Packaging

Reference for Business

Encyclopedia of Business, 2nd ed.

Packaging refers to the container or wrapper that holds a product or group of products.
Most commercial packaging serves two basic functions: protecting the product from
damage during shipping, and promoting the product to the ultimate consumer. Some
common types of packaging include shipping cartons, containers for industrial goods, and
bags, boxes, cans, and other holders for consumer products. Packaging is of great
importance to both sellers and buyers of products. It can prevent spoiling, breakage,
tampering, or theft; enhance convenience in use or storage; and make products easier to
identify. A significant improvement in packaging can even create a "new" product by
expanding the ways in which it can be used, and thus its potential markets. For example,
a soup that is packaged in a microwavable bowl might suddenly increase its sales to
working people.
Prior to World War II, packaging was used primarily to surround and protect products
during storage, transportation, and distribution. Some packages were designed with
aesthetic appeal and even for ease-of-use by the end consumer, but package design was
typically left to technicians. After World War II, however, companies became more
interested in marketing and promotion as a means of enticing customers to purchase their
products. As a result, more manufacturers began to view packaging as an integral element
of overall business marketing strategies to lure buyers.
This increased attention to packaging coincided with socioeconomic changes taking place
around the world. As consumers became better educated and more affluent, their
expectations of productsand their reliance on themincreased as well. Consequently,
consumers began to rely much more heavily on manufactured goods and processed food
items. New technologies related to production, distribution, and preservatives led to a
massive proliferation in the number and type of products and brands available in
industrialized nations. Thus, packaging became a vital means of differentiating items and
informing inundated consumers.
The importance of consumer packaging was elevated in the United States during the late
1970s and 1980s. Rapid post-war economic expansion and market growth waned during
that period, forcing companies to focus increasingly on luring consumers to their product
or brand at the expense of the competition. Package design became a marketing science.
And, as a new corporate cost-consciousness developed in response to increased
competition, companies began to alter packaging techniques as a way to cut production,
storage, and distribution expenses. Furthermore, marketers began to view packaging as a
tool to exploit existing product lines by adding new items and to pump new life into
maturing products.

Today, good package design is regarded as an essential part of successful business

practice. Since many potential customers first notice a new product after it has arrived on
the shelves of a store, it is vital that the packaging provide consumers with the
information they need and motivate them to make a purchase. But packaging decisions
involve a number of tradeoffs. While making a product visible and distinctive may be the
top priority, for example, businesses must also comply with a variety of laws regarding
product labeling and safety. Protecting products during transport is important, but
businesses also need to keep their shipping costs as low as possible. The following
provides an overview of some of the factors to consider in packaging products for
consumer markets.

PACKAGE DESIGN
Consumer packaging serves to contain and communicate. A product's "packaging mix" is
the result of several requirements that determine how a package accomplishes those two
basic functions. Robert D. Hisrich identified eight major package requirements that
dictate the mix. A package must: protect the product, be adaptable to production-line
speeds, promote or sell the item, increase the product's density, help the consumer use the
product, provide reusable value to the user, satisfy legal requirements, and keep
packaging-related expenses low. Two classes of package design criteria are functional
requirements and sales requirements.
FUNCTIONAL REQUIREMENTS Package

design must meet five groups of functional

criteria: in-home, instore (or warehouse), production, distribution and safety, and legal.
In-home requirements usually dictate that packaging be convenient to use and store,
remind users when and what to repurchase, reinforce consumers' expectations of the
product, and tell them how to safely and effectively use the product. In addition,
increasing numbers of consumers expect packaging to be recyclable and environmentally
sensitive.
In-store criteria require that packaging attract attention on the shelf, instill confidence in
the buyer, identify the product or brand and differentiate it from the competition,
communicate benefits and uses, and entice customers to actually purchase the item. The
product must also be easy for retailers to store and stock on the shelves or the floor, and
simple to process at a check-out counter or other final point of distribution. For instance,
packaging that is oddly shaped and takes up a large amount of space may draw attention,
but it may also be shunned by mail-order sellers concerned about shipping costs or by
space-conscious store retailers.
Production demands, the third group of functional criteria influencing packaging, are
primarily based on cost. A designer may create a fantastic package that would perform
excellently in the marketplace, but if the company cannot find a way to produce the
package cost-effectively, the design is useless. Among the most important considerations
in this realm is production line speed. If a container is too long, wide, or short, it could
significantly slow the speed of the production machines. Similarly, if the top or spout of a

container is too small or is oddly shaped, the product may not flow easily into the
package.
Packaging considerations related to distribution and safety are important and numerous.
If an unacceptable portion of the goods are damaged during storage, transportation, or
distribution, the package has failed. Likewise, if the package injures the user, future sales
could be lost or the company could be liable for damages. As a result, packaging
engineers face numerous technical considerations that have a residual impact on the final
look and feel of the package. For instance, packages must be able to withstand the
pressure of several other crates stored on top of them. They must also be able to resist
moisture, adapt to temperature changes, and withstand rough handling. From a cost
standpoint, packages must also be designed to suit standardized transportation
requirements related to weight, size, and durability. Finally, they should be designed so
that the bar code on the package is easily scanned.
Furthermore, packages should ideally be designed to handle normal use by consumers.
Examples of packages that may result in harm to consumers include: those with sharp
edges, such as some pull-top canisters; glass containers; and heavy item boxes which
might break when the consumer is carrying them or cause strain or injury to the consumer
when picked up or set down.
The fifth basic group of functional packaging requirements relate to laws and legislation .
Various federal laws have been passed to protect consumers from misrepresentation and
unsafe products. For instance, some laws require that potentially dangerous goods, such
as gasoline or drugs, be stored in specially constructed containers. Other laws forbid
producers from misrepresenting the quality or quantity of a product through misleading
packaging. Perhaps the most influential class of laws that affect packaging, however, is
that related to labeling.
PRODUCT LABELING The label

is the text printed on a product package or, in the case of

items like clothing, attached to the product itself. Legally, labels include all written,
printed, or graphic material on the containers of products that are involved in interstate
commerce or held for sale. The main body of legislation governing packaging and
labeling is the Fair Packaging and Labeling Act of 1966. It mandates that every product
package or label specify on its "principal display label" (the part of the label most likely
to be seen by consumers) the following information: 1) the product type; 2) the producer
or processor's name and location; 3) the quantity (if applicable); and 4) the number and
size of servings (if applicable). Furthermore, several restrictions apply to the way that the
label is displayed. For example, mandatory copy required by the act must be in boldface
type. Also, if the company is not listed in the telephone book, the manufacturer's or
importer's street address must be displayed.
Other information required by the act relates to specific foods, toys, drugs, cosmetics,
furs, and textiles. For instance, under the act labels for edible products must provide
sodium content if other nutritional information is shown. They must also show
ingredients, in descending order from the one of highest quantity to the one of least

quantity. Certain food items, such as beef, may also be required to display qualitative
"grade labels" or inspection labels. Likewise, "informative labeling" may be required for
products such as home appliances. Informative label requirements mandate information
about use, care, performance capability, life expectancy, safety precautions, gas mileage,
or other factors. Certain major home appliances, for example, must provide the estimated
cost of running each make and model for one year at average utility rates.
Congress passed significant new labeling legislation, the Nutrition Labeling and
Education Act of 1990, that became effective in the mid-1990s. This act is intended
primarily to discourage misleading labeling related to health benefits of food items.
Specifically, many package labels subjectively claimed that their contents were "low-fat,"
"high-fiber," or possessed some other health virtue when the facts indicated otherwise.
Basically, the new laws require most food labels to specify values such as calorie and
cholesterol content, fat and saturated fat percentages, and sodium levels.
SALES REQUIREMENTS In

additional to functional requirements, product packaging must

be designed in a way that will appeal to buyers. The four principal merchandising
requirement areas are: apparent size, attention drawing power, impression of quality, and
brand-name readability.
Apparent size entails designing packaging to look as large as possible without
misrepresenting the actual contents. This objective can be achieved by ensuring that the
panels or dimensions of the package most likely to be viewed by the consumer are the
largest, and that the product or brand name is shown on the most visible areas in large
letters. In addition, the package can be made to look larger by using solid colors and
simple, bold designs free of borders, superfluous art work, and unnecessary print. The
pretense of largeness is particularly important for packages containing commodity items,
such as rice, driveway salt, and canned fruit or vegetables.
Attention drawing power refers to the aesthetics and obtrusiveness of the package design.
Depending on the product and the goals of the marketers, the package may be made to
appear attractive, exciting, pure, soft, sexy, scary, intriguing, or to evoke some other
emotion. In most cases, though, the product is displayed on the front of the package in the
form of a picture, art, or see-through window. In addition, bright colors, glossy stock,
obtrusive carton displays, and other elements can garner positive attention if used
prudently.
A quality impression is an important sales requirement for packaging because items that
are perceived to be of low quality are usually assumed to be a poor value, regardless of
price. Examples of packaging mistakes that convey low quality or poor value include:
faded lettering or colors, tacky designs or strange typeface, outdated pictures and designs,
and cheap construction.
Readability is the fourth basic sales requirement for successful package design. This
element is of paramount importance for products like breakfast cereal that are shelved
next to several competing brands and products. If the package attempts to convey too

many messages, it will likely fail to connect with the consumer. Because of the mass of
buying choices, buyers typically do not take time to absorb messages on packaging, with
the possible exception of high-priced specialty items. Among other guidelines, letters or
logos should be large and printed in the same type style as that used in complementary
print and television advertising. The requirement of readability contributes to the
difficulty in packaging completely new products.

PACKAGING STRATEGY
One of the most critical roles for packaging is promoting products. Indeed, just as easeof-use and readability are elements of the strategic packaging mix, packaging is an
important part of a company's strategic marketing mix. Most packages for consumer
products are designed for one of three purposes: 1) to improve the packaging of an
existing product; 2) to add a new product to an existing product line; or 3) to contain an
entirely new product.
Redesign of packaging for existing products may be prompted by several factors. Many
times, a company may simply want to breathe new life into a maturing product by
updating its image or adding a new feature to the package, such as an easy-pour spout.
Or, a company may redesign the package to respond to a competitive threat, such as a
new product that is more visible on the shelf. Other strategic reasons for package
redesign are: changes in the product; economics, which may require less or more
expensive packaging; product line restructuring; alterations in market strategy, such as
aiming the product at a different age group; trying to promote new uses for a product; or
legal or environmental factors that lead to new materials or technology. Even small
packaging changes for established brands and products typically require careful
consideration, since a great deal of money is often at risk if a company alienates or
confuses customers.
A second reason for package redesign is to extend a product or brand line. In these
instances, the packaging strategy usually reflects an effort to closely mimic the
established brand or product, but to integrate the benefits of the new feature into the
existing package in such a way that customers will be able to easily differentiate it from
other products in the line. The chief risks inherent in packaging for extensions are that the
new package will confuse customers or frustrate retailers.
The third impetus for package design is the need to generate housing for an entirely new
product. This is the most difficult type of packaging to create because it often requires the
designer to instill consumer confidence in an unknown product or brand, and to inform
the buyer about the product's uses and benefits. Packaging for products and brands that
are entirely new to the marketplace are the most challenging to develop. In contrast,
packaging for goods that are entering established product categories require less
education, but they must overcome established competition. A common packaging
strategy for such products entails mimicking the packaging of leading products, which
helps to assure the buyer that the product is "normal."

FURTHER READING:
Boyd, Harper W., Jr., and Orville C. Walker, Jr. Marketing Management: A Strategic
Approach. Irwin, 1990.
Clark, Ken. "Packaging for Profits." HFN: The Weekly Newspaper for the Home
Furnishing Network. August 25, 1997.
Hisrich, Robert D. Marketing. Barron's Business Library, 1990.
McCarthy, E. Jerome, and William D. Perreault, Jr. Basic Marketing . Irwin, 1990.
McMath, Robert M. "Too Much of a Good Thing: A Perfectly Sound Product Idea can be
Sidelined by Attractive but Impractical Packaging." American Demographics. December
1997. "Packaging at the Turning Point." Consumer Network, 1999.
Quail, Jennifer. "Packaged for Profit." Supermarket News. October 18, 1999.
Schoell, William F., and Joseph P. Guiltinan. Marketing: Contemporary Concepts and
Practices. Allyn and Bacon, 1992.
Sook Kim, Queena. "This Potion's Power is in Its Packaging." Wall Street Journal.
December 21, 2000.
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