Environmental Influences on Packaging

Natural Resources

Climate

Ecology

Demographics

Economics

Science/Technology

Political/Legal

Social Values

MarketingMix

Decisions

Evolution of Product Packaging for Coca Cola

Packaging ObjectivesProtection of Product FunctionProtection of Product FunctionProtection of Product FunctionProtection of Product Function

Promotion ImageryPromotion ImageryPromotion ImageryPromotion Imagery

ProductProductLabel/instructionLabel/instruction

ProductProductLabel/instructionLabel/instruction

ProductProductamountamount

ProductProductamountamount

Customer demands ..Customer demands ..Convenience in useConvenience in use

Customer demands ..Customer demands ..Convenience in useConvenience in use

This coffee is thebest tasting coffeein the world. That’sbecause it’s madewith 100% arabicabeans, the finestbeans money canbuy.

12 oz.

(Containment, Transit, Storage,Tampering)(Containment, Transit, Storage,Tampering)

(graphics + color =(graphics + color =

brand mage)brand mage)

(Size, shape, weight)(Size, shape, weight)

Promotional Role (Informing the Consumer)– Verbal and nonverbal symbols– Size, shape, texture, color and graphics

(graphics + color = brand mage)(graphics + color = brand mage)– Psychological impact & usage

Convenience in useEnvironmentally Responsible

– Biodegradable and recyclable– Ecological impact

Packaging Decisions• Focus on the wrapping and containment decisions

involved in physical design (size-shape-safety)

Major Packaging Considerations

• Cost of Packaging (production & material)– Limited consumer willingness to pay for better

packaging

Protection of Product FunctionProtection of Product Function (Containment, Transit, Storage, Tampering)(Containment, Transit, Storage, Tampering)

Reseller Needs ..shipping and handling

Transportation, storage,..

Product Standardization or Adaptation?

Sell product as isSell product as is

Modify productfor other country

Modify productfor other country

Design new productfor new markets

Design new productfor new markets

Introduce aglobal product

Introduce aglobal product

Domino’s Pizza

• Satisfy an unmet need/want(Food?, Convenience?, Time?)

• Octagon Package(Saves Heat)

Product Package

CoreCoreProductProduct

(ring)(ring)

CoreCoreProductProduct

(ring)(ring)

TangibleTangibleProductProduct

(packaging)(packaging)

TangibleTangibleProductProduct

(packaging)(packaging)

AugmentedAugmentedProductProduct

(psychological(psychologicalbenefits)benefits)

AugmentedAugmentedProductProduct

(psychological(psychologicalbenefits)benefits)

Field Tests for Packaging Analysis

A. Laboratory Tests– Strength / Durability of Material

B. Dealer Tests– Storage / Handling / Shape

C. Visual Tests– Color / Graphics / Legibility

D. Customer Acceptance / Usage– Image / Function/Safety-Tamper Proof

PRODUCT TAMPERING

BATORY’S

COOKIES

SAFETY FEATURES

Tylenol Capsules

Listerene Mouthwash

Computer Access

Plastic wrap

Plastic wrap

Voice Prints

Tamper-Resistant Packaging- FDA regulations and consumer safety concerns

Multiple Packaging

Family Packaging-Similar packaging for all of a firm’s products or packaging that has one common design element

AA A

Secondary use

small medium large

Ethical Issues In Packaging

Issues:

- Deception: Look alike (knockoffs)

- Concealing a downsized product

- Hidden Environmental Effects … (glass, paper, plastic) - High Costs for “Image” (color, etc.) - Safety in use and from tampering

FRAGILE

After Years Of Super-sizing, Food Makers Shrink Portions

(And Fatten Profit Margins)

Applied Marketing

Company Benefits• Profit margins: Can Sell Products at Higher

Price per Unit• Consumer orientation: Smaller portions are in

demand by nutritionists and consumers

• The new cans of soda force the consumers to change their mindset about value.

• Relationship Marketing – “We’ve got to recruit new users and hold on to

users as they age” - Bill Elmore, President, Coca-Cola Co

• Total Quality Management– Continuous improvement of a product to keep a

brand competitive

Company Benefits

• Can Sell Products at Higher Price per Unit– Soft Drink Sales

Product Price Price per Oz.

12 oz. Can (6 pack) 2.99$ 0.0415$ 8 oz. Can (6 pack) 2.19$ 0.0456$ 20 oz. Bottle 1.09$ 0.0545$ 13.2 oz. Bottle 0.89$ 0.0674$ 2 Liter Bottle (67.7 oz.) 1.39$ 0.0206$ After Years Of Supersizing, Food Makers Shrink Portions,(And Fatten Profit Margins),WSJ, 28Jan 2004

• Took their popular brand of soft drinks and re-released them in 8oz cans and 12oz. Bottles. (an alternative)

• The product is aimed at light users and aging, weight-conscious baby boomers. .

• Hoagie franchise that just introduced a 4.5 ounce triangular sub called Diamond Mini Meltz.

Consumer Behavior: Advantages

• A new way to recruit and maintain current product users.

• Storage of product is much easier.

• Sodas do not become warm and flat before you can finish them.

• Reduce temptation to drink too much soda.

• Cans of soda aren't too large for children.

• The product caters to Americas current obsession to loose weight.

Brands of Nestlé• Alpo• Butterfinger• Hot Pockets• Libby’s Juicy Juice• Nestlé Toll House• Nesquick• PowerBar• Taster’s Choice

The Perils of Packaging: Nestlé Aims for Easier Openings WSJ, Nov. 17, 2005

Applied Marketong

Why Change the Package?

• Ease of opening the product (convenience) Target markets – kids and aging baby boomers On-the-go (in the car, running, etc.)• Tamper-resistant; hold up during shipment• Updated, fresh look (Nescafé push button lid)• Costs

Research• “Ideas are free”

– Customer insights collected from the call center (sent letter and got exclusive rights)

– Called back several hundred customer ideas & gains customer support as well

– Nestlé’s 8 oz. coffee jar too small – made it 15 oz. (sales jumped)

– Pastel-colored packaging of CoffeeMate was too light – brightened package

• Observation: observed runners at mile 17 of 2004 NYC Marathon using PowerGel

• Focus groups – opening lids, discussion of whether they’d purchase the product

Costs of Updating Packaging• Costs are biggest

problem – raises because of oil prices (ingredient of water bottles, film wrap, etc.)

• Prices for plastic packaging rose 20-35% in 2004

• Spends $6 billion per year on packaging

• Costs range from less than 1% to 15% of overall cost to make the product

• Re-sealable zip-lock plastic bags add an average of 20% to packages

• However, these options are demanded by consumers

"Your most loyal consumers represent 70% of your volume," says Marty Sharkey. "You'll find the money to keep that group satisfied."

Relating to Textbook• Chapter 2 – Controlling Marketing Strategies

– Nestlé compared their expected level of performance of PowerGel to the actual performance, then took corrective action

• Chapter 3 – Legal and Regulatory Forces (FDA)– It is mandatory that packaging is tamper-resistant so it

must be tough, yet easy to open

• Chapter 5 – International Marketing– Nestlé is based in Vevey, Switzerland– Reaches customers all over the world (USA)

• Chapter 7 – Marketing Research– Collecting Data: focus groups, observation, telephone

survey

Relating to Our Textbook…• Chapter 7& 8 – Target Markets & Consumer

Behavior– Demographics: Age and family– Behavioristic: Brand loyalty, price, end use

• Chapter 11 – Product Concepts– Product line: Pet care, baby food, beverages, prepared

foods, chocolate and candy, dairy products, bottled water, breakfast cereals, ice cream, food services

• Chapter 12 – Developing and Managing Products– Quality/Functional/Aesthetic Modifications: more

convenient, appealing, and durable• Chapter 13 – Branding and Packaging

– Nestlé is a major brand name– Altering the package (updated the style) and innovative

packaging (unique and easier to use)

References• Ball, Deborah. "The Perils of Packaging: Nestlé Aims for

Easier Openings." Wall Street Journal 17 Nov. 2005: B1. • "FPA Congratulates Its Winners." 2001. Flexible Packaging

Association. 28 Nov. 2005 <http://www.flexpack.org/achiev/2001winners.asp>.

• Moore, John. "Ideas are Free ... just ask Nestle." Brand Autopsy. 15 Sep. 2004. 28 Nov. 2005 <http://brandautopsy.typepad.com/brandautopsy/2004/09/ideas_are_free_.html>.

• "Smarties set to lose their tube ." Online posting. 18 Feb. 2005. Do you have fond memories of the Smarties tube?. 28 Nov. 2005. <http://news.bbc.co.uk/1/hi/business/4276553.stm>.

• Toops, Diane. "Food Biz Kids: Perfect easy-to-go brownie." Food Processing Magazine . 28 Nov. 2005 <http://www.foodprocessing.com/articles/2005/299.html>.

• “Green Labeling” :

• Labeling packaging as made of recyclable materials

– Provide information on product origin

• “Made in the USA” 1st

• Universal Product Code (UPC)

Section 2Section 2PackagePackage Labeling Labeling

Asparagus From Afar

0%

10%

20%

30%

40%

50%

60%

70%

Fish &Shellfish

Asparagus Grapes

Imports' share offoods consumed in theU.S. in 2001

Kilman, Scott. “Grocers, Meatpackers Fight Law to Label Origin of Foods.” WSJ, June 26, 2003

Whacky Warning Label Contest

• 1st Prize Label on Drain Cleaner Bottle “if you do not understand , or cannot read, all directions, cautions and warnings, do not use this product”.

• 2Nd Prize Snow sled label “Beware: sled may develop high speed under certain snow conditions”

Applied Marketing

- Tough-guy

- Smooth-guy

- Macho-guy

Target Market: Men, Ages 21-29

Molson Campaign Spoofs the Genre

Applied Marketing

Some of the new labels include:

• I Put the Super In Superficial Lager• Guess Where My Tattoo Is Lager• Let’s Get Out Of These Wet Clothes

Lager• Skinny Dippers Are People Too Lager• Ask Me About My X-Ray Vision Lager• http://www.twinlabel.com/main.php

Applied Marketing

Money spent on advertising in 2001:

• Molson- $3.1 million• Anheuser-Busch-

$331.7 million• Heineken- 69.2

$million

3.1

331.7

69.2

Molson

Anheuser-Busch

Heineken

• Product Differentiation– Molson hopes to set their beer apart from its

competitors by introducing new humorous labels on their products to attract more consumers

Labeling Information Value

Source of Product (who,when,where)

Content Identification

Use of Product-instructions ( # of Servings.etc.)

Promotion: graphic design

Legal Potential Hazards

Nutrition

Nutrition Facts & Points of Confusion

Parker-Pope, Tara. “A ‘Fat-Free’ Product That’s 100% Fat: How Food Labels Legally Mislead.” WSJ, D1, July 15, 2003.

Ethics + Product LabelingA case example

Wineries & Gov’t Class over Ads that Toast Health Benefits of Drinking

• CBS 60 Minutes suggested that moderate wine consumption may reduce the risk of heart disease...

• Red wine sales soar...• Gov’t threatened to close a winery

down• First Amendment Issue?...(No)

• Measure 27 - Require food companies to label products that contain genetically modified ingredients

• More likely to be approved by consumers than politicians

Oregon May Require Labels on Genetic Food

Case example

GENETICALLY MODIFIED INGREDIENTS

• 70% of processed food contains genetically modified – Corn – Soybean– Other crops

• Have not been shown to cause health problems

• Resist pests and weed killers

• Easier for farmers to grow

ANTI-LABELING GROUP

• Special packaging just for Oregon

• Costly headache for farmers, food makers, and supermarkets

• Anti – label group members– Crop Life International

• PepsiCo Inc.• General Mills Inc.• Kellogg Co.• Sara Lee Corp.• H.J. Heinz Co.

PRO LABEL GROUP

• “If food is safe and the technology is great, why not put a label on it and let me have a choice”

• “Give Oregonians a choice”• Have more than 100,000 signatures and 7

other states are interested• Perishable products are produced locally

– easier to comply with state labeling law

Section 3Section 3Packaging & ColorPackaging & Color

Product Congruency & COLOR

1. Competitive

2. Believable

3. Consistent

COLOR Theory

Color carries a connotation influenced by:- Culture

- Personal memories

- Physiology

Principle: Color influences product sales

• Colors send different signals

(conscious and unconscious)

Kraft Cheese• Objective: to increase packages eye appeal

– Shelf appeal: make their products stand out from the rest • Consumer Behavior: Kraft is trying to make a bigger splash at

the dairy case because most shoppers spend just 1 ½ seconds before choosing a brand

– Tactic: use catchy colors & animation, Example - cow

Applied Marketing

• Kraft is also working to give cheese a healthier, sexier image “Love it… Gotta Have it”

COLOR VISIBILITY

Color ads produces 35% increase in readership versus Black & White.

• Orange - 118%• Yellow - 113%• Blue - 100%

*10% of the population are color blindPackage Size: Increases w/lighter colors Decreases w/darker colors (Mc Neal,J., C. B. 1982)

Sample size

Color Associations

• Orange : Conveys strength - fall, harvest.

• Blue & White : Clean and gentle.

• Red : Symbolizes blood & fire.

Masculine in appeal. Anger & action.

Stimulates appetite & desire.

Color Associations

• Blue : cool, truthful, formal, purity, loyalty.

• sky,sadness, water,coldness• Green : wet, nature, calmness, spring.• (also molds, bacteria, spoilage)• Black : mystery, mourning, death,

heaviness• Yellow: sunlight,caution,warmth,visibility

Snow days

Cultural differences in Color Associations

Beware when bearing gifts on foreign lands - and beware of the color...

• Brazil- Purple is a death color, Scotch is more popular than bourbon

• England - Apparel and soap are considered a bit personal. White lilies suggest death, but other flowers are okay

• Hong Kong - White is for funerals, but Red is popular in all Chinese-speaking areas.