Tag: product halo

The Power of Packaging

This time last year I bought a new guitar.

When I bought my my first instrument buying a guitar by distance means was a big no-no. You bought an instrument from a music shop. You walked in to what often appeared to be a imposing environment: and yes, someone was always thumping out Smoke on the Water in the background! (n.b. many music retailers now ban anyone who starts the infamous riff).

By actually going to a music retailer, you handled the instrument, you played a few notes and you could be assured that the instrument was properly set up.

In those days, mail order guitars, and mail order was the only distance selling route, were seen as poor quality, badly constructed and lacking a set up process which made them difficult to play.

The growth of internet shopping means that the most successful music retailers have a big internet presence. In the UK probably the biggest exponent of this is Andertons, who have grown from a single music shop in Guilford to being the most prominent instrument retailer in the UK on the web.

Manufacturers have recognised that a large proportion of their sales will be through distance selling, so manufacturing standards have risen and instruments arrive properly set up (and even in tune!).

However, I think many retailers and manufacturers in the musical instrument sector are missing a trick when it comes to the marketing of their products. Guitars arrive in plain brown cardboard boxes. They are not leveraging the communications power of their packaging.

What is the role of a products packaging?

Well obviously, packaging holds the goods, it stops them being spilt. It protects goods and stops them from being broken. It can be a barrier to stop goods from spoiling. It can allow for efficient transportation of goods. It can act to prevent theft and is why many small goods such as camera memory cards come in oversize packaging.

But packaging also has a communications role. It can convey information e.g. assembly instructions, safety information and certification marks.

But communication goes beyond simply advising purchasers that goods are safe and how they are to be used. Packaging can be an opportunity to upsell and to advertise acessories.

After all, most guitar manufacturers also make and sell strings, plectrums, amplifiers, effects pedals, T-shirts, lesson packages, tuners, straps, baseball hats, etc, etc, etc…

Packaging has a promotional role. It attracts consumer interest on the supermarket shelf. Why else would packs of breakfast cereal be covered in cartoon characters like Tony the Tiger?

Packaging conveys brand messages and allows consumers to make brand choices. Packaging is an important source of marketing messages particularly with fast-moving consumer goods.

Packaging is particularly important where consumers are making low involvement purchase decisions. It can provide promotional cues. this can be the colour of the packaging e.g. Cadbury purple. It can be an identifiable brand character e.g. Mickey Mouse. It can be logos, fonts, tag lines and colours. Packaging has the power to attract consumers and to hold their attention.

Take as an example a can of Coca Cola. The brand name is in a particular font. The can is a particular colour of red. The can is marked with an identifiable swoosh design. Coca Cola even trademark their distinctive bottle shape. All are distinct brand identifiers and provide strong points of differentiation from those of competitors.

There are cultural aspects of the communication role of packaging. Colour often implies a particular class of product. Dark coloured packaging is often viewed as expensive or classy. Red packaging acts as an appetite stimulant. White packaging implies purity and cleanliness. Blue packaging implies freshness. Green packaging implies environmental concerns.

But colours also have cultural implications. In China, red is the colour of luck and happiness. In Germany, products for infants are often in brightly coloured packaging whilst in the UK it is far more common to see infant products in pastel shades.

Pictures can have cultural implications. In Europe we put a picture of a baby on infant formula and baby foods. In Africa, the practice is to put an image of the contents of the pack on the label. So sales of infant formula did not go well in Africa when a baby is shown on the label.

The shape of packaging can give communications cues. Look at the perfume and fragrances market where perfume bottles come in fancy shapes e.g. high heeled shoes, a fist, a woman’s torso in a corset etc, etc. The packaging of these products becomes an attractive ornament on a dressing table or the bathroom shelf. The packaging of the fragrance becomes a product in its own right.

Attractive packaging get re-used. Fancy biscuit tins have been used for marketing since the days of the Victorians. Who hasn’t got an old jam jar or Lyon’s golden syrup tin repurposed to hold coins, nails, paper clips, pens or other bric-a-brac. Every time you go to put something in the tin you get a reminder of the brand message.

The size of packaging can operate on the basis of Gestalt Theory, i.e. the whole is greater than the sum of its parts. So you can buy ‘sharing’ bags of sweets and crisps. The message being that our product helps with social coherence. Value packs offer diversity and can influence product desirability. Big containers also take up more shelf space leaving less room for competitors products

Packaging directly affects a products market position. So if you buy a ‘value’ guitar it will be packed in folded cardboard whereas a premium guitar will have a travel case and come with ‘case candy’ owner’s certificates, a cleaning cloth, booklets about the guitar and brand, and even memory cards with photos of your guitar being made.

Cheap goods are sold in cheap packaging whereas expensive goods have glossy and robust packaging. toys and Easter eggs often have packaging that can be used as part of the toy or which includes activities like puzzles and games.

Increasingly, re-useable packaging is increasingly offered by manufacturers of household goods.

Packaging sometimes has to harmonise with the in-store appearance e.g. supermarket own brand labels or Apple electronics.

So your packaging is not just a container for your goods. It offers instructions. It contains regulatory information and compliance marks and it is a promotional tool.

If your packaging is passive, you need extensive and widespread promotional activity.

If your packaging is active it provides its own advertising and promotion. Active packaging works in a synergistic approach to marketing communication.

Designing and Delivering More Customer Value

One of the secrets of successful marketing is developing your organisation so that it has fewer, smarter people to deliver more value to customers faster.

However, things are not that simple in complex, mature, competitive markets.  All players in such markets are after the same thing and they are all fighting for the same set of customers.

Some economists will place price as the primary or sole factor in customer value.  this is the perfect competition model. It may be acceptable in simplified economic modelling but it bears no relation as to what happens in real life.

Consumers do not just buy products.  If a product solution was the only factor in consumer purchases, all goods would have the same features and price would be the sole factor in consumer decision making.

The only markets where price is such an over-riding concern are bulk commodity markets, such as steel or oil. Certainly consumer product markets are rarely decided on price alone.

Consumers form brand preferences.  They value things like customer service. Their self-image projected by the use of brands is important to them.  They like to develop brand loyalty.

These brand preferences drive customer expectation.  For example, consumers expect BMW cars to be superbly engineered; They expect Marks and Spencer’s clothes to be well made and good value; They expect McDonald’s burgers to be of a consistent quality and consistency.

When these customer expectations do not match the delivered product, then customers are dis-satisfied and seek alternatives.

More and more, as technology drives product conformity, brands are using halo services to differentiate their products from those of competitors.  Brands today represent more than physical products. Increasingly brands look to expand beyond their traditional product categories. Caterpillar isn’t just a maker of earth moving equipment, they are a clothing brand.

Brands are not only product; they are services, values, promises made by the seller.  They are an amalgamation of aspects which leads to the creation of a ‘personality’.

Smart marketers do not look to sell products: They sell benefits packages. They don’t sell purchase value, they sell usage value.  So if, for example, you are in the seed business, you don’t prioritise the cost of a bag of grain, you sell the likely value of the yield from that pack of grain.

Porter state that there are three ways to deliver more value to customers and to beat your competitors:

  1.  Charge a lower price than that of your competitors
  2.  Help customers reduce other costs
  3.  Add benefits which make your brand more attractive than that of your competitors

To win through price leadership means having an aggressive pricing strategy.  You must become the low cost option (again not just purchase price but usage price). Such a strategy requires organisational scale, market experience, inexpensive locations (outsourcing), superior cost control and supply chain bargaining power.

Often price leadership means offering fewer options in the market.  Lower prices are often driven by not offering free delivery or making the customer do more of the work.  For example, if you forget to print your boarding card at home, they will apply a significant surcharge to print it at the airport.  Ikea make you assemble their furniture.

Such a low cost strategy means relying on tight profit margins and selling in bulk.  It is difficult to sustain such a position over the longer term.

Many firms operating in business to business markets focus on lowering their customers other costs.  this could be through having longer service schedules, energy efficient machinery, easier repairs.  They market by showing customers that the cost of usage over time is lower than that of competitors products. Others offer to share the customers risk by selling on consignment, having low minimum order quantities or issuing exceptional guarantees e.g. no win no fee litigation.

Some firms go further by actively helping their customers lower costs.  Such companies want to be considered a business partner not just a supplier.  they offer customers training and support.  They may locate staff in customers premises to offer functions like on-site maintenance.  They offer services such as computer software and automated re-stocking.

Inventory cost can be lowered through matching customers Just In Time stock control procedures or through providing inventory outsourcing.

Through helping to reduce customers processing costs many firms become the preferred option in a market.  This could be through improving yields; reducing waste and reworking; reducing customer’s labour costs, reducing accidents and lowering energy costs.

Many firms analyse their production chain using customer value analysis.  Offering to lower costs away from that value chain, such as reducing administration costs or the costs of legal compliance can be a profitable marketing opportunity.

Some firms are successful in markets through offering value added.  This could be through a ‘more for more’ strategy where additional features and functions are added for a slightly increased price.  The trick is to bundle features and services which customers value but which come at a relatively low cost.

This could be the offering of product customisation, increased convenience, faster services such as delivery time, adding free coaching or training, offering consultancy services, issuing extraordinary guarantees and member benefit programmes (e.g. executive lounges at airports).