The Incredible Shrinking Potato Chip Package
A regional potato chip company, Salty Snacks, is competing with large, national snack food companies. Salty Snacks faces a dilemma about pricing vs. quantity. A drought caused a minimized potato crop compared to the previous year, which will cause the 7.5 oz package of chips to increase in price from $1.59 to $1.83. The company is concerned that customers will not be receptive to the price increase, and will switch to the national brands, who can afford to maintain the lesser price. Historically, other companies facing the same problem maintained the pricing and the packaging size, and reduced the volume (net weight) of product instead. Known as “downsizing”, this strategy appears to go unnoticed by customers. There are no FDA regulations restricting downsizing, and companies are required to disclose net weight, serving size, price, and quantity on the package. The manager of the company is struggling with the decision to downsize their product, because she views it as a deceptive practice.
1. Should Salty Snacks advertise/notify their consumers that they have reduced their product’s net weight?
2. Based on Environmental practices, would it be more ethical if Salty Snacks were to also reduce packaging size along with net weight? Thus, reducing environmental impact?
3. Based on Socially Responsible practices, can reducing the amount of chips sold be looked upon as aiding the fight against obesity?
*Story is modified from original source: http://wpweb2.tepper.cmu.edu/ethics/AA/mktg04-case.pdf