min read

Big Opportunities from Thinking Small

by Paren Patel , 13.02.2014

While many mature markets are recovering from economic crisis at the macro level, consumers aren’t seeing this reflected in their standard of living, and real incomes are still lower than before the crash thanks to stagnant wage growth coupled with inflation. As consumers seek products that can be offered at a lower price point without compromising on quality or utility, miniaturization could offer an interesting solution.

On first impression the idea of offering a smaller variation of a product generally goes against the idea of value for money, and the concept of economies of scale would support this.  It is generally accepted that larger variants of products offer better value as fixed costs are offset against a larger volume of product.  So how does miniaturization fit in with this value for money narrative?

According to GfK Consumer Trends’ Roper Reports Worldwide study, 80% of consumers globally regard being customized to their needs as an attribute which adds value to a product.  The fact is in many cases the consumer may not even need the smallest option available in its entirety, with the remainder left to expire, (perhaps leading to second thoughts before making the purchase again in the future).  Buying a miniaturized variant may actually work out cheaper than buying a regular sized pack and having half of it go to waste.  For example, I rarely used to buy bread until I came across the Kingsmill Little Big Loaf. It was the perfect product for me; half the size of a regular loaf with full-sized slices.  This becomes an increasingly important consideration with the rise of single person households, particularly in the Western world.

Other products may benefit from a similar line extension - particularly perishable items such as lettuce, mayonnaise, eggs and cooking sauces etc.  For instance we have seen cucumber halves going on sale in supermarkets and Loyd Grossman introduced single serve cooking sauces to its range. Is there market potential for other products to follow suit? One advantage of smaller variants for the consumer is that they reduce the risk involved in experimenting with a new product and therefore hopefully facilitating the switch to your brand in the long term.

This kind of line extension can also make products more accessible to those with low levels of disposable income such as consumers from newly-emerging economies.  These consumers may find some products prohibitively expensive despite having the desire to use them. Fully 58% of consumers in developing markets agree that “it is better to buy well-known brands because you can rely on their quality,” compared to 28% in developed markets.  Consumers may be more willing to make a weekly purchase of a premium skincare brand for example, than to save up to buy a regular-sized bottle at the end of the month.  This is also particularly useful for products that may not be used up at once such as over-the-counter medicines, which can sit in the cupboard for months after initial use.  There may even be a case to adopt smaller pack sizes in Western markets too, where GfK Consumer Trends has witnessed increasing levels of concern for “having enough money to live right and pay the bills”.  Unilever has actually identified this as one of its strategies for the struggling European markets where many consumers have faced challenging economic circumstances for some time.

Miniaturization can also help people to be more guilt free, by offering a small treat which is able to suitably satisfy their cravings.  Globally, two out of five consumers agree that it’s important to indulge or pamper themselves on a regular basis. Smaller variants may present an opportunity to alleviate consumer consciences regarding these guilty pleasures which may otherwise be considered unhealthy or not strictly a necessary expense.

As we witness the rise of the middle class in Developing economies and single-person households in Developed economies, and with consumers looking to tighten their belts both literally and figuratively, product miniaturization will be an interesting area of opportunity for consumer products going forward.