“Quantity Surcharge” Prevalent
Most consumers believe that the large ‘economy-size” package in the supermarket gives them a lower price per unit than the smaller size of the same brand. A new study in Rhode Island shows that too often the reality is just the reverse. In short, there is a widespread prevalence of a “quantity surcharge.”
Students and marketing professors at the University of Rhode Island surveyed 26 product categories in nearly half of the 70 chain supermarkets in the state. Out of the 2,069 cases studied, 24.6 percent or 509 have a quantity surcharge. Yet, at the same time, 76.6 percent of the 400 Rhode Island households surveyed by phone replied that they thought the larger sizes have the cheaper prices per unit.
The products reported to have the highest number of cases of quantity surcharges are: tomato sauce, dishwashing liquid, ketchup, salad oil and canned tuna.
For example, the survey found that the smaller size of ketchup cost 52.6 cents per pound while the larger size cost 60 cents per pound. The larger size of cereal cost 12 cents per pound more than the smaller size. The smaller napkins cost 43 cents per hundred and the larger size, 51 cents per hundred.
Prof. Robert W. Nason, who supervised the study initiated by the Rhode Island Student Public Interest Group, has received inquiries from consumer and academic groups in other states interested in conducting similar analyses in their areas. Studies of the “quantity surcharge” phenomenon already are under way in Canada and Norway.
Nason tried to find the reasons for the surcharge in the supermarkets surveyed. About one-fifth of the time he discovered they were caused by price promotions on smaller package sizes which temporarily reduce the unit price of the sale item below that of larger packages. Overall, he concluded that
“quantity surcharges are not accidental.” The stateattorney general’s office is looking into the situation for possible violation of the state consumer laws against deceptive practices.
Rhode Island is a unit pricing state, but there have been many complaints that the unit-price information is not conveyed with adequate graphic quality and placement. The emblazoned “economy size” labels on the packages tend to attract the consumers’ attention more readily.
The marketing students who did most of the surveying work on this study deserve much praise. Too often, business majors at universities and colleges spend their time learning how to sell but not how to buy. Bearing down on deceptive marketing practices is a good way for business students to become more sensitive to fair marketing principles as well as help consumers in their communities at the same time.
For several years, Indiana University students prepared weekly price comparisons for major breadbasket items after surveying local Bloomington, Ind., supermarkets. Buyers would check for the lowest price from the list in the newspaper. An economics professor estimated that, as a result, prices in Bloomington were five percent lower than they were in neighboring towns.
It is early spring on college campuses and many vacationing students are heading for Florida to engage in the annual rites of play. But some students, like those in Rhode Island, are doing important consumer and environmental work for their studies that benefit other Americans and provide models for their student peers to emulate elsewhere.
To receive more details on how to conduct a similar “quantity surcharge” study in your community, write Prof. Robert W. Nason, University of Rhode Island, Kingston, R.I., 02881.