Shrinkflation, also known as ‘reduflation’, is an increasingly common practice companies use to fight inflation. But are there alternatives? Yes, there are! Firstly, it is vital to understand the concept of shrinkflation. This term, a portmanteau of the words ‘shrink’ and ‘inflation’, refers to a decrease in the quantity or quality of a product to stay competitive, without increasing the price. This is a more subtle strategy than price increases, as it is also tricky for the average consumer to notice. But there are other ways to combat inflation without jeopardising the brand value: using tools to monitor the competition and creating effective pricing strategies.
Take advantage of competitors’ data
- Monitor competitors’ prices
Knowing other companies’ strategies is one of the keys to keeping prices competitive. Monitoring tools make it possible to track competitors’ prices, promotions, stock, and sales. They also offer the possibility of price matching, helping to avoid losing an edge against the market. These price adjustments increase sales without incurring excessive price hikes that may deter a prospective consumer.
- Monitor competitors’ products
Another aspect that helps maintain a well-positioned business during inflation is analysing competitors’ catalogues. While price variations must be in sync with the market, the ability to react to new products introduced by other companies, provides the opportunity to offer new products at the right prices. It may even be possible to provide substitutes for products that have suffered a huge price rise, causing a fall in demand.
Create effective marketing strategies
Building an effective pricing strategy is key to avoiding falling into shrinkflation. Marketing tactics to improve the customer experience will also help ensure you get the customer back. Here are two options:
- Surprise the consumer: Wow effect
If a business can surprise consumers and build brand loyalty, it will strengthen the existing customer base and may contribute to new leads. One of the strategies to create the wow effect is to offer deals throughout the year, or even to have unique offers for customers.
- Customer centric: Customer focussed quality and service
Emphasising quality and providing a unique service allows you to maintain competitive prices and generate more business. This may involve offering a specialised after-sales service or additional benefits for subscribers. Being able to differentiate yourself from the competition by offering a unique experience is key to weathering the storm of inflation’s impact on prices.
Inflation’s effects on the market may not be avoidable, but they can be mitigated. The key to staying competitive in challenging times is to use software developed by price intelligence specialists, featuring the most advanced real-time competitor monitoring technology.