding the growing trend in the UK confectionery market. The capitalism factor is highly in practice as the state gains less control of the operations of the market. This Shrinkflation is growing in a faster rate that soon it will be covering the whole of Europe.
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