UNIT 5

Packaging
Packaging is the encasement of products in packages, protective wrappings or other external
covering that can provide protection, information, security and marketing benefits. Common
packaging materials include boxes, Styrofoam peanuts, bubble wrap, plastic, bags, cloth and
cartons.
Protection
The basic benefit of packaging is the protection of goods to be sold. It prevents damage during
transport and storage from the elements, vibration and compression through a physical layer of
protection.
Information
Packaging can provide information to a consumer regarding the product contents. This
information may be promotional, factual or mandated by consumer law.
Containment
Products that contain multiple items use packaging to keep all items contained prior to purchase.
Product containment also allows a product to be sold in larger quantities.
Size and Quantity
Packaging can control the size and quantity of a product. Portion control helps control inventory,
create product consistency and can help regulate prices.
Marketing
Packaging is the front line of marketing. Through design and marketing communications,
packages can help sell a product and differentiate it from similar products. The packaging can
also help promote product branding.
Security
Product security can be provided through packaging. Packing can make items tamper-resistant,
can help reduce theft and can help prevent harm from dangerous products.
Rising Standards of Health and Sanitation:
As the people are becoming health conscious they like to buy packed goods. The reason is that
the chances of adulteration in such goods are minimised.
Self-service Outlets:
Nowadays self-service retail shops are becoming very popular, particularly in big cities. Because
of this, the role of sales assistants has gone to packaging.
Innovational Opportunity:
With the increasing use of packaging more innovational opportunity becomes available in this
area for the researchers.
Product Differentiation:
Packaging is helpful in creating product differentiation. The colour, material and size of the
package makes difference in the perception of the buyers about the quality of the product.
IMPORTANCE OF PACKAGING
Function
The purpose of product packaging is to protect the product from damage. Product packaging not
only protects the product during transit from the manufacturer to the retailer, but it also prevents
damage while the product sits on retail shelves. Most products have some form of packaging. For
example, soups must have a container and package while apples may have packaging for
transport but not to sell the product from the produce department of the local grocery store.
Attraction

How a product is packaged may be what attracts the consumer to take a look on the product as is
sits on store shelves. For this reason, many companies conduct extensive research on color
schemes, designs and types of product packaging that is the most appealing to its intended
consumer.
Promotion
Packaging also plays an important role for portraying information about the product. Outside
packaging may contain directions on how to use the product or make the product.
Facilitates Purchase Decision
Packaging may also contain ingredients and nutritional information about the product. This
information can help to sell the product because it allows potential customers to obtain the
necessary information they need to make a purchase decision. Information contained on a
package may propel the reader to buy the product without ever having to speak to a store clerk.
Differentiation
Packaging can also differentiate one brand of product from another brand. Because the product
packaging can contain company names, logos and the color scheme of the company, it helps
consumers to identify the product as it sits among the competitions products on store shelves.
For example, as a shopper walks through the coffee aisle of the local grocery store, the bright
orange, pink and white packaging of the Dunkin Donuts coffee brand may be easily
recognizable for the consumer to grab on his way by the coffee shelf. The shopper may identify
with the company brand, which propels them to buy the product. If the product packaging
changes, it may alter the brand perception of the company, which doesnt mean that the
consumer would not still purchase the product, but it may delay the purchase until the person is
able to identify the product according to its new packaging.
Attention grabbing:
A distinctive, unmistakable and eye-catching appearance is a signal at the point-of-sale to which
all consumers respond positively. Whatever stands out clearly in the monotonous competitive
environment scores points with the consumer. Think carefully about where you want your
products to be most visible. For instance, if your product is a fortified cereal consumed mainly
by kiddies, you may want to place your goods on a lower shelf where it is visible to children,
instead of at eye-level. We all know the influence kids have on their parents' purchases!
Multi-sensory appeal:
Packaging which appeals to more than one sense attracts greater attention, intensifies perception
and stimulates interest in buying. Packaging that can be felt, smelled and heard as well as looked
at wins the customer's favour, which often means that he will be prepared to pay a higher cost for
that product. Innovative packaging makes new products stand out over trusted, familiar ones.
Functionality: Product and aroma protection, hygiene and tightness, environmental responsibility
and practical handling are just as important as ideas that improve comfort, such as closure
mechanisms, for example.
Added value:
Cross merchandising and buy-one-get-one-free promotions increases value-for-money
perception in the mind of the consumer.
a) Physical protection: The objects enclosed in the package may require protection from,
among other things, mechanical shock, vibration, electrostatic discharge, compression,
temperature, etc.
b) Information transmission: Packages and labels communicate how to use, transport,
recycle, or dispose of the package or product. With pharmaceuticals, food, medical, and

chemical products, some types of information are required by governments. Some

packages and labels also are used for track and trace purposes.
c) Marketing: The packaging and labels can be used by marketers to encourage potential
buyers to purchase the product. Package graphic design and physical design have been
important
and constantly evolving phenomenon for several
decades.
Marketing communications and graphic design are applied to the surface of the package
and (in many cases) the point of sale display, examples of which are shown here: .
d) Convenience: Packages can have features that add convenience in distribution, handling,
stacking, display, sale, opening, re-closing, use, dispensing, reuse, recycling, and ease of
disposal.
e) Barrier protection: A barrier from oxygen, water vapor, dust, etc., is often required.
Permeation is a critical factor in design. Some packages contain desiccants or oxygen
absorbency to help extend shelf life. Modified atmospheres or controlled atmospheres are
also maintained in some food packages. Keeping the contents clean, fresh, sterile and safe
for the intended shelf life is a primary function.
f) Security: Packaging can play an important role in reducing the security risks of shipment.
Packages can be made with improved tamper resistance to deter tampering and also can
have tamper-evident features to help indicate tampering. Packages can be engineered to
help reduce the risks of package pilferage.
Product Piracy
Product piracy is actually a catchall term that includes several categories of illegal activities,
which threaten the brand equity and intellectual property of fi rms in these and other industries:
1. Counterfeiting. This is the unauthorized production of goods that are protected by trademark,
copyright, or patent. Counterfeit goods range from low price and quality to excellent quality;
often a giveaway is that the product lacks the manufacturers original warranty.
2. Brand Piracy. This is defi ned as the unauthorized use of copyrighted or patented goods or
brands. Again, product quality can range from very low (the $20 Rolex) to extremely high.
Cartier and other watch and fragrance companies have initiated thousands of legal actions to
attempt to stamp out brand piracy.
3. Near Brand Usage. Here, the pirate manufacturer uses slightly different brand names such as
Channel fragrances, Panasanic camcorders, or Tonny Hilfi ger clothes (all real examples!).
Moral: Buyer beware, and check the package carefully.
4. Intellectual Property Copying. Some of the most highly publicized cases in recent years
have involved the unauthorized copying of intellectual property, especially CDs and DVDs
containing computer software or entertainment. One estimate fi gures that 75 million CDs are
illegally copied in China alone. Other industries such as pharmaceuticals and car or plane parts
are also affected.
Protection against Product Piracy
1. Communication: Announce that your product has been pirated and that only the real thing
offers top value and should be sought out. It was good enough to have been pirated, suggesting
that it is of good quality! Especially works if there is a safety or health risk involved. Brazilian
consumers were concerned about pirated contraceptives and anticancer drugs.
2. Legal recourse: A NAFTA agreement requires trading partners to enforce intellectual
property rights. GATT allows a nation to restrain imports from countries where piracy is a
problem. A fi rm can begin the process of getting legal protection by registering with the U.S.
Customs Service.

3. Government: The U.S. Trade Representation lists the countries with the biggest piracy
problemcurrently China and Taiwan. A country can get a nation with a poor track record
denied most-favored-nation status, but this is a severe penalty and rarely imposed. A problem is
that there are not enough policemen to enforce all the international agreements.
4. Direct Contact: Get the counterfeit goods off the store shelves. Sometimes the counterfeiting
is ignored, because of the costs of litigation and enforcement, risk of bad publicity, and the fact
that top government offi cials may be in on the deal! Another possibility is for the injured
company to try to buy the pirate fi rm.
5. Labeling: Put holograms or DNA security markers (that encode product manufacturing
information) on the genuine goods labels. Holograms can be copied but do increase the
counterfeiters costs. The security markers are generally too costly for most counterfeiters.
6. Strong Proactive Marketing: Cut prices, spend aggressively on advertising, encourage
customers to buy the genuine article. Get distributors support in cutting down on the counterfeit
products. Keep changing the product or its packaging.
7. Piracy as Promotion: Wide availability of pirated Word software could have the effect of
spreading the adoption of Word as the worlds word processing standard. Microsoft could then
add features available only to genuine product owners via valid registration numbers or could
offer product support only to genuine owners.
Personal Ethics
People who react to them more often call them matters of personal ethics, not economics or
business management. They are issues where people pretty much reach individual decisions,
rather than seek court decisions. Here is a set of themnot complete, but in sufficient variety to
let you see the problems product innovators deal with. As with all personal ethics situations, they
are not just in the marketplacethey are in the labs, factories, and offi ces too.
Note that personal ethics situations exclude the clearly illegalfor example, scientists have been
known to steal company secrets and sell them to competitors, but such cases are not issues in
ethics.
1. Ideation or concept generation often leads us to explore the minds of customers to fi nd
something they want or will want when they hear about it. Your fi rm uses intrusive techniques,
such as unannounced observation and psychological projective techniques. A customer recently
said it is unethical to trick people into telling you what they want.
2. Your market research director uses focus groups for concept testing and lets company people
secretly sit behind the mirrors as your customers react to the new concepts. They often joke
about customers product usage practices.
3. You introduce a temporary product that will be replaced when a better one in development is
ready a year from now. You are told not to let distributors or your sales force know it is only
temporary.
4. You work for a management training fi rm and are about to market a new seminar service for
banks. Your fi rm, for a fee, will run seminars during which you will train bank personnel in
investment counseling. But there is no product use test on the seminar, and you dont know that
the bank people will really learn how to counsel.
5. You work for a detergents company and recently learned that over the years thousands of
rodents have been force-fed each new product, including versions in development. The forcefeeding goes on until half of the rodents die (the so-called LD50 test).
6. You are currently working on a patented item that schools will use for map displays. It is so
good that virtually every K12 school will buy several of them. You come across the cost figures

and calculate that the gross margin will run about 80 percent. A co-worker comments that the
price could be cut in half and the company margin would still be a healthy 60 percent.
7. You work for a database service that recently began collecting patient records from physicians
and now offers a new service of information for pharmaceutical fi rms. The records sometimes
contain names and often include age, sex, and so on of the patients. Information includes nature
of illnesses and treatments.
8. The Food and Drug Administration has charged that your new Freshland spaghetti sauce is
processed and sold non-refrigerated; it therefore cannot be called fresh in its brand name. Your
fi rm counters that it is fresher than the leading competitor, and besides, lots of products are
advertised as being fresh when they technically arent, by the arbitrary FDA definition.
9. A set of educational game cards, made by your fi rm and not really very educational, are
known to be bought by less intelligent parents for their children. There are several far better sets
of such cards on the market.
10. Your strategy is to stir up the watersmarketing a long line of similar products to confuse
customers and keep them from being able to buy intelligently.
11. You have a line of party products that seem to be in sync with many younger people, but are
sexually oriented. You market them through mass outlets, not adult stores, and although some
retailers wont stock the items, many will. Sales have been outstanding.
12. You work as a sales rep for a pharmaceutical company. Food and Drug Administration rules
prohibit off-label promotion, that is, marketing a drug for uses other than those approved by
the FDA. Your company funds thousands of medical-education programs yearly at which
doctors and other health professionals make presentations about the use of certain drugs, some of
which are not yet approved by the FDA (but are written up in the medical journals as effective).
They say they are doing nothing wrong, but you see this as a clear violation of off-label
promotion rules. For you, the last straw is when you attend a sales meeting at which you are
instructed to recruit medical speakers to talk about approved and unapproved uses of a new
blood clot drug
The Underlying Residual Issues
A few really tough issues thread their way through the above confusions. They are such that we
will never be free of problems working in the public policy area. One of them is, What are
reasonable goals for action here? A risk-free existence is totally unreasonable. Zero-defect
quality control is a goal in many firms. But, with the complexity in most of todays consumer
products, nothing short of government decree would stop consumers from making errorsand
then only because they would not be making any decisions at all. Besides, even if we could hope
to reach a 99.99 percent level of risk reduction, that would still leave 27,500 people on the wrong
side of the statistic in the United States alone. Worldwide, the number would certainly be much
higher.
Another one is the trade-off problem. Even when a particular situation seems to have a clear-cut
guiding principle, we often fi nd a contrary principle of equal merit. Which of two worthy
options should be accepted?
A third is, Where should the costs fall? In many of the controversies that affect new products, the
argument is not so much what should be done as who should pay for it. Assuming (1) no
production system can ever make products perfectly and (2) no consumer group will ever use
products with perfect wisdom, there will always be injuries and waste. Who should pay?
Governments are already under pressure for tax reduction. Insurance companies know the
negative reactions to infl ated rates. So the no-fault approach is becoming popularor, as the

manufacturer says, thetotal -fault approach. The manufacturer assumes all responsibility and is
expected to pass along the costs somehow.

Product Modification
An adjustment in one or more of a product's characteristics. It is most likely to be employed in the
maturity stage of the product life cycle to give a brand a competitive advantage. Product line extensions
represent new sizes, flavors, or packaging. This approach to altering a product mix entails less risk than
developing a new product.
Three conditions must exist for product modification to improve the firms product mix.
a) The product must be modifiable.
b) The customer must be able to perceive a modification has been made.
c) The modification should make the product more consistent with customers desires.
There are three major ways to modify products.
a) Quality Modifications
(1) Quality modifications are changes relating to a products dependability and durability,
usually executed by altering the materials or the production process.
(2) Reducing quality may allow the firm to lower its price and direct the item at a different
target market.
(3) Increasing quality may allow the firm to charge a higher price by creating customer
loyalty and lowering customer sensitivity to price.
(4) Some companies have been able to increase quality and reduce costs of a product.
b) Functional Modifications
(1) Functional modifications are changes affecting a products versatility, effectiveness,
convenience, or safety; they usually require the product be redesigned.
(2) These modifications can make a product useful to more people and enlarge its market.
(3) These changes can help an organization achieve and maintain a progressive image.
(4) Function modifications are sometimes made as a response to product shortcomings and
help reduce the possibility of product liability lawsuits.
c) Aesthetic Modifications
(1) Aesthetic modifications change the sensory appeal of a product by altering its taste,
texture, sound, smell, or appearance.
(2) Aesthetics of a product can differentiate it from competing brands to gain market share.
(3) The major drawback in using aesthetic modifications is that customers perceive value
subjectively and some may find the product less attractive.