Understanding Marketing: The Other “P’s” — Packaging

Chapter 7: Packaging

Depending on whom you ask, people have different ideas about what other “P’s” should be added to the original four P’s of Marketing. Starting with this chapter, this author will cover each of these other P’s so that there can be proper appreciation for their respective roles in the marketing mix. Among these other P’s, Packaging appears to be what consumers might be most familiar with, as it is certainly the most visible. Packaging is in fact an industry unto itself and could probably stand alone even if the rest of the marketing ecosystem crumbles. After the creation of the product, packaging becomes the next most immediate need in the production process – ahead of the rest of the marketing mix. Packaging comes before Place (distribution) and Promotion. And usually, packaging will be a major consideration for the second P: Price. One cannot properly price a product without taking into account how it will be packaged.

Price and packaging in fact work together as most products are available in different sizes of packaging, with corresponding different prices for each packaging size. The universally accepted rule for packaging and pricing is that larger packages offer more product at lower costs per unit because the costs of packaging gets smaller in relation to the volume of product being sold – the old principle of cheaper by the dozen. To illustrate: a two-liter plastic bottle of Coca-Cola will always be cheaper per ounce than a regular 16-ounce can (500ml). If the can sells for a dollar, then four cans would be $4. A two-liter bottle contains four cans of soda, but it only sells for about $2 – effectively half the price per ounce compared to the canned version.

Consumer advocates actually recommend that people buy regularly consumed commodities in large quantities in order to save on packaging costs, as well as trips to the supermarket. Best example would be Costco, and their multi-pack offerings of every product they sell that could qualify for such volume purchases. It is hard to argue against this pricing strategy, as anyone can make the cost comparisons himself/herself. Costco bundles are very hard to beat. For example, Swiss Miss, a popular powdered instant chocolate breakfast drink comes in single-serve sachets. At a regular grocery store, a 10-pack box would retail for about $3-4, which puts the individual servings at $0.30 to $0.40 for each sachet. Costco sells them in large 50-piece cartons for $4.99, which means one individual serving will cost less than $0.10 each. Can’t beat that.

One key point for consumers looking to save on their grocery shopping costs: choose not just the bigger packs, but also the simplest, most inexpensive packaging options. Remember that the fancier the packaging, the higher its cost contribution to the retail price. If you are choosing an elaborate pump-operated dispenser for your toothpaste, then you are probably paying more for the packaging than for the actual product. Reach for the regular, tried and tested tube, and compare the price per ounce of product that you are getting out of each pack. Chances are, the tube will give you as much as 50% more product for the same amount of money that you are paying for the fancier pack version.

Packaging is not just an option, an add-on to be desired, an unnecessary trapping. It is an actual need, and many products cannot be conceived of without it. Think of any liquid product, like say olive oil, wine, vinegar, or beer… how do you market these things without packaging? Every single consumer good requires packaging: toothpaste, shampoo, perfume, detergents, processed foods like hotdogs and cereal, milk, coffee, soda, etc., etc., etc. – in fact the category is formally called consumer packaged goods. There is a subcategory that is the most visible to the consumer: FMCG, Fast-Moving Consumer (packaged) Goods. All the examples mentioned above, and all of the most heavily advertised and promoted consumer products fall under this subcategory. These are the beverages, canned goods, toiletries, household cleaning products, laundry detergents… in other words, just about everything that you will find in a supermarket. These products are where advertising agencies find their bread and butter accounts. Companies like Nestle, Unilever, Procter & Gamble, dominate most of the FMCG businesses globally.

What makes packaging so important? What is its real value to the marketer? First of all, in many cases, it is the very first available medium for advertising their product. At the barest minimum, any packaging material would explicitly display and shout out the brand that it carries inside. Without such prominent branding on the packaging, one can of soda would be indistinguishable from another. The more “generic-looking” a product is, the more intense its need for branded packaging. Obviously, for such products as beverages, shampoos, oils, and other liquid products, marketing the product is unthinkable without the packaging. There are certain products that may always be recognized without their packaging, but they are quite rare. One good example would be M&M chocolate candies – they actually have the brand imprinted on the product! Certain products can lend themselves naturally to this type of “baked-in” branding. Look at sports shoes: every pair of adidas has its signature three stripes clearly visible on the product, or the Nike swoosh, or the letter “N” on New Balance shoes. In fact, these items are displayed for sale without their packaging – the boxes that are used for these shoes are usually boring unadorned carboard containers with little advertising content on them. Other apparel items would have their logos displayed on the clothes – sometimes subtly, as in the little alligator on the chest for Lacoste shirts, at other times the logos are screaming all over the shirt, like what you see on the brightly colored jackets of motorcycle racing teams. You could read the brands, Suzuki, Kawasaki, Honda, Ducati, and so on, emblazoned on them even from very far away. That is intentional. The race drivers are walking billboards for their respective sponsor brands.

Are there manufactured products that can do without packaging? Yes. One example comes to mind: tires. You know, those round black things on which your car moves over the road? They are made of various grades and types of rubber and other elements that give it certain features and benefits, such as steel and/or nylon belts. These strings of very strong material provide the tire with stability and durability. In the past, new tires used to be wrapped in some kind of plastic tape that is wound around the tire to protect it from the elements during shipping. Well, guess what? The materials out of which the tires are made are far superior to any sort of plastic wrapper when it comes to protection from the elements. So why bother with the plastic tape wrapper?

Packaging is also important for creating the impression that the product is of high quality and high value. This is most evident in the very sophisticated designs for the bottles that contain fragrances or expensive alcoholic beverages like cognac and champagne. The iconic champagne brand Dom Perignon, for instance, has such a distinctive bottle and label that it can easily be identified even if the label is turned halfway to the side. Naturally expensive products like jewelry and high-end watches also require equally expensive, or at least expensive-looking, packaging. For the consumer to believe that the product is expensive, it has to look expensive. And packaging can deliver that look easily.

Packaging products are a product category unto themselves. The most common example would be giftwrapping paper, gift bags and gift boxes. During the holidays, otherwise known as gift-giving season, one well known life hack is to package your mediocre gift in expensive gift wrapping, and add a large bow. Your gift will look very special when you hand it over. Never mind if the gift inside is worth less than $25. The recipient will appreciate the effort you have put into making the packaging look so good (and expensive).

As in most elements of marketing, there is a spectrum of how well packaging serves the purpose for the marketer, or how well they take advantage of it. In some cases, it is in fact abused. When packaging is most unnecessary, that is usually when it tends to be most abused. One example is double packaging. This is when a product already has a perfectly functioning packaging yet the manufacturer adds another layer of packaging to exploit the device. Take a look at toothpaste, for example. As a product, it normally comes in a tube – a perfectly well designed and well-functioning package such that it has not been replaced since the product first came out. But why does it come in a cardboard box when you pick it up at the grocery or drug store? The obvious answer? So that the manufacturer can have more space for promoting the brand. In fact the boxes are usually a little bigger than necessary – there is a lot of air inside the box along with the tube of toothpaste. Boxes also stack better on the shelf. They stay upright so the brand is clearly visible and readable to the passing consumer, eye level or not. A tube could never deliver those benefits.

Such deviousness is not exclusive to toothpaste brands. The same tactic is employed by almost all other manufacturers whose products come in tubes. Particularly worth mentioning would be pharmaceutical products: creams, ointments, and similar formulations. Or products that come in small bottles, like eye drops and superglue. They are almost always repackaged in a bigger box or shrink-wrapped onto a large piece of cardboard that will stand up on the shelf to prominently announce the brand. Sometimes the product occupies less than half the space provided by the big box, and the rest of the available space is just filled by, well, air. You must have heard about how some consumers complain that potato chip manufacturers put very little product in their large packs that are filled with mostly air? Well, it is true. The product does not need to fill up the package. The package serves other purposes than simply containing the product, many times the product is actually already contained in some other package before it is inserted into the outer packaging that a consumer sees first.

In such situations, it is quite obvious that the outer packaging is no longer intended to primarily contain the product, but to serve another purpose, namely advertising the brand. Advertising is always or should always be medium-specific, meaning the design should be tailored to the unique attributes of the medium. In the case of advertising on packaging, it is the other way around: the medium is often designed to serve the needs of the advertising message it will carry. In other words, the box will be as big as how big the manufacturer wants his brand name to be displayed on the pack.

Companies that supply packaging to manufacturers are always looking for ways to improve their materials so that their clients can be more successful. The more products that their clients sell, the more packaging materials these clients will order from their packaging suppliers or vendors. Improvements and innovations in packaging are continuously being developed. Liquid soap (and many other liquid products) now comes in pump dispensers. Sometimes innovative packaging actually creates new product categories. Special versions of these dispensers allow the product to come out as foam instead of plain old liquid soap. Whoever imagined that would be a thing? Another example: toilet cleansers – they have been around for decades. But when the packaging companies came up with goose-neck bottles that allow the consumer to directly spray the product into hard-to-reach areas under the rim of the toilet bowl, an altogether new product category was created. Thank you, Toilet Duck.

But life for packaging vendors is not always rosy nor simple. Sometimes they get overtaken by technological developments and suddenly their products are no longer relevant to their clients. There is this story of such a supplier of packaging materials for a major toothpaste manufacturer. In the old days, all toothpaste manufacturers used aluminum tubes for their products. This supplier and his client had a great business relationship, and as the population of the third world country they were in kept growing, their business similarly grew by leaps and bounds. The vendor – let’s call him Mr. Prosperous – invested in ever larger capacities at his plant to deliver ever larger volumes of aluminum tubes to his client whose business simply kept on booming. And then economic tragedy struck. Someone somewhere in the higher up echelons of corporate headquarters at the toothpaste company made the decision to switch from aluminum tubes to plastic – globally. And new packaging suppliers have entered the market offering just that: plastic packaging. All of his investments are now about to go down the drain. Mr. Prosperous is now Mr. Sad. What to do?

Whether he came up with this idea himself or someone advised him is unclear, but instead of throwing in the towel and shutting down his packaging plant, he decided to launch his own brand of toothpaste using his existing manufacturing facility. Long story short, he has become a successful toothpaste manufacturer in his own right, with the second best-selling brand in the market. Mr. Sad is now Mr. Happy.


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