Is Changing Your Package Worth the Cost?

It is a commonly accepted belief that a successful package is one that is highly visible to the consumer and that readily conveys the brand's identity. To ensure these standards are met, many pre-launch package testing techniques involve consumer exposure to a real or virtual shelf to assess key dimensions such as shelf standout and fit of the new package with the brand.

Unfortunately, these measures are not enough.

Since the ultimate goal for redesigning consumer goods packaging is to increase sales - either by attracting new users or by growing share of purchases among current users - the critical.

• Will the newly designed package contribute to an overall sales increase?
• If so, will the sales increase stem from existing buyers or from new buyers to the brand?
• Will the investment in the newly designed package pay out?

A new package design must overcome many hurdles to achieve incremental volume, such as making a significant impact on potential new buyers and avoiding alienating current buyers. And, of course, package changes can involve significant costs, especially if production processes are impacted. With so many factors in play, Marketers must be certain that proposed changes in package design will indeed increase revenue. How? By using a package testing approach that addresses the most fundamental issue of incrementality.

Ipsos Marketing, Consumer Goods has developed such an approach as part of its PACKEvolution package testing system. PACKEvolution evaluates new package designs using shelf sets as well as the latest eye-tracking technology. Unique to PACKEvolution is the Pack Composite Index (or PCI).

The PCI, based on our validated DESIGNOR174 forecasting model¹, takes traditional package testing to a new level by relating the drivers of package success to the sales impact engendered by the new package.

PACKEvolution's PCI splits the impact on sales into two components: Reach and Response. The following diagram conceptualizes our approach to forecasting the incremental sales from a package change.

As illustrated in the diagram, Reach is measured through Package Visibility and Brand Linkage. Response is measured through Relevance (the extent to which a product meets consumer needs) and Differentiation (the extent to which a product has a unique benefit vs. competitors). All of the measures are modeled to determine the Pack Composite Index, which, as will be explained shortly, can be used to estimate the positive or negative sales impact of a package change.

Reach: A Melding of Visibility and Brand Recognition

Reach measures whether or not consumers can find the newly designed package on the shelf and, if they can, whether or not they associate the new package with the correct brand. To reflect reality, Reach is measured in a competitive context.

In our approach for determining incrementality resulting from a package change, the Reach for a new package is compared to the Reach for an existing package among current brand buyers and non-buyers. Data mining of our global DESIGNOR database reveals that, on average, Reach for a new package is lower than Reach for an existing Package among current brand buyers. This finding is expected since current brand buyers would not be familiar with a new package. Accordingly, this effect is greater when the package change is more significant. However, the extent to which Reach is lower for a new package vs. an existing package is undoubtedly overstated. Why? Because in a research study, the consumer is exposed to the shelf only once. In the real world, the consumer will potentially be exposed every time he or she shops the category and, thus, the new package will become more familiar. Our approach not only incorporates the impact of Reach, but also takes into account repeated exposure to the category and subsequent increase in familiarity with the new package.

Response: A Measure of Package Persuasion

Response measures whether or not consumers perceive the new package to be more relevant and unique than the existing package.

The new package must demonstrate relevance by meeting consumer needs and by strengthening the innovation promises and key attributes which drive brand choice. Package relevance is an integral contributor to the holistic perception of brand quality.

A new package's unique benefits vs. competitors (differentiation) should be immediately understood upon the consumer's first interaction with the brand. Package graphics, messaging and, in some cases, structural aspects are integral to communicating competitive points of difference to drive sales. This communication is particularly important if the objective is to attract current non-buyers, as they must perceive something different to spark them to change their behavior.

Relevance and differentiation are preferred for sales estimation purposes over the traditional purchase intent measure because, unlike purchase intent, they are measures that Marketers can impact.

A forecasting model based primarily on package design must incorporate both the relevance and differentiation aspects of Response, since these are the only consumer-driven factors that truly drive sustainable growth. Response among existing brand buyers must be measured and modeled extremely carefully since there is the downside potential of brand alienation with a package change. The risk is particularly high in cases where the package is being changed in a direction to attract new buyers.

The Pack Composite Index: A Single-Score Benchmark

Reach and Response among buyers and non-buyers are modeled to determine the Pack Composite Index, or PCI. The PCI compares the performance of the new package to the existing package, taking the competitive environment into account when assessing both Reach and Response. The PCI is a powerful yet easy-to-use tool: Marketers simply apply the PCI to current sales to determine the likely impact of the package change.

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Package Success Story: Aquafresh174 Delivered Both Reach and Response

The power of the PCI can best be illustrated by an example. A few years ago, Aquafresh174 was the number three player in the toothpaste market and declining.²Aquafresh succeeded in reinvigorating the brand and bringing in new triers via its Extreme Clean makeover, which included a redesigned package. Aquafresh utilized a unique transparent plastic outer packaging and a bold orange package color that readily broke through the shelf clutter of the traditional reds and blues of the category leaders, Colgate174; and Crest174.

The new Aquafresh174 package was able to deliver on important sales drivers. The dramatic break with the traditional category package color and package materials resulted in excellent standout and brand recognition. Furthermore, the new package conveyed "clean" both structurally and graphically, thus offering the consumer differentiation and relevance. Hence, the new Aquafresh174 package succeeded in enhancing Reach and Response, leading to substantial sales increases.

Concluding Remarks

Estimation of sales attributable to changes in package design is a gap in the current arena of package testing. PACKEvolution addresses this need by linking package performance on key measures to DESIGNOR, Ipsos Marketing's validated sales forecasting model. PACKEvolution accurately pays differential attention to performance among existing buyers vs. potential new triers. Moreover, it addresses differences in the measures obtained for new packages vs. existing packages for both Reach and Response, since there may be a wear-in factor that must be accounted for over repeated exposures to a new package. The end result is the Pack Composite Index (PCI), an invaluable tool that can be leveraged by Marketers to set expectations for incremental volume prior to launching a new package design.

The author would like to thank and acknowledge Bernard Nacher, Senior Director, Global Product Center, Ipsos Marketing, for contributing research and writing support for this piece.

¹Designor is Ipsos' simulated test market forecast model for consumer packaged goods and has been validated over 600 times, producing estimates within 9% of actual sales on average (taking into account the full marketing mix, including a detailed marketing plan, advertising, shelf impact and competition).

² The Hub. July /August 2006. http://hubmagazine.com/archives / the_hub / 2006 / jul_aug / the_hub13_aquafresh.pdf