RESEARCH IN PROGRESS

Downsizing Price Increases: Greater Sensitivity to Price Over Quantity in Consumer Markets (w/ J. Gourville)

As the cost of inputs increase, manufacturers routinely pass these costs onto consumers through higher prices. A less obvious strategy is to maintain price, but to reduce the size of the product. In many ways, this “downsizing” should mirror a straight price increase when it comes to consumer behavior. Marketplace and experimental data show this is not the case and that consumers are more sensitive to changes in price than changes in quantity.

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