Week 7.4 Packaging and Labelling

Packaging and labelling are an integral part of products. A consumer’s first exposure to the product starts with the package and label. Businesses spend time and effort to create customer value through packaging and labelling. When carefully designed, packaging and labelling can provide a competitive advantage.

A label is a part of the package that identifies the product or brand. It discloses who made the product, how it is to be used, and package contents and ingredients. 

Packaging and labelling provides the following benefits:

  1. Communication benefits: The label on packaging conveys important information to the customers such as the expiration date, instructions on how to use the product, and the list of ingredients.  
  2. Functional benefits: Packaging often plays a functional role, such as storage, convenience, or protection of product quality/freshness.
  3. Perceptual benefits: Consumers face dozens of products on the shelves. Package and label shape, colour, and graphics distinguish one brand from another. It also conveys a brand's positioning, and helps build brand equity.

It is not a simple task to come up with creative but low-cost strategies in packaging and labelling. There are four main challenges package and label designers face:

  1. Connecting with customers
  2. Environmental concerns
  3. Health safety and security Issues
  4. Cost reduction

Connecting with Customers

Packages and labels must be continually updated to connect with customers.

Package of three Kleenex Perfect Fit boxes.

Example: Kleenex tissues decided to update their standard rectangular box into an oval shape with colourful graphics. This update was appreciated by the consumers and their sales soared with this aesthetic change in packaging.

Environmental Concerns

Recycling packaging material is a major need. There is a widespread worldwide concern about the growth of solid waste and the shortage of landfill sites. The amount, composition, and disposal of packaging materials are a big concern for many businesses. There are many companies involved in environmentally friendly packaging and production.  

 A bottle of Fairy detergent.

Example: Procter & Gamble uses recycled cardboard in over 70% of its paper packaging. They are packaging detergents in jugs that contain 25% recycled plastic.

Photo of three full recyclable grocery bags with the Walmart logo on checkout counter.

Example: Walmart is emphasizing the use of less packaging material. Walmart is working with its 600,000 global suppliers to reduce overall packaging and shipping materials. 

Health, Safety, and Security Issues 

For some products, there is need for a child-resistant safety latch to prevent misuse or ingestion of the product, which could cause harm to the child. 

Example: Tide POD's Child-Guard packaging.

Cost Reduction

Profit equals revenue minus cost. Cost is a concern for any profit driven business. Businesses try to find innovative ways to cut packaging costs while delivering value to their customers.

Plastic cola bottles on a conveyor belt in a bottling plant.

Example: Coca Cola was one of the first beverage companies to introduce recycled PET (polyethylene terephthalate) into a beverage package in 1991. This allowed for a reduction in their production cost without a comprimise on the packaging quality. 

Product Warranty

Product warranties can provide a significant marketing advantage for the producers. Producers agree to replace any broken or malfunctioning products within the warranty limits. It gives consumers peace of mind and encourages new product trials. 

A wrench with Craftsman label.

 

Example: Sears applied a simple warranty to its Craftsman tool line. If the consumer breaks a tool it is replaced with no questions asked.

A warranty is a statement indicating the liability of the manufacturer for product deficiencies. There are limited and full warranties applied by the manufacturers. 

A limited-coverage warranty specifically states the bounds of coverage and, more importantly, areas of non-coverage. 

A full warranty covers everything with no limits of non-coverage. Studies show that warranties have an important effect on consumer's product evaluation. Brands that have limited warranties tend to receive less positive evaluations compared with full-warranty items.

Concept Check Questions:

 

1. Product packaging such as the Pringles' cylindrical package is one example of the product's __________.