Using Packaging to Turn a Commodity into a Brand

bottled water packaging shows the shift from commodity to brand

In the past few years, packaging has undergone a dramatic shift from a role focused on attributes such as communicating basic product information and protecting the product within, to one of an invaluable tool in shaping a consumer’s perception. Brand packaging has come to primarily steer the consumer through their intricate decision making process as the primary communication platform for the brand. In no channel has this shift been so dramatic as in the fast moving consumer goods category. Proliferation of competition as well as the decline of communicating technical information as a pack’s primary purpose for connected shoppers has helped to fuel the widening gap between products consumers view as commodities and brands with real value. Brand led packaging is how some companies are trying to transcend these categories and find success within this new market paradigm. Any product that is lowly differentiated from its competitors with high levels of substitutability and straightforward price discovery is at risk of being considered a commodity by its buyers.

It is possible to, through brand led packaging, change consumers perception to create an environment where the substitution rate is drastically reduced, and price is no longer linked to value. Bottled water is a great example of this.

Arguably a clear-cut commodity, right now there are more than 100 brands of bottled water in the USA competing on things like taste, nutritional and flavor enhancements, carbonation etc. that successfully convince consumers to spend more than 2 dollars on something that can be poured from the average tap for fractions of a cent. This is indicative of what is happening across the entire category. As consumers’ attention spans contract (most spending less than 20 minutes in a given store) and new market entries continue to create an atmosphere of discovery in store (leading to approximately 70% of all purchase decisions being made at POS), this shift from commodity status to that of a valuable brand has become a more complicated transition.

In response to this shift from a functional to an emotional relationship between consumers and packaging, companies have been realizing the importance of building engaging brand experiences with their packaging to provide REAL benefits to their consumers. This in turn helps them to avoid the spiral of cost cutting and price slashing due to the downward pressure of this market. When consumers think of your product as a commodity, they assume a level of understanding that precludes any need for education about your company or product, including learning about change for the better. This sets a high bar to clear but one that can be overcome through a straightforward approach.

  1. Research or innovation needs to occur to either uncover, create or enhance your unique selling proposition and to strengthen your positioning.
  2. Remove barriers to purchase or reduce their importance either through change in approach or the way it is presented.
  3. Develop a packaging system with powerful and evocative visual messaging and strategic content structure that quickly and clearly communicates your USP and positioning to a potential customer who may have no prior knowledge of your company. If this is not done, and done well, it negates the value of having gone through the first two steps. Knowing who you are is helpful but if your consumers or prospects don’t know why they  should buy from you, they are likely not going to do so.
  4. Measure, manage and grow. Fast moving consumer goods as a category changes quickly and it is important to stay on top of the changes if you hope to find continued success and price stability.

Following these steps to shift to brand led packaging as a marketing strategy by many companies over the past few years who have found great success, has proven the viability and necessity of this approach. Developing their brand equity through packaging, they are protecting their value by shifting the playing field in the minds of consumers and moving away from a price driven commodity model. Fast moving consumer goods is a category that presents unique challenges but also has tremendous opportunities to build equity as a brand and enhance your value in the minds of consumers. With daily increases in competition in nearly every product category, to compete on more than just price and volume has never been more important than it is today.

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