Skimpflation Penalty: Decreases in Product Quality Trigger Stronger Consumer Reactions than Decreases in Size or Increases in Price

Abstract Rising costs have led to the emergence of skimpflation—reducing the quality of a product or service without changing its price. Although this practice is becoming increasingly common, little is known about how consumers perceive it relative to other cost-management strategies. Across multiple preregistered experiments, consumers were found to judge decreases in product quality as significantly more unfair than decreases in product size or increases in price. This “skimpflation penalty” is associated with perceptions that quality reductions are less transparent and affect more central aspects of the product and consumption experience. Consistent with this account, differences in consumer reactions are substantially reduced when firms communicate changes transparently, and the additional penalty for quality reductions disappears—or even reverses relative to size reductions—when quality reductions affect peripheral rather than central attributes. Additional studies examine behavioral consequences, showing that consumers are especially averse to purchasing products with reduced quality compared with downsized products or those with higher prices. Further, consumers react less negatively to quality reductions when the original consumption experience can be recovered. These findings offer important implications for firms managing rising costs and for policymakers concerned with transparency and market fairness.