Packaging gets the sale!

It’s a known fact that most consumers are impulse buyers and only decide which items end up in their shopping basket when they are actually in the shop itself. The ideal packaging therefore jumps off the shelf, speaking to the consumer, providing instant persuasive information about the quality of the product. But no matter how appealing the design of a packaging is, functionality is always a prime consideration.

Lego, the Danish toy building brick manufacturer, is deploying a whole bag of tricks to tempt customers. At its Lego brand stores in Denmark, products are now being staged in three-dimensional (3-D), interactive views–to the delight of fans of all ages. The new presentation technology called ‘augmented reality’, enhances the viewer’s perception by using advanced imaging techniques to combine real-world pictures with 3-D computer-generated images.

Entry to the augmented Lego world is provided by a digital box, a terminal equipped with special software. The user takes a Lego product from the shelf and holds the package barcode up to a camera which reads the barcode and projects a 3-D version of the product on a monitor. When the package is turned, the image of the product also rotates, allowing the product to be viewed from all sides. The animation is superimposed on real-world images, which the camera transmits simultaneously. Unlike virtual reality, the augmented reality does not replace the real world, but enhances it with virtual data.

Augmented reality is a technology used by Lego to stage its products as a value-added service to the consumer. (Photo courtesy of Lego)

For Lego, this investment at the point-of-sale (POS) has paid off. “The feedback tells us that this innovative concept is going down really well with customers, who are having a lot of fun using it,” says Helena Seppelfricke, press officer at Lego Central Europe. Lego says it now intends to roll out this new technology to all 50 of their brand stores around the world–including the Calgary store that opened up in 2010 and the Toronto shop slated to open in April 2011.

No Excitement – No Sale

For companies that want to reach the consumer, merchandise must be staged perfectly at the POS. This doesn’t just apply to toys but to all products–from food to luxury items.

“Shops are a hotly contested arena, where the prize is the customer’s attention,” explains Hilka Bergmann, head of the packaging research section at the German retail consultancy EHI Retail Institute adding that the pressure to be noticed at all costs is highest at the discounters.

According to the EHI’s data, the average supermarket in Germany carried some 6,000 articles in the mid-1990s, with that figure having risen to more than 15,000 in 2011. This vast array of products is often confusing to consumers who know very little about individual products, and so, most shoppers will buy a product based on instinct.

Marketing researchers have found that 70 per cent of consumers only decide directly at the POS what ends up in their shopping basket–and this is where the importance of the product’s package leaps out, as it tends to act as a part of the decision making process at the shelf. According to the Munich-based market research firm facit, the influence of the packaging on purchasing decisions is twice as high as that of television advertising, billboards or print media. Manufacturers have know this for decades, and have allocated big money to POS advertising.

According to EHI Retail Institute, spending by product manufacturers in Germany, Austria and Switzerland is predicted to rise by 0.2 percentage points to 10.2 percent of its marketing budgets in the 2009 to 2012 period–and impressive feat considering that the Internet’s web marketing has been swallowing an increasing amount of funds.

At interpack 2011–the world’s foremost event in the packaging industry–held on May 12-18, 2011 Düsseldorf Exhibition Centre, Düsseldorf, Germany, communicative packages will be an important topic. What’s more, the INNOVATIONPARC PACKAGING is holistic display area within the show that will present visitors with themes showing how packaging relates to quality of life: meaning, health, aesthetics, simplicity and identity.

As the quality of life impacts directly on the behavior and the consumption patterns of potential customers, using packaging as a vehicle to persuade these potential customers to buy a product calls for deep insights into target groups and their expectations. In the INNOVATIONPARC PACKAGING, best-practice examples of packages will be presented during interpack in realistic environments relating to each of the five dimensions of quality of life, becoming a sort of mall with a variety of shops.

Investing in packaging that shows off its contents interactively and in 3-D has, however, has so far exceeded the budgets of all but a few companies. Although the more common sales packages and displays don’t provide such deep insights, in the ideal case they assume the role of the salesperson who stands at locations with especially high traffic in a discount or department store–such as gondola ends–ready to offer quick and competent advice about the product inside.

Articles can be even more strongly promoted in retail outlets when they come in ‘special editions’ or with an extra ‘gift’. One internationally known and long-time example of such on-pack solutions are razors that are offered complete with blades–as they used to have to be purchased separately. Other examples include adding travel-sized version of the regular product to the packaging. Also gaining importance are promotional activities where the consumer can learn more about the products, namely food and beverage tasting counters or live events such as cooking shows.

A stiff challenge for designers

That being said, the perfect packaging at the POS is the be-all and end-all–the POS is still just one component in branding, and as such it has to fit seamlessly into the overall concept. The design has to stay within strict limits, since the colors, logo and language are normally predefined.

“In the mail-order business, packages are the only piece of corporate design that consumers can actually hold in their hands,” comments packaging designer Uli Mayer-Johanssen of the Berlin-based MetaDesign agency adding that other factors that are just as important for successful presentation of a product at the point of sale are the stability and ease of handling of the packages.

EHI’s Bergmann explains: “In terms of logistics, displays can be a particular problem if they not sturdy enough, too tall, or the base is too weak to carry a superstructure with a very high point of gravity.”

Clean-lined and simple: Vileda banks on compact cardboard displays at the point-of-sale s it saves material and is easy for retailers to handle. (Photo: STI Group)

Along with the fact that top-mounting display structures could cause it to collapse under the weight of the merchandise, there is also the added risk that it might not even have a chance of arriving intact at the POS. Of course, for the retailer selling the merchandise, ease of display assembly and disposal are key components of product display.

“Displays that are difficult to assemble and take up too much time simply don’t get set up,” states Bergmann.

Another important aspect for retailers is the ease of restocking at the POS. Because displays are normally set up for two to four weeks, it has to be continually replenished during this period. When they are taken down, the remaining merchandise has to be transferred to the shelves. Since retailers have no time to spare for wonky rearrangements, modular displays that can be set up on top of the transport packaging and are quick to install are gaining ground rapidly.

This need to create a multifunctional display does puts manufacturers in somewhat of a dilemma: the packages themselves have to present a perfect appearance, but they must also be multifunctional in order to keep costs down and ultimately to protect the environment. Displays that are taken down after just two weeks and put out for recycling or even trashed are definitely not a good proposition in terms of economy or ecology.

The German display and packaging manufacturer STI Group has found a solution for efficient POS presentation. For the Vileda company it developed a corrugated board display stand for pails, scrubbing brushes and floor cloths with a modular design that reduces the number of parts by two-thirds. The various display types and merchandise selections can be put together using just a few standard elements, which also makes it easy to quickly position new products at secondary locations, reports STI Group spokesperson Claudia Rivinius.

Good looks are not enough

Innovations like these are encouraging the German association of corrugated board manufacturers (VDW) to extol the benefits of their material.

“Corrugated board is highly versatile. Great shopping experiences can be created with suspended ceilings, displays and primary packaging,” says VDW president Rolf Dieter Kögler.

And indeed, corrugated is eminently suitable for displays as it can be recycled, and consumers have long since accepted it as a sustainable material. But other materials such as plastic or metal are also used at the POS.

“For upmarket merchandise, companies often opt for high-quality long-term displays,” says Rivinius of STI Group.

Luxury presentation: Chocolate-maker Lindt presents its merchandise in high-quality long-term displays made from plastic and metal designed to emphasize the high quality of its pralines and chocolates. (Photo: STI Group)

One instance of this is the shop-in-shop solution that the STI Group has created for the Swiss chocolate manufacturer Lindt–a structure made of plastic and metal designed for long-term use and a high impact on consumers. And though ecology is of course a prime consideration, glamor and glitz play an important role in sales packages as well. The Belgian chocolate maker Godiva, for example, offers its praline chocolates in a box finished with a novel, gold-shimmering UV coating made of tiny aluminum platelets – a more exclusive product presentation would be hard to imagine.

Critics claim that such packages are too sophisticated and expensive and ultimately drive up the product price. The food processing and packaging machinery association within the German Engineering Federation (VDMA) counters this with the argument that, by reducing the material input and constantly improving production methods, manufacturing processes are becoming more and more efficient.

Cost savings, it says, can be achieved simply by implementing the latest state-of-the-art technology. In packaging production lines, for example, it is possible to use distributed servo technology, which is more dynamic and efficient that large central drives. Although the upfront investment for these machines is high, this expenditure can be easily recouped during the life cycle of modern machines, if only because they consume less energy–claims the VDMA.

Henkel, the German developer of the UV coating that it supplies to Godiva, puts forward similar reasons, pointing out the increases in manufacturing efficiency which made the finishing of the packages economically worthwhile. According to its producer, the UV silver coating has high storage stability, is ready to use and can be processed at the same speed as conventional UV coatings in standard printing machines.

Packaging machinery manufacturers are also investing heavily in innovations. The Swiss plant manufacturer Ilapak, for example, is currently introducing turnkey packaging lines to the market. The advantage here is that all the machines are optimally adapted to one another, which heightens overall efficiency.

“With complete single-source solutions, the industry can significantly lower its costs per packaging unit,” says Ilapak marketing manager Christian Romualdi adding that at interpack 2011, packaging specialists and product manufacturers will be able to see the innovations from his company for themselves.

For more information on how to attend or exhibit at interpack 2011 to be held on May 12-18, 2011 at the Düsseldorf Exhibition Centre, Düsseldorf, Germany, visit the tradeshow’s website: www.interpack.com.