In order to be successful, it’s critical that positive economics result from the The Four Cs. Changing an existing package configuration in an attempt to better meet a Consumer need will often add unit cost and capital. The more radical the change, the higher the cost and therefore the greater the business risk. As such, the reluctance on the part of management to invest in new equipment and technology commonly results in a compromise to the product. When a Category is void of real packaging innovation over time, Consumers do not have a choice but to compensate in their own innovative ways.
Accordingly, the apparent lack of Consumer complaints (even with the ease of 8oo numbers) gives rise to a perception that there is no issue with the current packaging. But there are sufficient statistics in the Consumer research industry to show that a lack of consumer complaint is not a good gauge of product quality. Technical Assistance Research Programs Institute (a Washington based consulting firm) conducted a study and found that on average, 96% of unhappy Customers never complain. For every complaint heard, the average Company has 26 other Customers with the same problem. This is not a good thing! It’s critical to uncover Consumer insights beneath these camouflaged issues and create innovative packaging solutions to better address these Consumer needs.
To be more effective in selling innovative packaging solutions within an organization, there are three tenets of success: 1) demonstrate how this new packaging idea can strategically differentiate your brand from the competition, 2) gain alignment on The Four Cs with a focus on solving a relevant consumer issue, and 3) achieve positive economics.
First, innovative packaging can differentiate your brand from the sea of look-a-likes at the shelf level. It’s also a signal to Consumers that you have listened to their problem and have fixed it for them. Innovative packaging solutions can also generate barriers to entry to your competition; it will take them time to catch-up.
Second, bringing together cross-functional experts (from Marketing & Sales to Manufacturing & Logistics) to solve this Consumer packaging issue can lead to powerful new ideas. These ideas can benefit Customers, Category and your Company. A notable example was the StarKist Tuna’s launch of the Flavor Fresh Pouch in June 2000. This retorted foil pouch refreshed the Category by meeting/exceeding the needs of Consumers and bringing in new users. For the first time, tuna became more portable, more Convenient to open and use, and raised the bar on quality—a more consumer preferred flavor for flaked tuna. From the Customer standpoint, the pouch offered greater logistic and shelf efficiencies along with a much bigger front panel graphics than a traditional metal can. From the Company’s (then a unit of Heinz) perspective, the unit price of the pouch at launch was twice that of the can with only one-half of the stated weight of the can. Although the pouch carried a higher cost than the can, you can imagine the margin improvement. Furthermore, the shelf impact for this new pouch for StarKist was unavoidable; it was clearly different from their competition.
Third, generating positive economics is a must. This can be achieved by bundling up the benefits resulting from aligning The Four Cs. Your pro-forma should rely heavily on the hard benefits (e.g. cost savings, premium price) while showing upsides from the potential soft benefits (e.g. increased displays, higher distribution, etc.)
Remember, there are ways to prosper from innovative packaging solutions. You can be much more effective within your organization if you understand your Company’s decision-making process and focus on those key drivers. The fundamental principal, however, is to elucidate how the new packaging will better meet the needs of the Consumers. Then worry about Customers and the Category in which you and your Company operate.