This is the edited transcript of the Contract Packaging Association's webinar, Driving Consumer-Centric Packaging and Product Innovation, with presenters Brian Wagner, co-founder and vice president of PTIS, and Phil Roos, CEO of Great Lakes GrowthWorks.
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Back in 1997, I joined the Kellogg Company, and I was really fortunate to have an opportunity to lead an innovation initiative, starting with linking with the best-of-the-best globally, in terms of consumer insight specifically for packaging. And I worked with a son-in-law of this gentleman, Louis Cheskin, and unfortunately never got to know him. He passed away in the early '80s. But I subsequently read all of his books - and he wrote a number of books. He was just an incredible leader and coined the term “sensation transference,” which is really about looking at a product or a package and forming judgments around the qualities of what's inside it, of how it's going to perform, how it's going to work. And even in the case of packaging, how it's going to taste.
Cheskin helped create the Marlboro Man, and the Gerber Baby. He was responsible for the Tide box, the black swirl on the orange background, and even launches of the Ford Mustang and Lincoln Continentals. All of which were great successes and all of which leveraged sensation transference. So, when you saw features and attributes of a design, you connected that with how you expected the product was going to perform.
One quick example in the packaging world, goes way back when probably people drank more brandy, frankly. But the leader in the area was E&J Gallo. They had the number one brandy. Christian Brothers worked really hard to develop an equivalent or better brandy in terms of blind taste testing. And then they put it in the bottle, and they put it on the shelf, and they couldn't get out of the bottom slot in the marketplace. And they couldn't understand why. And so, Louis Cheskin got involved and he put the Christian Brothers brandy in the E&J bottle and vice versa. And sure enough, the Christian Brothers brandy got better taste test results when you could see the package and when you could see the brand.
And then they started to strip away the features. They took off the labels. They did a number of different things and finally found out that the thing that made the big difference was the Christian Brothers brandy had a bottle that was more like a wine bottle, which was perceived to be inferior to brandy in terms of the product. And so, all they did was change the silhouette of the bottle. Went back to the same branding, the same color, and they took over the number one slot ahead of E&J Gallo.
Testing and Learning
When Phil and I met, he had just started the Arbor Strategy Group and acquired a collection of what we called ‘new and once new’ products. He acquired it from a mutual friend, the late Bob McMath, who was just an amazing guy and had started this collection something like 40 years earlier. When you think about hundreds and thousands of products that are launched every year, in fact it's in the tens of thousands, launched every year in the United States, some of the research suggests that 90% fail within the first three years. There's some other research that says that most product lifecycles are only three to five years long. And we know that the contract packaging and manufacturing industry is playing such a huge role because the big brands can't afford to build brick and mortar factories anymore. And so being able to test and learn is such an important part of our industry and in the food and beverage and consumer product industries.
Bob McMath was on almost every major network. He was on the Tonight Show. He told these stories, which were so entertaining for people: Frito Lay Lemonade was actually a product at the time. It didn't last long in the marketplace. Clairol launched a ‘Touch of Yogurt’ shampoo. People actually thought it was yogurt, not shampoo, and they thought they were supposed to eat it. The ‘Wine & Dine’ dinner was kind of an elegant poultry-based Hamburger Helper and you took these ingredients, and you mixed them with the chicken, and you cooked them. But people were perceiving that that wine was for drinking while you cooked. But in fact, it was an ingredient intended to be part of the mix. It also failed miserably.
It’s kind of entertaining, and kind of interesting, that the big brands who should know what they're doing in terms of consumer insight frankly don't get it right that often. And they seldom really understand packaging very well. And therefore, there's opportunities for some of you as leaders. And whether you're in a packaging department in a brand, or you're with a supplier company, or an OEM, or with a contract manufacturer, if you really want to differentiate yourself, there's an opportunity to take your new solutions and test them with consumers before you take the potential solution to the big brands.
So, what does it all mean? Obviously to me packaging is the product. Purchase decisions are made at shelf in something like 4.6 seconds. I'm not sure what the research is for e-commerce and online, but consumers make up their mind very quickly and in doing research, it's really how you talk to them, get at their needs, understand attitudes and actual behaviors, and observation is critical to packaging. And I always talk about the need for creative people, engineers, marketing, branding, involving suppliers and research because we all see potential solutions very differently. It's a best practice. Not a lot of companies do it. So, you can't just test in a sterile conference room. You need to get into people's homes, into their cars, at their workplace, the places where they're using products, to really get the best insights.
And then you need to recognize packaging is really integral to product development, not an afterthought. It's part of a brand, it's part of a product, and it needs to be prioritized as such.
We live now in a world that's changing at warp speed. And if you need to be reminded of that, just reflect back on the last three or four months. It just seemed like a whole new world every week or two. In that kind of a setting, it's not enough to go talk to your consumers and figure out what their needs are. You really have to marry that with an understanding of foresight. How is my world going to change in the next three or four years? Because I think that, for most businesses, everything's up for grabs; our business models, our customers, the way we do business.PTIS LLC, GL GROWTHWORKS LLC
An evolution in how people shop - we all know about e-commerce in general and the impact that's having. But there are many dimensions to it. There's ease of being able to make a purchase. That has big implications for packaging and product and the way it's designed to facilitate that. Experiential aspect of shopping as well. People want to buy more than a product in a package. They want an experience out of it. The whole direct-to-consumer and home delivery world has really revolutionized the businesses we're all in.
Ubiquitous Tech - tech is in everything we do in one way or another, even if it's just how we order. Competition that we never knew existed. People who are selling things that we might sell, but they're selling them on the web or selling them in some other channel. And it's turned out to be a tough thing to track, to answer that question, “who is my real competition?”
Consumers Who Care - that's really about people caring how their brands respond to different situations. And we see that right now with the Black Lives Matter protests. We see it with COVID and the health risks. But the way that a brand or a company, the view they bring to the world, how they respond to the things going on in the world around us is really important. People buy or don't buy based on that.
Sustainability - we're all very familiar with that. That's assumed here to stay and constantly evolving. Brands as Stories - that's one of those profound implications for packaging because packaging in many cases may be the primary way that those stories get conveyed, and we have to convey in a simple way not with a million words. Some of the innovation work that we do, we actually do something called a disruptor analysis, which is to look at some of these dynamics but in a very custom way for your industry because they are a little different; they have different manifestations.
If we start with foresight, then we have to match that with insight. Thinking about what would really resonate with consumers, and it's not just the functional needs. It's not going to break, it's easy to handle, all of those kinds of things. But back to Brian's point about sensation transference - we're trying to help express an emotional benefit that the product has, but that can be conveyed and reinforced in the packaging, whether it's somehow a sense of well-being, or connectiveness, or feeling good about myself, or just convey an experience.
Consumer Journey and Research
And a big part of the research that we often do to understand this is mapping out the consumer journey. How do we get to making a purchase decision? What are the influences? And you very often find from that some important promotional drivers that need to be conveyed in whatever new products or packaging we're bringing to market.PTIS LLC, GL GROWTHWORKS LLC
Brian's talked about the importance of understanding the consumer, bringing them into the process. And sometimes if you're a contract packaging company, a contract manufacturer, you may be delivered an idea that has some development work has happened with consumer input, but often the package itself hasn't really been integrated into that process. And I just wanted to make the case that that's really important for them to do. It's important to do very early in the process because sometimes the packaging can be the thing that drives success or failure, and it actually conveys all the wonderful things you want to convey.
In the early part of consumer research - this can certainly be done perhaps in focus groups, ethnographic research. But there are online approaches to this that have been really proven. They've been around for 10-15 years and constantly evolving. And some of the things that we used to think we had to do live, we're finding can be done quite effectively, sometimes even better and more affordably, in a virtual format.
There's the more conventional approaches of focus group and individual depth interviews, which really bring to life the voice of the customer in a way where you can actually see their reactions and see if they look at a product or a packaging execution or a conceptual idea, a drawing or illustration of such, you can see which things light up their faces. And that's really important.
But I want to make the case for something Brian said earlier, which is the importance of contextual research that's not done in a focus group realm, but it's done in the real world of the consumer's life. The classic there is ethnographic or observational research where you're observing and interacting with consumers in their homes or when they're shopping. And you're doing as much observing as you are actually asking them questions. But there's a way to actually augment this with them doing some online blogging that can be connected to that where they're recording some of their behavior over time, some of their observations, some of their feelings.
But what if you're already developing the sense of an idea, but now you want to really get to the idea execution? Or maybe you're working on a whole range of different ideas. There's the whole consumer co-creation aspect of that. That we would now transfer all of our work in that space to an online format. We used a combination of what we call online boards, so it's basically a way that we work with a consumer or a set of consumers over time and we give them a series of activities. And often what we'll start with is insights that we would've gathered in the first phase, in the early stage of consumer work. So, these would be a set of statements, accepted beliefs, or statements about problems that consumers ran into for which there might be a need for a new product to address.
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I wouldn't underestimate the value of talking to consumers right now. What we find in the COVID environment when people are holed up at home, some things that were small latent needs, problems become really big when you're in a limited environment. And I think it's actually an excellent time to go out there and find out what some of those are and be on the leading edge of addressing them as we roll out of this. So bottom line, stay connected to your consumers and users of some of your products and packaging. I think that's real important.
Don't be afraid to innovate now. There are companies and I would say competitors out there who have taken that time, the last two or three months, to figure out how the world’s going to be different. Where are my consumers, and how do I bring to market products that will make a difference? And I think it's also an opportune time if you're a contract packager or contract manufacturer to begin bringing some of those ideas proactively, to the brands that you're working with because they're looking for ideas right now.
Definition of Design, Value, and Emotion
I thought about our definition of design as we think about packaging. It's the look and feel. It's the form and function. And sometimes most importantly is the emotional connection to the brand. And a lot of people, especially technical folks and men for that matter, say that they don't shop emotionally; they shop logically, practically. But the truth is the research shows most purchase decisions are actually 80% emotional.
How do you communicate value through packaging and package design? Cost is always easy to quantify and easy to focus on. But the real and perceived benefits that packaging can communicate and deliver about the brand and about the product are really crucial. They tend to be emotional. They tend to be about things like relevance and differentiation, delivering portion control, or communicating the brand message as a brand asset, emotional fulfillment. They're all very difficult things to quantify. And business decision makers love to quantify things. But frankly the most important things that go through the consumer's mind when they purchase are emotional and not always quantifiable. So, it's an important thing to keep in mind when doing research.PTIS LLC, GL GROWTHWORKS LLC
What this means for contract manufacturers, contract packagers, and also everybody along the value chain: We know that packaging influences consumer product perceptions, including things like taste and flavor. It's a critical asset, and contract manufacturers, contract packagers can help deliver the brand promise. Brands want new solutions and value. We hear it all the time. Leading contract manufacturers, contract packagers, and packaging suppliers should monitor consumer trends.
We also know some suppliers who ask to be involved in consumer research with the brand owners. So, when brands go to contract manufacturers and they say, "We'd love to put whatever this thing is, a new ingredient say, in a small pouch or a small sachet and it should really be a unique and novel touch and feel and look with a great convenient opening feature," quite often and way too often what happens is the contract manufacturer or the supplier says, "Well, we can't do any of that. Here's what we can do." And the big brands settle for whatever that solution is that can be manufactured today.
We really see an opportunity to not just be an order taker but to push back on them a little bit. Take this insight and look for ways to modify your equipment and your materials to deliver what the insights really pulled out. Probably the brand owner tested a concept that was a brand message. It was a specific product. It was in a package. It really should stay in that package and not change to something else just because a contract manufacturer can make that something else.
We see collaboration in everything we do as key. If you want to get to market quicker, don't try doing it yourself. Whether you're an OEM, material supplier, converters, even universities, associations, like the Contract Packaging Association, CMCPs, everybody solves problems in new ways. Everybody brings something unique and different to the table and the more you can collaborate the more you're going to be successful.
Products fail for many reasons. That 90% number I shared earlier; it can be bad messaging. It could be one word in an advertisement. It could be a bad package that wasn't the package that was tested. It could be a flavor wasn't quite what was tested in a blind sensory test. And then all of a sudden you put it in a different package, and it changes the perception of how that performs. It could be so many different things. But our job is to help you and help companies to be successful and improve the success rate. Procter & Gamble I think have been quoted as having a 55% success rate. So, 90% average doesn't apply to everybody. There are some really positive exceptions out there. And that gold standard that gets tested in consumer insight testing should be a gold standard that goes into a design brief, a product brief, and a marketing brief. And that's again the look and feel, form and function, design, emotional connection to the brand.
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Questions from audience:
What are some of the leaders with respect to understanding and using packaging to create new experience in solutions with packaging?
We've actually done a fair amount of benchmarking and best practice work around this. I mentioned Procter & Gamble. They've been a leader for a long time. They really see packaging as part of the integrated solution in every one of their products and whatever they have, $20 or $22 billion brands. We hear Nestle's name come up, Unilever's name come up quite often. Who am I missing? Pepsi, Coke. There are a number of companies who do it really well. Very few do it consistently very well. I think most of those I mentioned are great at understanding consumer insight early on and really trying to understand unarticulated consumer needs.
And one of the best practices, and again I think it's Procter & Gamble, is that every one of their leading brands we're at least told that every 18 months they go back to consumers and they test the relevance of their package design. And if for some reason a color needs to change a little bit or a wording or a structural change, they make those changes very subtly so as not to disrupt what's in the consumer's mind.
How soon would you see smart sensors on package and what are the challenges of embedding smart sensors on packages?
So, we know from a lot of our work that three key areas that are crucial in the packaging industry looking out 10 years, one is a circular economy. And trying to figure out how to design products and packaging for the circular economy. Not thinking about disposal at end of life but in reuse. Another one is e-commerce and direct to consumer. It's not going away. It's creating another level of complexity. And then the third one is the Internet of things or the Internet of packaging, which has a lot to do with building sensors in.
It's already being done. Quite often it's being done for those novel reasons, like I can look at a wine bottle and see the criminals jump into my phone or a character jump off the Oreo pack. However, we're seeing, at least in different categories, different parts of the world – for example powdered infant formula. The major brands who are shipping globally - the level of safety, security, and authenticity that's required by mothers of babies when they buy that is enormous. And there's a tremendous amount of work being done to leverage technology to make sure that there's no tampering, there's no copy catting. Making sure that it's truly the brand that they feel confident about.
So, the technology’s there, we've got a number of other examples of technologies that are being applied in Europe and Asia, less so in the United States and I'm not quite sure why. But they're widely available. Again, companies like Unilever, Nestle, Abbott Nutrition, they've been employing some of them. And what's cool is that they provide a total supply chain benefit, not just safety, security, authenticity. But once the codes exist, the opportunity to leverage that technology to carry supply chain data and help your manufacturing and your company from a data and analysis perspective is also an important part that can be integrated in.
Do you believe the consumer is ready to pay for sustainability initiatives?
I think if you take the long view on this with a choice to have a pretty significant conversion to natural materials and to things that fit into a circular economy, will people pay for it? Not so often. I think it may be mandated, it may be through pressure brought on to corporations and brands to move in that direction. That may be what drives it. You'll have some folks who pay a little extra. But I think we've all seen that people's interest in that kind of thing compared to what they're really willing to pay for it are two different things.
Yeah. I agree. Phil's got a great handle on the marketplace and what people will and won't pay for. A few years ago, again, we did work for a major company that was essentially looking at a big investment of biopolymer. It was a supplier company and we talked to I think it was 40-some experts at major brands. 40-some who work on the technical side of the business, research and development, procurement, operations, and another 40-sum who worked in marketing and they were on the brand side of the business.
And we had to go to them and say, "Okay. So, this would be the concept. You could put X amount of this biopolymer into your new package." And they would ask, "Would it cost extra?" And we'd say, "Well, there would be an increase in the cost." 100% of the people we spoke with on the technical side of the big brand company said, "Marketing will never pay for it. All they ever tell us is they want us to take cost out." Over 50% of the experts we spoke with who work on the brand side of the business said, "We would definitely pay more. It would allow us to make a relevant claim in the marketplace. We would either increase the cost of our product or we would take the risk on reducing our margin because we're looking to differentiate our brand. And that would be something, if we could make a reputable claim, that we would consider switching to."
What are your thoughts on consumers in a post-COVID world that changes the direction of the future?
We do a lot of work on the future of packaging. We work with futurists. We leverage foresight. We are making changes. We know that consumers are experimenting more than they have in ages. Brands that we became familiar with because they were at the center of the storm. And they were long shelf life, dry items, canned items. They're eating them now and they're trying them, and they may stay with those. And they may become more familiar with those package formats. So, safety and security is becoming more of an issue.
We can't really predict the future, but there's a lot of things pointing to new opportunities. Think of plastic bag bans in the various states, the bans went away. We think the bans will come back. As Phil said, we've got to take the long-term view and really look at what kind of things need to stick and what kind of things we'll go back to. And e-commerce will not go back to the numbers it was at. They've accelerated and we're getting more accustomed to home delivery of groceries, food. And we need innovation. I think innovation will be necessary and will drive new solutions in all of those areas I talk about, whether it's e-commerce or circular economy or the Internet of things.
One of the things I think is going to be one of the most fundamental changes and I think is going to be important is thinking of brands and companies in a humanized way. And having an expectation that for me to buy a product or service, it has to reflect my values in some way. I think we're seeing that in a world of brand as advocate is much bigger than it ever was.