Retail Packaging Strives to Serve Many Masters

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Retail Packaging Strives to Serve Many Masters

Packaging used to be simple. You simply wrapped your product in an attractive container that was easy to display on a retailer’s shelf, and hoped it would grab the customer’s attention.

But now, packaging has become increasingly complex, for at least five reasons:

First, there are so many competing products on shelves that it’s almost impossible for a product to stand out because of its packaging. According to Lateral Marketing: New Techniques for Finding Breakthrough Ideas,1 by Philip Kotler and Fernando Trias de Bes, the number of registered brands in the U.S. grew from less than 31,000 in 1975 to nearly 110,000 in 2000.

Second, because of this intense competition, companies are under greater pressure to cut costs than ever before. As competitors quickly imitate each other’s product attributes, customers are becoming less brand-loyal and more price-sensitive than in the past, so every extra penny spent on packaging increases the chances that the customer will buy a cheaper brand.

Third, consumers are revolting against packaging that is difficult to open. Consumer Reports2 recently criticized manufacturers of packaging that’s hard to open, including video game makers who shrink-wrap the plastic cases, medicine manufacturers who use “blister packs,” and cereal companies that use cellophane bags. For example, its packaging testers found that it took 15 minutes and 10 seconds to un-package an “American Idol” Barbie doll, and that it took 9 minutes and 22 seconds, plus a box cutter and a razor, to open a Uniden Digital Cordless phone set.

Fourth, consumers are increasingly concerned about the environment. That means that if your company is responsible for billions of discarded packages that end up in landfills, you could be vulnerable to a customer boycott or to fines from government agencies.

Fifth, powerful retailers like Wal-Mart are demanding that their suppliers use new types of packaging so they can keep their own prices low. As we discussed in Trends last month, Wal-Mart recently required all of the makers of deodorants to stop using paperboard packaging around the product. As Charles Fishman explained in The Wal-Mart Effect,3 the deodorant already came in a can or a plastic container. The package added 5 cents in cost to each unit; it took up shelf space; and it created waste. By forcing its suppliers to eliminate it, Wal-Mart created cost savings for consumers of $25 million to $30 million per year...

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