Friday, July 13, 2007

Good Product Packaging is Underrated

Retailing products is an art. To be successful you need one of the following: Hi profile chain brand name: eg. Myer, Woolworths etc, OR a high profile product brand name eg. Sony, Nokia, Johnson. You could also compte with a ridiculously low price ($2 store), or an ultra cutting edge innovation that speaks for itself, but these are outside the scope of normal retail.

Big store brands and big product brands have it made. Let's talk about smaller chains or stand alone retailers. In these stores the purchasing decision is not pre-decided like with many big name purchases. Customers of small retailers buy on the spot based on what is before them at the time. This is why the importance of store presentation and product packaging is of ultimate importance. You could say the importance of product packaging is inversely proportional to the size of the retail outlet. This is not to say that big brands and big chains can slack off. It just helps to define where the purchase decision is most influenced, which highlights the importance for this kind of retailer.

Now let's talk about the product itself.

Here's a bold statement:

The same crap product will sell more often for more money if packaged better.

Properly designed packaging makes all the difference when the main purchasing decisions are being made at point of sale. AND the cost of implementing the better packaging are more than covered by the increase in price that can be gained by the improvement.

Take the above product. Bickfords raspberry cordial. Packaged in a glass bottle with a label that harks to the good ol' days when shopkeepers were honest and the products were made in your local community. Changing the packaging from a plastic receptacle of concentrated flaour liquid also transforms the idea of the product. No longer to be given as a daily dose of thirst quencher, the cordial is now a luxurious experience with exceptional quality with the taste of nostalgia.

The newly created image can now command both a better in store position and a higher prices for essentially the same cordial as found in the plastic jugs two metres away. If this concept can be applied to packaging of any goods they will sell themselves. The look, the name, the box or the bottle all indicate what attributes the product itself carry. If the product comes in a white box, then it only says negative things about the product because certain questions come to mind: Is it too low quality to have a nice box? Do they buy it from a dodgy factory? If they don't have pride in the product then how can I have any confidence in it? etc etc.

I must mention one potential drawback with creating an image that is 'too good'. If a product has packaging that makes it appear too good a few things can happen. One possibility is the price will seem too low, and this will make customers ask the question: why is this so cheap? If you decide that as a result of developing a fantastic product with equally good packaging you can now demand a higher price you may experience slower sales. This is ok if the sales are only slightly less because your higher profit margin will cover a slight slowing of sales. However, there is not much room to move here and it is important to get a balance between heightened confidence with a higher price, and a price that is low enough to maintain consistent sales.

Again it is an art and not science to get the balance right. But ultimately if the product (whatever it is) comes in a nice box, it will sell better. Simple.

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