NBU: ‘Product price vs product size: Who’s really doing the conning?’ by Guest: Sharon R. Powell, 3/27/08

This week, a Good Morning, America consumer report on shrinking product sizes irritated me so much that I found myself turning into Howard Beale, the news anchor in the 1976 film Network, who shouted the now-famous, “I’m as mad as hell, and I’m not going to take this anymore.”

Here’s the gist of the GMA story: corporations rip off consumers by charging the same price for a product that’s reduced in size or content. GMA cited example after example and included comments from celebrities (people who demand big paychecks even though their output may not increase) who say pricing is nothing more than a big con game. GMA gave two responses, one from Kimberly Clark and the other from Georgia Pacific, which did not address the myriad factors that go into pricing.

I used to be a product manager for a company that publishes medical payment guides used by hospitals and outpatient surgical clinics across the country. There’s a real good chance that your doctor uses my books to calculate your bill. These books are expensive, running between $300 and $500 each for a year’s subscription. Despite the inaccurate-but-popular belief (promoted by pandering politicians and the news media) that healthcare providers have cash to burn, many of my client facilities could not afford to purchase my products at the full retail price.

The efficient management of a product, from conception to shipping, is an integral aspect of a product manager’s job. Handling customer concerns after the release of the publication is another major component. I constantly walked a tightrope as I looked for ways to improve the quality of my publications without increasing their costs, while at the same time watching the costs of shipping, paper, and printing go up, along with the internal costs related to salaries and the health insurance provided by our parent company, United Healthcare. To keep one of my books at the same price for two years in a row, I had to do such things as use a lower-grade paper, reduce the point size on the print, and move information to our Web site to trim the number of pages, which also saved on the cost of paper. It was an exhausting process made essential by the fact that our prices had to be competitive.

It all runs down hill on the corporate landscape: C-level suits who want increasingly higher quarterly earnings and ever-greater year-end bonuses pound on their underlings who, in turn, pound on their middle managers who feel the need to keep puckering, so they pound on their product managers to cut costs on current products and come up with new products that will shoot profits through the roof during the next fiscal year. It is not unusual for a product manager to be searching for the telephone number for one Mr. Rumpelstiltskin while talking on the telephone with an irate client who is outraged and insulted by the product change, which, to the client, was nothing more than a way to make more coin for the company by short-changing the customer.

Good Morning, America, et al. do a disservice to the consumer by perpetuating the myth that ripping off the customer is the raison d’être of American corporations. While American consumers want everything cheap, abundant, and convenient, the reality is that they can have only two of those three. I, too, would like inexpensive and high-quality health care, high wages and low cost of goods and services, and the end of international outsourcing along with greater earnings per share; but, I know it is impossible to eat my cake and have it, too.

I would also like to see news organizations abandon hit-and-run journalism that results in stories that resemble a bag of candy in that the end product is sweet, immediately satisfying, but nothing more than empty calories. And that leads me back to the GMA story and their Cadbury chocolate “eggsample”. Cadbury’s Web site admits that the size of their eggs in the U.S. is smaller, even though their United Kingdom eggs remain the same size. Cadbury says that’s because its U.S. partner, Hershey, decided to make them smaller for the states.

Could the cost of shipping be one factor in Hershey’s decision, not explored by GMA? Let me see. United Kingdom: 93,788 square miles. United States: 3.5 million square miles. And because we don’t want to pay more for a product that costs more to manufacture and deliver, Cadbury is running a con on its customers by reducing the size of their U.S. eggs. Or so say late night talk show celebrities quoted by a large cost-conscious news corporation.

Come on guys, you can do better than that.

Sharon R. Powell