Talking the Talk, But Not Walking the Walk...
By Peter Clarke
It’s far easier to talk about innovation than it is to actually innovate. CPG companies are recognizing the need for structural packaging innovation but they face many roadblocks to actually implement it.
Store shelves bloated with brands and consumers too busy to consider them make a strong case for structural packaging innovation. But there are many obstacles that may restrict your success.
One is the fact that structural innovation is not frequently done. The realities of packaging equipment procurement, setup and qualification timelines are often not anticipated or understood.
That’s likely why many initiatives still place the emphasis on product innovation, relegating packaging to off-the-shelf solutions or no solution at all.
Add to that the short tenure of brand marketers. It is difficult or impossible to attain success when project leadership is constantly changing and timelines are dictated by the need for success within ones’ term.
Accurate predictors for return on investment (ROI) are also lacking. Packaging initiatives are typically launched with other marketing efforts, making it difficult to isolate their impact and difficult to justify costs to upper management.
There are techniques that make the attempt, but they too have issues. For instance, forecast modeling, based on in-use testing, is often inaccurate because it doesn’t provide consumers with the proper context to evaluate the package. It also doesn’t look at long-term benefits or the deeper emotional connections that consumers might have with a package.
Your assets may be your liability
Your biggest barrier among all these, however, is most likely cost. It is cheap to keep making what you already make or what the world commonly makes. Profits are, in part, derived from manufacturing efficiencies that generate low cost of goods.
The problem is that these efficiencies may actually encumber change. Most equipment is specific to a particular method of production, and it frequently lacks the flexibility to adjust for new packaging. A company simply can’t invest millions of dollars in new equipment for each new packaging concept!
Change mindsets and reset expectations
So how do you break through these barriers? My first recommendation is a tough one: change your company’s mindset. Start thinking of packaging not as an expense but, rather, as an investment.
Expectations also need to be reset. Packaging innovation may take longer and cost more than product innovation, and the packaging cost of goods will, most likely, be more than with a common packaging format. Indeed, it takes time, and commitment, to create the efficiencies necessary to reduce the cost of goods.
As a result, timelines, budgets and ROI expectations have to be reset accordingly, and companies must also allow for experimentation and the necessary trial and error to take place.
Avoid reactive, short-sighted initiatives
Save your time and money for the long term “bigger bang for your buck” packaging opportunities. Too much money is wasted on projects that are doomed to fail because of false expectations, contradictory objectives or insufficient budgets and timelines. It just might be possible to offset the short-term margin deficit of the initial high cost of goods with money saved from avoiding such ill-fated projects.
Fine-tune financials accordingly
To cover the added costs of innovation, you can seek to cost reduce the product, or package less product, in a way that still makes an impact with consumers. Improvements in manufacturing, distribution and shelf pack out are ways to reduce those innovation costs. Also consider: Are there more efficient ways to spend marketing dollars? Have you offered your consumer a benefit that they are willing to pay more for?
Learn from others
Remember that today’s standard packaging forms weren’t always standard. The first glass bottles, metal cans, paperboard boxes, plastic bottles and trays weren’t cheap—it took years of investment to optimize and standardize them.
You might also take flat panel TVs as inspiration. When they first launched, they were hardly affordable. But they offered a consumer benefit worth the added cost. Over time, and with increased investment and demand, the cost of these items came down.
Leverage an internal champion
For innovation to succeed, it definitely helps to have an entrepreneurial mindset. It helps even more if you have a courageous leader.
Take Sherwin Williams. The CEO reportedly championed the company’s Twist and Pour paint container, which revolutionized paint packaging—no small feat when you consider that all the paint shakers in countless retail outlets needed to be altered to accommodate the new square configuration. If you have commitment from the top it sure makes things easier.
Walk the talk
Talk is cheap, but innovation takes courage and commitment. If companies wish to stay ahead of the competition they must pursue new ways of doing things. Rarely is there a “silver bullet” solution that is immediately available, cheap to make and that earns market share. “Cheap to make” is likely what you and your competitors are already manufacturing.
But take heed: Packaging innovation is no longer just about driving down costs but identifying benefits people are willing to pay for. Creating superior things people want and can afford that you can ultimately make for a profit is what you should be striving to achieve.
The author, Peter Clarke, is president and founder of Product Ventures, a packaging and product design and development agency. Contact Peter at 203.319.1119 or firstname.lastname@example.org.