Cheaper and smaller or more expensive and larger: how consumers respond to unit price increase tactics that simultaneously change product price and package size

To increase the unit price of a product, marketers of packaged groceries generally either raise the retail price or reduce the package size. We describe two unit price increase tactics in which the retail price and package size of a product simultaneously increase or decrease. Five studies, including a field study conducted in a grocery store, show that when unit price information is available, consumer decisions are influenced more by changes in both retail price and unit price than by changes in package size. Consumers thus respond more favorably to simultaneous decreases than to simultaneous increases. We further show that when unit price information is unavailable, consumers focus on the observed retail price increase for simultaneous increases, whereas they tend to estimate the unit price increase for simultaneous decreases. Since both forms of processing result in the cognition of an increase in “price,” consumers respond similarly to the two tactics.