Brand Packaging

Using Research to Guide and Support Packaging Innovation

January 1, 2007
Using Research to Guide and Support Packaging Innovation
By Scott Young

In our packaging research, we constantly find evidence of the power of structural innovation: Unique packaging structures can successfully enhance shelf visibility, differentiate brands from their competition and, through improved functionality, boost customer satisfaction.
However, because new packaging systems often involve significant investments in new production processes and/or additional materials, companies need to understand which innovations are most likely to make a difference at the shelf—and in the home.  
As important, to help justify investments to senior management, marketers need to demonstrate a high likelihood of positive return-on-investment (ROI). In other words, you need to show that the aesthetic or functional benefits of a new packaging system translate into a strong possibility of increased revenue.
Strategies for driving innovation
It’s best to start by observing shoppers, so that you understand how they come to their decisions and recognize which of these decisions are most likely to be influenced at the point of sale.
When we observe, watch and speak with shoppers at the shelf, we often find that the real opportunity lies in encouraging them to make an additional purchase. For example, Campbell’s Soup understands that it is far more likely to persuade an existing brand user to buy a third or fourth can of soup than it is to win over a Progresso user. For this reason, the company has focused its packaging innovation on new product introductions (such as Soup at Hand) that extend the brand to new usage occasions.
In many cases, we find a “disconnect” at the shelf between the shopper’s mindset, which is often focused on specific users and usage occasions (Is it for me or my child? Is it for lunch or an afternoon snack?), and most packaging communication, which often emphasizes ingredients and product features (diet, organic).
This finding tells us that there is an opportunity to make better connections with consumers through packaging innovations that link to usage occasions. One recent example is the Heinz Picnic Pack, which bundles condiments (relish, mustard, ketchup) in a paperboard carrier, providing functionality (ease of transport) appropriate for a common usage occasion.  
Once you’ve considered the retail setting, you might consider ethnographic research to follow the package into the home environment, tracking the full life cycle of a package from transport through usage, storage and, ultimately, disposal.  In many instances, we have approached a study like this already aware of a common functional problem (such as spilling), but have found that a home visit reveals other issues that may be limiting consumption. For example, packages that are “out of sight, out of mind” because their shape or structure relegates them to the cupboard or the garage. That’s why packaging innovations, most notably fridge packs, are increasingly aimed at ensuring in-home visibility and, ideally, encouraging more frequent use.
A successful recent example is Kraft’s Nabsico Chewy Chips Ahoy! bag with a resealable opening. This innovation helped limit shoppers’ tendency to transfer the cookies to unbranded jars or bags—and has reportedly nearly doubled sales.
Another valuable strategy is to periodically “benchmark” the performance of current packaging: tracking how it enhances brand imagery and perceptions; how it competes on shelf; and how well it ensures satisfaction when a customer uses it (functionality).  
Such research is powerful on several levels, as it:
• Provides numerical evidence to help determine if packaging changes are necessary;
• Isolates the contribution of packaging to brand perception and preference, via a comparison of “name-only” data (based on incoming brand perceptions) versus “packaging exposure” data
• Identifies unmet functional needs, specific areas of concern or competitive disadvantages (i.e. “The packaging is weak in its ability to keep the product fresh.”)
Our findings with such benchmarking studies have consistently illustrated the power of packaging to impact shoppers’ brand perceptions and purchase decisions. About 25 percent of the packaging systems we’ve studied have been found to enhance brand perceptions and preference, while a comparable number have been found to detract from their competitive positioning. In other words, about 25 percent of brands appear to be selling despite their packaging, rather than because of it.  
Measuring the impact
Once you’ve identified an opportunity, you will want to gauge the potential return from a new packaging system. However, it is important to avoid the temptation to have shoppers directly compare the “current” and “proposed” packaging. Direct comparisons can be misleading and, typically, they are not predictive of in-market performance. In other words, the fact that 75 percent of shoppers prefer a proposed package over the current system—or even that 75 percent feel that it is easier to use than the old packaging—does not mean that the new system will drive sales.
Instead, a study should simulate the introduction of a new package into market and focus on determining if the new system impacts a brand’s differentiation and preference versus its competition. Specifically, it should measure packaging performance on four issues that tie directly to revenue and ROI:
Shelf visibility: Does the new system help the brand “break through shelf clutter” and generate consideration more consistently?
Preference vs. competition: Does the brand “win” against its competition more consistently with a new packaging system?
Price expectation: Does the new packaging system drive higher price expectations, which suggests that additional packaging costs can be passed along to shoppers?
Satisfaction and usage frequency: Does the new packaging system enhance satisfaction and/or lead shoppers to use the product more frequently and/or in new situations?
When we applied this approach in a recent study, we found that a new rigid plastic packaging structure for Domino sugar provided several important functional benefits, including improved product protection, tamper resistance, and ease of opening and closing—and that it was very likely to drive a positive return-on-investment.
Despite the new structure’s smaller size (only four pounds, compared to the existing five-pound size), it actually drove significantly higher price expectation ($3.38) than  the current packaging ($2.96). Though Domino actually lowered its price by 10 cents when introducing the new structure, this finding suggested that the brand could have actually raised prices—and been very likely to pass along the costs of the new structure without compromising sales.
In a forced choice scenario (which includes actual retail pricing) against a lower-priced store brand competitor, Domino’s new packaging structure had a dramatic impact. The brand went from winning 55 percent of the time in its existing packaging to winning among 74 percent of shoppers in the new packaging. Clearly, if Domino chooses not to raise pricing, the new packaging structure is very likely to drive gains in market share.
As this example illustrates, packaging innovations have the ability to significantly impact shoppers’ price expectations and purchase decisions. However, a cautionary note is in order: The “power of packaging” can work both ways. Take Skippy for instance. In the case of Skippy’s Squeez’ It peanut butter, we found that the new packaging system failed to deliver an important category-level packaging expectation—the ability to see the product. This actually reduced the perceived functionality of the new packaging (versus current packaging) in key areas, such as ease of opening, resealing and dispensing. As a result, the Squeez’ It package significantly decreased the likelihood that Skippy would “win” against its competition.  
However, even in this case, there was a potential source for optimism—28 percent of shoppers claimed that the new tube format allowed them to use the product in new ways or situations. So while the new packaging would certainly be a poor replacement for current Skippy packaging, it could hold potential as a line extension geared to specific usage situations (i.e. a travel pack).  
The Domino and Skippy examples show that success depends on appropriate packaging innovation, not just innovation itself. They also highlight the importance of a holistic approach to testing new packaging systems, which measures the value of innovative packaging from the shelf to the home usage experience. In fact, to accurately gauge a packaging system’s full potential for ROI, you need to measure four key performance dimensions (shelf visibility, preference, pricing and usage/satisfaction).  
As the need for packaging innovation—and the demand for accountability—continues to grow, brands with these consumer research processes in place will be best positioned to develop (and justify investments in) successful packaging innovations.
Scott Young is the president of Perception Research Services (PRS), which conducts more than 600 studies each year to help companies guide, assess and improve their performance at retail. Contact Scott at syoung@prsresearch.com or 201.346.1600.