PACKAGING

Product packaging used to be regarded as a rather utilitarian
marketing activity whose functions were to protect the
product and to provide a convenient way to transport and
store the product along the marketing channel. Since the
late twentieth century, packaging has evolved into one of
the more important marketing tools to enhance sales of a
product. Product packaging, including the labels on the
package, is the last opportunity to influence the purchase
decision of the consumer at the point of purchase.
Supermarket shelves are cluttered with multiple
brands competing for the attention of shoppers. Some
estimates are that the average consumer passes approximately
300 items per minute during a shopping trip to
the supermarket. Depending on the product category, up
to 70 percent of all brand purchase decisions are made at
the point of purchase. Thus, the product package should
be considered one of the most important components of
a marketing effort. As such, it should be designed to
attract the attention of the consumer and promote the sale
of the product.
Product packaging can be defined as all the activities
that:
• are involved in developing and producing the covering(
s) and/or container(s) that provide protection
for the product;
• facilitate product handling and storage;
• assist in the marketing and promotional efforts; and
• enhance the use of the product by the consumer.
The U.S. Department of Agriculture (USDA) estimated
that over 8 cents out of every consumer food dollar was
spent on packaging. In fact, many “companies spend more
on packaging than on advertising” (Hoffman, 2006, p.
299). In 2004 the total global market for consumer packaging
exceeded $350 billion, with a growth rate of about
4 percent annually over the previous ten years. With $98
billion in sales, North America accounted for 28 percent
of the market. Food and beverages accounted for approximately
70 percent of all consumer packaging.
Most consumer products, large and small, require
some packaging. Refrigerators and other large appliances
are normally shipped in a cardboard carton to protect the
finish of the unit, and may include internal packing material
to protect the mechanical components. On the other
hand, small screws are packaged in small plastic boxes or
plastic pouches. Some packaging requires minimal information
(refrigerator carton), some have selected informational
copy (bread), and others have a significant amount
of marketing promotional design and copy (branded
cookies).
Often a given product will have several layers of packaging
each with different functions. The product’s primary
container is the immediate package that holds the
product (such as the plastic tube that contains the toothpaste).
The primary container may then be placed in a secondary
package for easier stacking, promotional
communication, and display on merchandising shelves
(the colorful box that holds the tube of toothpaste).
Finally, there is the shipping carton—usually corrugated
boxes—which will hold a quantity of the products for easy
identification, transportation, handling, and storage (sixeobf_

578 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION
Packaging
dozen boxed tubes of toothpaste to a carton). It is easy to
see that, in some cases, the cost of packaging a product
(toothpaste) may far exceed the value of the actual product
(the paste).
FUNCTIONS OF PACKAGING
Packaging is designed to serve one or more of several functions:
product protection; easy and efficient handling and
storage; providing useful identification and information;
and contributing to the marketing and promotional
efforts. Products need to be protected from rough handling,
the environment, and spoilage. Most products need
to move through a marketing channel from the end of the
production line to the home of the final consumer. A
number of different people and machines will physically
handle (or mishandle) the product as it flows through the
channel, which will likely involve loading and unloading,
transporting, storing, and stocking the product on the
vendors’ shelves. The shipping containers must be
designed to withstand all of the rough handling to which
a package and product may be exposed.
The environment poses other dangers to products.
Light (which affects milk and beer), moisture (chips and
dried soups), temperature (ice cream and meats), and
excessive movement (soft drinks) are a few of the environmental
concerns for certain products. Another major concern
is to protect the product from tampering and, in
some cases, shoplifting.
Size, weight, dimensions, and stackability are just a
few of the factors that need to be considered in designing
packaging for easy and efficient handling of the product.
Some automated product handlers have limitations that
may influence the package dimensions or weight. How
efficiently the product uses allotted space in the tractor
trailer can reduce shipping costs. How much space a product
uses and how easy it is to stack on the shelf may determine
if a retailer carries certain products. These are just a
few of the logistical concerns that need to be considered
when creating the packaging for a product.
Certain basic identification and information will
need to be included on the various layers of packaging
required for a product. The shipping cartons will need to
identify such things as the product, the brand/company,
the quantity, handling instruction, and any dangers associated
with handling the product. The primary package
and/or the secondary package, if that is what the consumer
sees on the shelf, will need information such as: the
brand name; quantity; contents or ingredients; suggested
usage and instructions for use; any legally required information;
“use-before” dates; and the Universal Product
Code.
Finally, the marketing and promotional function
should definitely be considered in designing the primary
product packaging. This function is concerned with two
characteristics of the package: attracting attention and the
marketable attributes of the product. It is vital that the
product’s package attract the attention of shopping consumers.
The use of color, shape, size, and graphic design
are some of the common elements used to attract attention.
There are four situations when the ability of the package
to attract the attention of shoppers is beneficial. In
some cases the design, particularly the color graphics,
allows for more efficient shopping by consumers who are
looking for a brand they normally purchase. Shoppers do
not initially read brand names, but rather they look for
the familiar package and then confirm the brand name
(such as Tide in the bright orange box). Being able to find
preferred brands quickly will significantly reduce the
chance of shoppers buying competing brands.
The second situation is when the package design is
recognized from previous exposure of the consumer to
promotional advertisements. Seeing the package on the
shelf could cause consumers to consciously, or subconsciously,
recall a favorable attitude toward the product and
increase the likelihood of purchasing the product. It is also
a common occurrence that the shopper wants to buy a
given item but is not familiar with any of the brands. The
package then becomes the primary source of informa-
Prescription bottles and colorful rings make up the ClearRx
prescription system. The bottle is flattened with easier-to-read
lables and rings that can be color-coded for each family member.
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ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 579
Partnerships
tional and promotional communications, with the brand
selection being based on the package. The fourth situation
is the pure impulse purchase. In this case shoppers had not
considered buying the product until the package attracts
their attention and they are enticed to purchase the product.
In addition to drawing the attention of the shopper,
the package itself may have attributes that significantly
increase the attractiveness of buying a given brand. These
are attributes that make the product easier to transport,
store, and use, such as multiunit packaging; package
dimensions that fit in the refrigerator door or on standard
height shelves; and packaging which is easy to open,
resealable, reusable, microwaveable and/or pourable.
Some consumers also have a strong preference for environmentally
friendly packaging that is recyclable or
biodegradable. Any of these features may persuade a shopper
to purchase a given brand of a product and should be
considered when designing product packaging.