Maximising Packaging Innovation ROI (when sales are down)


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We had the privilege of presenting at the Atoz Innovation Village workshop in Prague recently. My topic was 'Packaging Innovation when sales are down' and i've transcribed my presentation and notes here so that you can follow along. Enjoy!

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Maximising Packaging Innovation ROI (when sales are down)

  1. 1. KNOWLEDGE PACKAGING INNOVATION maximising ROI when sales are downPresented at Innovation Village, June 09, 2011 Hey  there,     We  had  the  privilege  of  speaking  at  the  wonderful  Innova&on  Village  workshop  last  Thursday,  put  on  by  Atoz   Publishing  and  Atoz  Events.    For  those  that  were  not  able  to  a@end  (or  even  for  those  of  you  that  did)  here  is  an   annotated  version  of  my  talk  which  should  give  you  a  sense  of  the  content  and  hopefully  a  bit  of  inspiraEon.       If  you  have  any  quesEons  or  comments,  don’t  hesitate  to  contact  me  at  d.kaufman@cg-­‐   Best  regards,   Douglas  Kaufman,  Cocoon  Group  
  2. 2. When  originally  given  the  theme  for  this  event,  I  immediately  thought  of  the  legend  of  the  guy   that  went  to  the  Colgate  boardroom  with  an  envelope  in  which  he  says  he  has  a  formula  to   instantly  increase  sales  of  all  toothpastes  10%,  and  that  he  will  give  them  the  envelope  for  1   million  dollars.      In  this  parEcular  legend,  the  board  of  Colgate  is  a  sporEng  bunch,  and  they  take  the  guy  up  on   his  offer.  So  he  hands  over  the  envelope.  Any  idea  what  was  wri@en  on  the  paper  inside?  “A guy walks into theColgate boardroom…”
  3. 3. Simply  increase  the  diameter  of  the  package  opening  4.5%  and  sales  will  go  up  10%  as  people  will  use  that  much  more  toothpaste  per  usage.      So,  even  if  you  forget  everything  else  I’m  about  to  say,  remember  that  you  just  got  1  million  dollars  worth  of  packaging  innovaEon  advice  right  there.   +4.5%
  4. 4. The brief…Give a 30 minute presentationon “packaging innovationwhen sales are down” So,  originally  I  was  given  this  brief  by  Jeff  to  give  a  30  minute  talk  on   ‘packaging  innovaEon  when  sales  are  down’  which  seemed  straighorward   enough  –unEl  I  actually  got  home  and  began  wriEng  this  presentaEon.     At  which  point  several  quesEons  came  up  which  would  profoundly  affect   what  the  content  of  the  presentaEon  would  be.  For  instance…  
  5. 5. Whyare sales down?
  6. 6. Whyare sales down?Are we ina recession? Because  if  so,  there  are  several  pack   innovaEon  strategies  we  might  follow   to  help  us  weather  the  bad  economy.   Firstly…  
  7. 7. Can we lower ourbottom line?
  8. 8. If  lowering  costs  is  the  objecEve  then  the  best  way  to  innovate  your  packaging  might  be  to  get  rid  of  it.  Over-­‐packaging  is  on  people’s  minds  these  days  so  a  move  to  less  material  could  mean  not  only  an  easing  of  your  budget,  but  could  also  make  you  more  popular  with  consumers.    It  could  also  make  you  more  compliant  with  gov’t  regulaEons.  Sainsburys  is  currently  the  first  retailer  being  sued  by  the  government  for  over-­‐packaging.  
  9. 9. Do  you  really  need  all  of  those  flashy  colors?  A  minimalist  look,  using  less  ink  will  save  you  money  and  give  you  a  more  sophisEcated  look  and  feel.    And  before  you  go  saying  “it’s  all  well  and  good  for  these  niche  products  to  go  minimalist,  but  I’m  in  a  mainstream  product  like  juices  and  fruit  drinks.  We  need  lots  of  colors,  shiny  eye  catching  materials,  shrink  sleeves.  It’s  just  the  way  the  category  works.”…    
  10. 10. Well,  here  is  your  category  leader  –a  simple  2-­‐3  color  design  on  recycled  paper  on  a  standard  bo@le.    Something  innocent  ‘gets’  that  we  all  tend  to    forget  -­‐Simplicity  catches  and  holds  our  a@enEon  through  the  clu@er  of  flashy.    Now  innocent  is  the  ‘thought  leader’  as  well  as  the  market  leader  in  smoothies.      And  if  this  isn’t  convincing  enough….  
  11. 11. The  biggest,  boldest  brand  in  the  world  just  simplified.  Not  only  does  this  return  the  brand  to  it’s  iconic  roots,  it  also  saves  them  a  ton  of  money  as  fewer  colors  are  used.      I  don’t  know  the  exact  number  of  colors,  but  somewhere,  there’s  a  guy  that  makes  yellow  ink  who  cries  himself  to  sleep  every  night.   75,380,201,500 Cans printed yearly
  12. 12. Can we innovate the waywe create packaging?   In  a  recession  situaEon,  maybe  we  should   innovate  how  we  do  packaging  rather  than   the  packaging  itself  -­‐  finding  a  more   efficient  way  to  produce  your  packaging.       Of  course  there  is.  
  13. 13. Almost  without  excepEon,  print  supply  networks  are  grossly  inefficient.  You  have  brand  managers,  marketers,  trying  to  manage  an  essenEally  technical  process.  Oien  data  and  knowledge  are  in  the  hands  of  the  suppliers  themselves,  making  it  either  too  risky,  too  much  hassle,  or  too  Eme  consuming  to  change  suppliers  to  someone  be@er  suited  to  the  project  or  the  brand.    We  oien  get  a  brief  which  expresses  a  desperate  need  for  revitalizaEon  when  basic  tools  such  as  the  bo@le  type  or  label  size  have  already  been  decided…by  the  printer!!!    
  14. 14.   Oien  its  enough  to  centralize  the  data.  centralize  the   knowledge  and  communicaEon,  freeing  you  up  to  find  the   best,  most  efficient  soluEons  for  each  brand  and  product.   That,  for  instance,    is  we  created  our  division  CG  Artworx*  to   do.  *for  more  about  CG  Artworx,  check  out  our  Knowledge  Center    (­‐  or  our  website  (­‐  
  15. 15. Can we help ourcustomers save somemoney?
  16. 16. Bulk  packs,  economy  sizes,  and  value  packs  save  your  customers  money  and  also  save  YOU  producEon  money!
  17. 17. The  clever  li@le  bag,  aside  from  being  sustainable  and  taking  less  to  produce  is  also  reuseable..further  adding  value  and  punng  an  innovaEve  spin  on  the  typical  shoebox.   Clever little bag -65% paper -60% energy reduction -60% water reduction -60% diesel reduction -10,000 tons CO2 reusable
  18. 18. Whyare sales down?Are sales down becausewe’re in a dull orcommoditized category? Maybe  we’re  not  in  a  recession  at  all.   Maybe  we’re  just  in  a  dull  or  commodiEzed   category.  What  pack  innovaEon  strategies   can  we  follow  in  this  case?  
  19. 19. Can we use packaging to bustout of our category and enternew ones?
  20. 20. Salt: the ultimate commodity
  21. 21. Design  is  a  tried  and  true  way  to  bring  value  to  a  commodiEzed  category.  Especially  3D  design.  It’s  not  enough  to  try  to  put  a  pre@y  picture  on  the  same  old  plasEc  bag  and  think  we’re  going  to  bust  out  of  commodity-­‐hood.  Think  material.  Think  shape.  Think  outside  the  bag!  
  22. 22. Another  innovaEon  strategy  in  a  highly  commodiEzed  category  is….no  innovaEon.  SEck  to  your  roots  even  as  your  compeEtors  try  gimmick  aier  gimmick  to  reinvigorate  the  category.    You  will  stand  as  an  icon  that  stands  for  stability  and  security.      This  is  obviously  a  long  term  strategy.  
  23. 23. Whyare sales down?Are sales down againstour competition? Another  reason  sales  might  be  down  is  against  our  direct   compeEtors  who  are  either  more  acEve,  undercunng  us  with  price   or  promoEon,  or  seen  as  a  be@er  value  for  whatever  reason.       Packaging  innovaEon  can  help  us  recapture  a  leadership  posiEon  in   consumers  minds.  
  24. 24. For  pack  innovaEons  to  do  this  most  effecEvely  –to  bring  real  long-­‐term  value,  they  will  provide  a   sense  of  novelty,  accessibility,  funcEonality,  and/or  brand  relevance.     Heinz  tomato  ketchup  is  a  great  example  of  a  leader  under  pressure  from  compeEtors,  private   labels,  and  newer  condiment  choices  who  re-­‐captured  a  sense  of  category  leadership  through  real   packaging  innovaEon.  The  result  was  a  product  that  was  be@er,  more  a@uned  to  consumer  needs,   and  Heinz  seemed  like  the  most  up  to  date,  modern  brand  out  there.   Suddenly  everyone  was  rushing  to  …catch-­‐up!*   Novelty Accessibility Functionality Brand relevance*note  to  self…word-­‐play  jokes  do  not  translate  well.  
  25. 25. Sometimes it’s simplyabout creatively applying technology to fit your brand and your product
  26. 26. What role does packagingplay as part of theinnovation pipeline? What  if  we’re  not  talking  about  packaging  innovaEon  at   all,  but  packaging’s  role  in  product  innovaEon?       Well,  I’ve  got  some  advice  for  you  here  as  well…  
  27. 27. Unless  everyone  coming  into  the  store  has  seen  your  million  dollar  TV  advert  and  is  rushing  out  specifically  to  buy  your  new  product,  then  packaging  plays  the  most  crucial  role  of  all  in  product  innovaEon…   Communicating the new value proposition
  28. 28. Tools  are  all  right  here...      USE  THEM!    (again,  it’s  not  just  slapping  on  new  pictures)   Shape Color Nomenclature materials
  29. 29. Gums  are  a  great  example.  Originally  for  kids  and  full  of  sugar.  When  sugarless  gum  came  out,  gum  manufacturers  needed  to  convey  that  this  was  not  a  children’s  product  anymore.  
  30. 30. Every  tool  was  used  –color,  nomenclature,  materials,  shapes,  etc.  to  build  on  the  idea  that  gums  are  an  almost  medical  product  for  adults.  
  31. 31. Why Sales are Down… A recession situation innovate to lower costs innovate for greater process efficiency innovate to find savings for customers A commodity situation innovate to change categories value through design (especially 3d) don’t innovate –celebrate your heritage A competitive situation innovate to regain relevance innovate to capitalize on new techs
  32. 32. As part of new product development Packaging is often the first, best, and only chance at the point of sale to convey the new value proposition!
  33. 33. Conclusion:What do all of thesestrategies and tactics havein common?
  34. 34. An  investment  in  brain  power.      When  sales  are  down  for  whatever  reason,  It’s  not  about  spending  less.  it’s  about  spending  smart.  And  smart  means  invesEng  in  brains.  If  you  get  the  right  creaEve  partners,  they  can  help  you  save  money  on  materials.  Save  money  on  prinEng.  Save  money  on  distribuEon  or  even  producEon  if  that  is  part  of  the  objecEve  of  the  brief.    If  you  try  to  save  money  by  holding  a  pitch  or  lowballing  your  agency,  you  will  absolutely  not  get  the  best  soluEon.  And  If  sales  are  down,  you  cannot  afford  not  to  get  the  best  soluEon!    Remember,  it’s  about  return  on  investment–Making  money!  Not  saving  money!        
  35. 35. Thank you for your attention.For more information, please contact:Cocoon GroupDouglas Kaufmand.kaufman@cg-eu.com00420 603 840 287U Pruhonu 13, Prague, Czech Republic 170