Winning at the two moments of truth

Editor’s note: Scott Young is president of Perception Research Services, Fort Lee, N.J.

Recently, marketers have become more focused on the power of design - and far more aware of the power of packaging to impact sales. However, as companies have acted more aggressively in changing the appearance of their brands, we’ve also seen several high-profile mistakes, most notably the Tropicana disaster, in which a new packaging system led to double-digit sales declines. This has led some clients to ask if there is a formula for leveraging the power of design while minimizing its risks.

With this issue in mind, our firm, Perception Research Services (PRS), recently reviewed our packaging research database (across thousands of studies) to see what it could teach us about the primary factors driving sales gains. This exercise uncovered several interesting insights, with definite implications for both packaging design and shopper research.

Difficult to come by

First and foremost, our analysis revealed that true wins (i.e., major sales gains from packaging changes) are quite difficult to come by. Across studies, while nearly half of the new (i.e., proposed) packaging systems outperformed current packaging in terms of overall packaging effectiveness (as measured by the PRS Packaging Performance Index), only about 10 percent of new systems drove significantly more shoppers to purchase the brand from shelf.

Thus, while a new packaging system might be more appealing or perhaps stronger than a current one in supporting core brand imagery, these advantages were not very likely to directly impact shopping patterns and translate into sales. In addition, we found that it is far easier to damage a brand than to grow it via packaging. In fact, it’s about twice as likely, as approximately 20 percent of new packaging systems drove declines in purchases from the shelf (as opposed to the 10 percent driving significant sales increases).

Of course, a natural next step was to take a closer look at the major success stories, in order to identify the performance measures and design elements that most highly correlated with success. This uncovered a very intuitive, yet powerful, reality: To significantly drive sales, new packaging systems need to have a powerful impact at one of the two moments of truth - on the shelf or in the home.

Single strongest driver

Across brands and categories, we confirmed that increases in shelf visibility were the single strongest driver of sales increases. While we’ve long known that “unseen is unsold,” this finding goes a step further: It confirms that if a new design system can drive a higher percentage of shoppers to engage with a brand at shelf, it is highly likely to drive purchase. In fact, through studies conducted in collaboration with Wharton and INSEAD, we’ve found that reexamination (getting shoppers to take a second look at a brand, as measured via eye-tracking) is an even more powerful predictor of purchase. When shoppers take a second look they are actually reconsidering a brand (giving it a second chance) and bringing it into their consideration set.

Of course, this leads us one step further, to the question of what creates shelf visibility and leads to a second look. Put simply, the one-word answer is contrast. In other words, visibility is not the result of a shopper’s conscious decision (“I want to look at that brand.”), but instead a physiological process, driven by the contrast between a brand and its competitors on shelf. Literally, it is what catches the eye.

So what creates contrast? Our analysis revealed three primary drivers: color blocking, unique shapes/structures and strong brand identity (a bold logo, visual, etc.). In fact, across brands, cultures and countries, we’ve seen that revolutionary new packaging structures have a far greater likelihood (than graphics-only changes) to create disruption at the shelf, lead shoppers to take a second look at a brand they previously ignored, and, ultimately, to change their behavior.

Interestingly, we’ve found that declines are not the inverse or mirror image of successes but they are also driven by on-shelf performance. Rather than shelf visibility, we found that declines in shopability are the factor most consistently linked to drops in sales. Specifically, we’ve seen that when shoppers are confused or frustrated at the shelf, it typically takes one of two forms: brand hesitation (“Is this still my brand?”) or product findability (“Where is my product?”).

One or both of these factors create enough hesitation for shoppers to revert to a safer choice (i.e., a competitive brand) and leave the brand, in some cases permanently.

Retail realities

New packaging structures can also be powerful in linking to an important and oft-overlooked aspect of shelf presence: Packaging rarely appears as we’d like it to at retail. Instead, packs are frequently knocked over, facing sideways or backwards, partially obstructed, scrunched up and dented or compromised by poor lighting or careless stocking. These retail realities are often the result of packaging systems or structures that don’t translate well to the retail environment.

Consider rounded containers, such as those used for many beverages. They may look great in a conference room (or perhaps when viewed in a focus group) when they face directly forward. In-store, however, these containers are often turned off-center, which can greatly compromise their shelf impact. Bagged products can also be a challenge because they are likely to sag or get scrunched on the shelf, which can impact quality perceptions and/or make key copy points unreadable.

When marketers invest in packaging structures that limit retail risks and maximize opportunities, we often see a positive return. For example, the new square jar for Kraft mayonnaise makes it very likely that the front label will face outward on shelf - thus creating a clear competitive advantage.

Finally, we’ve continually seen that packaging systems can break through clutter on-shelf by more directly speaking to shoppers’ underlying priorities and thought processes. In many categories, we find a disconnect at the shelf, between the shopper’s mind-set, which is often focused on users and usage occasions (“Who is this product for? When would I use it?”) and packaging communication, which typically emphasizes ingredients, forms and features (diet, organic, liquid, gel, etc.).

For new products, the opportunity often lies in defying convention and using packaging to speak to an underlying need and/or a specific usage occasion. One excellent example is Nabisco’s 100 Calorie Packs, which quickly built a $100 million brand by using packaging innovation to provide portion control and to extend brands into new usage occasions (school lunches, etc.).

There is a danger

When most marketers consider the second moment of truth during product usage, thoughts turn immediately to packaging functionality (opening, dispensing, etc.). However, we’ve found that there is a danger in defining functionality too narrowly. The reality is that we come across very few cases of major functional problems with current packaging, such as leakage or breakage, which are creating high levels of dissatisfaction.

Instead, we’ve found that the challenge is identifying unmet (and often unarticulated) consumer needs - and using them as an opportunity to provide differentiating benefits. One frequent example is resealability, which provides value by retaining product freshness and preventing spoiled food. On a spontaneous basis, consumers don’t often complain about packaging that doesn’t provide resealability. However, when we observe them in their homes, we see that they often work around the issue, by taking the food out of its original packaging and putting it into alternative home storage containers (such as unbranded jars, sealed bags, plastic containers, etc.).

When Chips Ahoy identified and acted upon this trend (via the Snack n’ Seal feature), it was rewarded with double-digit sales gains. Not surprisingly, we’ve recently seen this trend extend to other companies and categories, such as Target’s Archer Farms cereal packaging.

These examples - and their connection to home storage - also link to the larger opportunity in the home environment. Consistently, we’ve seen that there is a direct and powerful connection between where products are stored and how often they are consumed. In other words, it’s critical to avoid getting “lost in the pantry” - and it’s very important to have packaging that creates a consistently-visible branded presence in the home.

The most obvious example is fridge packs, which drove enormous increases in beverage sales upon their introduction. More recently, Heinz drove a 68 percent increase in consumption of its large 64-ounce product through a more slender package that provided improved storage flexibility within refrigerators.

Clear implications

The insights gathered from our study of packaging success stories have clear implications, in terms of guiding both design efforts and investment in packaging innovation.

From a design perspective, the findings point to a very challenging balancing act that must be navigated. To make a difference and drive elusive wins at the shelf, designers need to make significant changes that create visual contrast at the shelf, lead shoppers to take a second look and reconsider a brand.

Smaller changes, which are less striking and not evident from three feet away within a cluttered shelf, are very unlikely to influence purchase patterns. However, to prevent major mistakes, designers also need to avoid creating brand hesitation and confusion at the shelf. They need to provide some visual continuity, in order to reassure shoppers and bring them along, which acts as a counterbalance against the imperative for dramatic change.

How can designers and marketers navigate this challenge? Fortunately, recent experience points toward at least one successful strategy, as embodied by successful design changes by Baked! Lay’s and Kraft salad dressing. In each of these cases, dramatic and visceral design changes - in color, visuals and/or packaging structure - were balanced with continuity in brand identity (to provide reassurance) and very clear product versioning (to facilitate shopability).

On a larger level, our experience highlights the importance of investing in new packaging structures and delivery systems, which hold far more potential (than graphics alone) to positively impact both moments of truth. While dramatic graphics changes can certainly make a difference at the shelf, there’s no question that structural innovation is a more powerful weapon, in terms of driving wins in the store and at home.

Change their focus

Finally, our experience has powerful implications in terms of packaging research. Overall, it suggests that if researchers are to truly help marketers and designers win through packaging, they need to change their focus in several ways.

First, researchers need to spend more time in the store environment. In addition to discussing packaging with shoppers, researchers need to observe them in the aisles. Packaging research has to incorporate and integrate shopper research, to provide an understanding of decision-making at the shelf - and to identify opportunities to break through clutter via innovation.

In addition, in-store research is needed to systematically uncover retail realities that are limiting sales, by compromising how packaging appears on the shelf. These insights should guide design briefs and investment decisions regarding new packaging structures.

Second, there’s a greater need for in-home insights. Specifically, more research needs to be done to document the full life cycle of packaging in the home, from purchase and transport through storage, use and disposal. By understanding how packaging fits within consumers’ lives, we can uncover opportunities to increase consumption rates through new usage occasions. Importantly, we can also help to ensure that packaging doesn’t get lost in the home.

This research also highlights the importance of testing new packaging systems within a realistic shelf context, in order to gather accurate measurements of both shelf visibility and shopability.

In addition, it illustrates the need to test new innovations (new packaging structures and delivery systems) holistically, starting at the shelf, moving to the shoppers’ hands and eventually to the home environment. This level of rigor, measuring impact on shelf presence and in-home consumption, is needed to fully gauge the ROI from new systems and, ultimately, to give marketers the confidence to invest in innovation.

Quantifying opportunities

Researchers who embrace these changes - and move beyond a risk-prevention mentality toward a focus on identifying and quantifying opportunities - will become invaluable partners in helping marketers leverage the power of design and win at these two moments of truth.