Loyalty pays - promoting customer loyalty

Packaging Professional magazine
20 Jan 2014

Packaging acts as both a marketing medium and as an integral component of the entire customer experience. Andrew Coker, European Director of Stakeholder Engagement at Asia Pulp & Paper considers packaging’s role in promoting customer loyalty.

Packaging has a much bigger role to play beyond preservation, protection and promotion. It enables brands to communicate directly with consumers, potentially in their own homes and at all times of the day. No other marketing medium is as powerful or has greater reach. Packaging is also key in the customer experience of a finished product, with the frustration factor especially important in determining if a customer gets off to a good start with a new product.

According to a 2012 report by the British Brands Group, consumers are overwhelmed with choice. The average UK supermarket carries around 45,000 product choices and the typical consumer will pick 50 items across a 50-minute shop. This means the consumer is making a choice of one in roughly 900 options every minute they are in-store. Of course, the consumer won’t be comparing 900 options for every single choice – they’re using a shortcut to make a speedy selection of each desired item.

One of the biggest shortcuts is branded packaging. The brand is the shortcut for the consumer to recall all the information they know about the product – whether they’ve had any prior experience, what their peers think and whether they’ve seen any recent advertisements or newspaper articles. Packaging forms a key part of branding. In simple terms, it carries the brand identity through logos, colour choices and design – think, for example, of the instantly recognisable can of Heinz tomato soup. However, the packaging itself is also a key part of the brand identity.

Let’s use online retailer Amazon as an example. Most people would assume that packaging is less important to an online brand that doesn’t have to compete on a store shelf. Yet Amazon’s use of packaging is notably excellent. The company realises that its choice says something about its brand. It focuses on ease of use – transit packaging is cardboard with easy-to-open perforations – but it goes a step further, working with manufacturers, especially in consumer electronics, to provide certified frustration-free packaging, again, predominantly using cardboard. Amazon’s packaging reveals the brand’s focus on its customer obsession value, and its recognition that its choices influence a customer’s decision about where to shop in future.

As a result of their intrinsic role in brand identity, changing package designs or formats carries a certain level of risk. Tropicana found this out the hard way when, in 2009, it attempted a change of logo that appears to have resulted in a 20% decline in sales. However, for every design failure there are plenty of successes, including Kellogg’s, which has taken the Corn Flakes brand through multiple redesigns without losing brand recognition.

Perhaps more interesting is the often positive impact of changing a design. Dr Oetker recently announced a new pack design across its home baking range. From a design perspective, the new look unifies the entire range under one colour – helping consumers to spot Dr Oetker among rival products in the home baking sector. Far more interesting, however, is what the company has done to its packs from a material and format perspective. The brand’s powder tubs – containing products such as baking powder – have gained re-sealable lids, helping to prevent food waste and adding value when compared against supermarket own-brands. In addition, the company moved its decorations range to see-through packs, enabling consumers to see the quality of the product on the shelf. What this highlights is that packaging format and material use is as important a decision in brand promotion and retaining customers as the graphic design.

User experience
One of the most important considerations in packaging is the user experience, yet as Which?’s August 2013 Wrap Rage report highlighted, user experience can often seem neglected. If a consumer is frustrated in accessing a product or, in the case of food and beverage, where the package is often integral to consumer enjoyment, if the package fails to open, generates product waste or injures the customer, they are unlikely to return to the brand anytime soon. In the food and beverage sector, user experience is a hotbed of innovation. In caps and closures alone, packaging manufacturers are spending millions on R&D – reducing the required opening force for a cap, inventing the perfect pouring solution or working out how to optimise a closure for onthe-go consumption. This focus on user experience is something other sectors can learn from. While the toy packaging industry has moved on in leaps and bounds in recent years, this Christmas will almost certainly feature horror stories on Mumsnet of sealed plastic clamshells and scissors or endless wire tie-downs. Packaging needs to balance the need for protection against the risk of customer frustration.

The final aspect to discuss in how packaging can promote customer loyalty is the relevance of sustainability. Consumers don’t like packaging waste, and packaging businesses need to find a healthy balance between product protection and the packaging’s impact on the environment. Sustainability is, however, a bit of a red herring when it comes to packaging. Should a business prioritise renewable resources, or ones that can be recycled indefinitely? What about the impact of weight or efficiency in logistics?

A far more useful approach, and that advocated by PwC, is to focus instead on packaging efficiency. This is a much more nuanced option that looks at the bigger picture, focusing on minimal resource consumption in production, effective product protection, transport and display efficiency, and efficient after-use disposal and recycling. This approach is driving a renaissance in demand for paper and board – materials that are inherently lightweight, renewable if managed responsibly, and recyclable and biodegradable at end-of-life. What’s more, paper and board technology has advanced to the point where it is now capable of deployment in new situations.

Consumers value packaging efficiency, and offering an environmentally superior package can also be a differentiation point for many brands. New Covent Garden Soup Co has long used cartons and this enables the brand to stand out in the chiller against a multitude of rivals, most of which use plastic pots. From a logistics perspective, the cartons can be packed much closer together, resulting in a tangible logistical saving with potential benefits for the environment.

Customer loyalty in 2014
With the start of a new year, many brands will be thinking about how they can expand demand and retain customers gained during the recession. The packaging industry can play a key part here. I expect we will see several re-launches and NPD, with new designs competing for attention on shelves. Far more interesting, however, will be looking at shifts in materials, formats and packaging innovation. We have seen how packaging can help to communicate brand values, and facilitating ease of use is a value all brands should seek to promote.

Separately, I expect we will see a renewed focus on packaging efficiency as end-consumers demand better designs with a lower environmental impact. We know that consumers view their packaging experience as part of the brand experience, and promoting a better package is a simple way for packaging manufacturers to help brands retain and attract customers. Packaging both carries and is part of the brand identity. As we head into 2014, ask yourself, what does your package say about your brand?

For more information, email Andrew Coker acoker@europe-app.com