November 29, 2022

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Smørbukk

You’re not kidding with old Goody bags – statement

Orkla’s relatively recent president Nils K. Selte realized something the rest of the industry didn’t fully realize:

People get really angry and feel cheated when the merchandise you buy in the store gets reduced in size, while the price is kept – without telling you.

This phenomenon is known as deflationary inflation, which is a combination of the words deflation and inflation.

Because when Orkla and Selte encountered Orkla’s shrunken products on Thursday, Selte settled down:

“It’s not fair,” Celti said.

Orkla has shrunk the Smørbukk bag from 192 to 150 grams.

Photo: Sophia Stourhaug/NRK

Will leave the ball dead

The statement is a strong attempt to put the ball dead as quickly as possible.

Selte says, among other things, that he will ensure that Orkla will not continue like this in the future, and that it is not morally right to “adapt to rising costs in this way”.

Very simple and very difficult.

Because the decline is large if he is unable to achieve it. He’s legally open to cash if Orkla keeps handing out bags as it’s not clear they’ve shrunk.

As Member of Parliament, Mimir Kristjanjon of Rodit Refer to NRK Earlier this week manufacturers had no problem writing a “new, bigger bag”. Then the opposite should also be possible.

He is, of course, absolutely right.

Nils K.  Celti, CEO of Orkla

CEO Nils K. Selte at Orkla.

Photo: Thomas Brown

harmful attention

For the supplier of the brand Orkla, the attention and images in the media for their shrinkage products are extremely harmful. When selling brands for a living, customers need to like and be satisfied with your products.

If customers feel deceived, they are punished and loyalty is weakened.

Celti is smart and he is the first to be very clear in his speech. It also sets the standard for other competing manufacturers – who may be penalized for being less offensive.

Additionally, one can hope that it will also contribute to the chains staying in very good shape to drive up prices too much, by going forward and playing with more open cards.

Brands give power

Having strong brands gives more power in all-important negotiations with grocery chains, both in terms of price and shelf space.

If you have a strong brand, you can get better salaries, and increase the likelihood of repeat purchases. You also don’t need to spend a lot of money on marketing if the brand is well established.

Orkla’s acceptance should be clearly seen in this context.

At a time when accelerated costs are killing profits, the brands that people are actually willing to pay for are even more important. Loyalty gives a greater willingness to pay, which is key to Orkla continuing to make money from its brands.

Prices will go up

Because he’s also very clear about something else, which is that food prices are going to go up dramatically in the future as well. How much does not want to expect, but there is probably good reason to fear a new and sharp price jump when the next price adjustment window opens in February.

In times like these, loyal and satisfied customers are more valuable than ever.

Marking this item has been shrunk on the bag may not be a selling trick, but at least customers get the basis for making an honest decision before putting the item in the cart.

When you see how much reaction others have received, one can hope that the client will appreciate the openness – and remain loyal.

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