Driving Competitive Advantage Through Packaging Innovation

Part 1: Nice package! Why getting packaging right is so important.

Recognize this product? It likely took you less than a second to think Heinz Tomato Ketchup, despite no mention of the brand or product on the label. It is a package that on its own conveys the product and brand.

Ironically, if you visit the Heinz ketchup product page, you won’t see this iconic bottle as part of the product line. That’s because in 1983, Heinz developed a new package designed to be a bit more functional, the squeeze bottle.

The new package was lighter, easier to handle, unbreakable and easier to dispense. No more pounding the bottom of the glass bottle to try to coax that delicious condiment out of its container. Consumers loved the new bottle, but some still complained about ketchup building up on the outside of the squeeze nozzle and it being a pain trying to get the last few servings out of the squeeze bottle.

Many resorted to balancing the nearly empty bottle on its cap so the product would settle near the neck of the bottle so they could use it all up without waste. Heinz took note of these complaints and innovated again. Today’s package was designed to be stored on its cap and a special nozzle was developed to keep the area clear of buildup.

Functional benefits drove this packaging evolution, just as it has driven the introduction of resealable bags, pull-top soup cans and boxed wines. Consumers value functional innovations for improved convenience, freshness, conservation, environmental-friendliness, etc. They can help differentiate a brand, gain share and often earn a price premium.

Communication is Key

Of course, today’s Heinz package looks nothing like the original classic bottle. In fact, the it has not been sold at retail for nearly 20 years (outside of a few limited edition runs). And you won’t even find it on their product website. Yet we still recognize the image in an instant. That recognition has nothing to do with function. It is communicating for the brand. And it is critical that it can communicate quickly.

A recent study used eye-tracking technology with shoppers in a grocery store to measure shoppers’ attention to packaging and in-store media. Across the three categories that were studied, shoppers spent on average just 0.6 - 1.0 seconds looking at any given product while shopping. That’s not a lot of time to make an impression.

The total average time spent shopping these categories ranged from only 6.5 seconds to 22 seconds, though in that time shoppers examined anywhere from 6 - 12 options, on average, depending on the category. That’s a lot of information that a shopper is processing in a short time before making a decision.

Coming out as a winner on the shelf is especially important considering how many purchase decisions are made in-store rather than being pre-planned. The Point of Purchase Advertising International (POPAI) recently studied grocery and mass merchandise shoppers and found that a whopping 82% of purchase decisions at mass merchandisers and 76% of purchase decisions in the grocery channel are made in-store. They need cues at the point of sale to make these decisions.

Why packaging is an important advertising medium

So a package needs to be able to break through the clutter on the shelf to even get noticed, portray attributes that consumers desire in order to gain consideration, and provide some point of difference that encourages the consumer to choose that product over some other one. That sounds a lot like advertising.

In reality, packaging is a crucial form of advertising. Increasingly fragmented media channels are making it more and more difficult to reach large audiences with advertising to drive awareness and position a brand. So packaging ends up doing a lot of the heavy work, especially on the shelf.

But more than simply building awareness, good packaging reflects a brand’s equity. In the case of Heinz tomato ketchup, the focus has always been on quality. The packaging was see-through and the product thick and not runny. The original squeeze bottle design allowed them to maintain that quality perception while also adding equity on convenience and ease of use. And the upside-down bottle added equity on less waste and not being messy. All without negatively impacting product quality equity.

Considering how consumers shop, and an increasingly fragmented media making much more complicated for brands to communicate their virtues using traditional advertising. A product’s packaging is now carrying more of the burden to make an impression with consumers and winning the battle at the shelf is more important than ever.

Getting started with packaging innovation

Package innovation is rarely serendipitous. It is a process and should be ongoing. A packaging innovation initiative should include several key elements:

Assign cross-functional innovation teams

Packaging innovation needs to be inclusive (marketing, R&D, supply chain) to ensure that a change that benefits one function (e.g., improved functionality for consumer) doesn’t have a negative impact on another (e.g., retooling requirements and other costs associated with the packaging itself, reduced product quality, higher shipping costs, disadvantaged planograms).

Identify packaging elements that are ripe for innovation

It is important to understand what consumers expect from your product’s packaging. This is generally an exploratory process, but can also be borne out of organic consumer feedback over time. This can help identify potential improvements in functionality, attribute communication, shelf breakthrough or even cost or waste reduction, for instance.

Test the potential impact of a change on consumer behavior

Change for change’s sake is an expensive proposition. Innovation should drive top line growth and/or improved profitability. It is important to test your new packaging idea with consumers to ensure it has the potential to meet innovation goals without having a negative impact on the brand’s equity.

In upcoming posts I’ll detail some ways to use consumer research to support packaging innovation, whether innovating for functional advantages or building equity.