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Thursday, August 14, 2008

 

Branding in the packaging industry



Packaging buyers tend to stick with branded products because they’re familiar with them and they know what they are getting. Generally, most successful packaging suppliers follow a strategy based on building brands.

What comes to your mind when you think of Bubble Wrap, Tyvek, and Valeron? These are all well recognized brand names in the packaging industry that are known not for what they are made out of but for what they do. Their suppliers — Sealed Air Corp., DuPont and Valeron Strength Films (formerly Van Leer Flexibles), respectively — could completely change the underlying material of construction, but their users will continue to buy these as long as they perform the functions that the brand is associated with.

Despite this, it continues to amaze me that the number of well recognized brands in the packaging industry is still so small. Our industry has been so focused on product attributes, manufacturing capabilities and materials of construction that we have failed to build brands.

The traditional approach to marketing in our industry has been rather product-centric. The basic assumption has been that if your product is superior to competitive offerings, customers will simply rush to buy it. Secondly, it has been generally believed that the customer is technical-competent enough to disregard the marketing message and evaluate the product strictly on its attributes and performance.

Thirdly, customers have been successful in commoditizing packaging materials so that they can negotiate better prices, and suppliers have fallen into this trap by introducing products that are practically indistinguishable from competitive products (or, in other words, customers do not always like brands because they are reluctant to pay premium pricing).

But why do companies continue to buy branded products despite the availability of cheaper/better alternatives? The answer is relatively simple: because they are guaranteed a definite level of performance on a consistent basis.

Developing brand equity
To develop brand equity, packaging suppliers must consider a number of factors regarding their product(s):

Performance: While the basic concepts of brand equity in the packaging industry are the same as those for consumer products, there are a few subtle differences. While heavy advertising with creative commercials may lead to building a consumer brand, this is not enough in our industry. Remember, the customers of these products are knowledgeable enough to still evaluate a product on its merits. Thus, you have to make sure that your product is as good as other competitive products.

Innovation: Product innovation is extremely critical to buyers of packaging materials. As companies struggle with either increasing shelf-appeal or reducing damage during shipping, they look to their packaging supplier for innovative solutions. Make sure that your product development does not become stagnant. Instead, as customers’ needs change, your product must continue to operate at the cutting edge.

Addressing product problems: There are innumerable examples of how companies can destroy years of brand equity simply by poor handling of product problems. The only time when product problems do not affect brand equity is when management reacts responsibly by immediately addressing the issue. My simple recommendation is to address a product problem immediately rather than denying it or blaming others.

Features and benefits: Suppliers of high-tech products get so enamored with the properties of their products that they fail to fully advertise what the product does for the customer. While charts and tables are needed, make sure that you connect the features with the benefits. Thus, the advertising message has to strongly emphasize how the product will add value to the user.

Co-branding: Consider a co-branding campaign with your key customers. Perhaps a clearly visible logo on a bag of potato chips with the message “Packaged in [name of packaging product].” While a company like Intel can successfully market an extremely high-tech product to an average consumer, packaging companies do not establish a similar connection with the consumers when packaging might very well be the reason they buy the product.

Look at products as brands: The most important approach to building a brand is to completely redefine the way you internally look at your products. If you think of yourself merely as a supplier of products that have certain attributes similar or better than other products in the marketplace, your customers will perceive these in the same manner and will compare them accordingly. If you think of yourself as a seller of brands that make your customers’ brands even stronger, your customers will start setting your products apart from competitive products.

Impact of brand equity on profitability
There is no hard evidence at this time that developing brand equity alone will necessarily result in higher profitability. However, my limited research shows that most successful packaging companies follow a strategy based on building brands. It is increasingly important to do so at this time when emergence of e-marketplaces is based on essentially eliminating product differentiation.

I can clearly visualize a future in which a product will either be a brand or a commodity. The former will demand premium pricing while the latter will be traded on an online exchange like any other commodity. Where do you want your products to be?

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How to use great content for marketing?



Packaging buyers are becoming increasing comfortable with using the Internet as a tool to find information prior to making a purchasing decision. Companies who provide effective content and interactivity on their site will grab the most eyeballs and, hence, maximize profits.

The Internet has fundamentally changed the manner in which we obtain information and the amount of information that can be accessed. Remember the days when someone in your organization was able to obtain your competitor’s price list or data sheets or organization chart? It would go into a file marked ‘confidential competitor information.’ Now, you can get the same information within seconds. In fact, companies are beginning to compete with each other in how much information they provide on their websites. It is no longer surprising to see customer lists, examples of applications, detailed product literature and an employee directory.

What’s missing?
The Web is essentially the easiest way for a company to connect with the world and turn visitors into customers by creating a pleasant experience. But the packaging industry has yet to take full advantage of all that the Web has to offer. For example:

  1. In an effort to create an online presence, yet with an unavailability of internal web design professionals, companies have essentially taken their brochures and put them on the Web. It is disappointing to see sites that are not updated regularly, sometimes for months.
  2. Another powerful feature of the Internet is its interactive capability. While a company might need to spend enormous resources to speak over the telephone to 100 customers to find out their experience with a new feature on the company’s latest equipment, a poll on the ‘customers-only’ section of the company’s website will provide such feedback at almost no cost.
  3. The Internet also allows companies to inexpensively answer questions from visitors by providing links to appropriate individuals or, in the case of a large organization, have a customer service rep available either to answer questions through a chat session or by calling back the visitor.

I have yet to see all of these features in a single website in the packaging industry. (I would like to know if there are such sites since I have not visited every single one.)

Providing effective content
As the comfort level with the Internet increases, customers are increasingly using it as a tool to find information prior to making a purchasing decision. The analogy that comes to my mind is that of a trade show. I see trade shows as having a three-dimensional role in business: inform, interact and market. Companies go to a trade show to demonstrate their products (inform), have discussions with potential customers (interact) and differentiate themselves from their competitors (market).

This is exactly what needs to be duplicated on the Internet. You should think about providing such powerful content that visitors feel that they can find out practically anything about the product. This will result in a higher comfort level and, as a result, higher sales. An informed customer is more likely to buy. Customers want to learn about existing applications, benefits to current users and how it compares to competitive products.

I believe you should provide a comparative chart so that customers do not need to go to many different sites to develop one on their own. It would be even better if such comparisons were provided by an independent agency to make sure that they create an impression of being unbiased. This will help users make faster and better decisions and develop a sense of trust in you. Remember that customers in the new economy are armed with information, and you cannot mislead them.

Make it interactive
The second feature that you need to include is interactivity. For example, make interactive product data available so that customers can plug in their specific information and see the product performance. If you have product pictures, make sure it is possible to see them from all possible angles by being able to rotate them.

As purchasing and technical managers use the Internet increasingly as a tool to collect information, packaging companies have to start exploiting it is a powerful marketing tool. A website that looks like a brochure gets treated like one — to be seen only when absolutely necessary and just thrown away otherwise.

Packaging products present a great opportunity to be demonstrated on the Internet, and those who exploit this faster than others are more likely to grab a larger share of the eyeballs and, thus, potential profits.

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