Packaging, Labeling, Warranties, and Guarantees

Some product packages—such as the Coke bottle and Red Bull can—are world famous. Many marketers have called packaging a fifth P, along with price, product, place, and promotion. Most, however, treat packaging and labeling as an element of product strategy. Warranties and guarantees can also be an important part of the product strategy and often appear on the package.

1. PACKAGING

Packaging includes all the activities of designing and producing the container for a product. Packages might have up to three layers. Cool Water by Davidoff For Men cologne comes in a bottle (primary package) inside a cardboard box (secondary package), shipped in a corrugated box (shippingpackage) containing six dozen bottles in cardboard boxes.

Packaging is important because it is the buyer’s first encounter with the product. A good package draws the consumer in and encourages product choice. In effect, it can act as a “five-second commercial” for the product. It also affects consumers’ later product experiences when they open it and use what’s inside. Some packages can even be attractively displayed at home. Distinctive packaging like that for Kiwi shoe polish, Altoids mints, and Absolut vodka is an important part of a brand’s equity.

Several factors contribute to the growing use of packaging as a marketing tool. [1]

Self-service. In an average supermarket, which may stock 15,000 items, the typical shopper passes some 300 products per minute. Given that 50 percent to 70 percent of all purchases are made in the store, the effective package must perform many sales tasks: attract attention, describe the product’s features, create consumer confidence, and make a favorable overall impression.

  • Consumer affluence. Rising affluence means consumers are willing to pay a little more for the convenience, appearance, dependability, and prestige of better packages.
  • Company and brand image. Packages contribute to instant recognition of the company or brand. In the store, they can create a billboard effect, as Garnier Fructis does with its bright green packaging in the hair care aisle.
  • Innovation opportunity. Unique or innovative packaging can bring big benefits to consumers and profits to producers. Companies are always looking for a way to make their products more convenient and easier to use—often charging a premium when they do so. The SC Johnson Smart Twist Cleaning System has a hand­held sprayer and carousel that rotates between concentrated versions of three different cleaning products; Kleenex hand towels use a dispenser that fits upside down in a bathroom towel rack; and Kiwi Express Shine shoe polish has a dispenser and applicator to shine shoes without the need to spread newspaper, wear a glove, or use a brush.83

Formally, packaging must achieve a number of objectives:

  1. Identify the brand.
  2. Convey descriptive and persuasive information.
  3. Facilitate product transportation and protection.
  4. Assist at-home storage.

To achieve these objectives and satisfy consumers’ desires, marketers must choose the functional and aesthetic components of packaging correctly. Functionally, structural design is crucial. The packaging elements must harmonize with each other and with pricing, advertising, and other parts of the marketing program. Aesthetic considerations relate to a package’s size and shape, material, color, text, and graphics.

Color is a particularly important aspect of packaging and carries different meanings in different cultures and market segments. As one expert says, “Color is all-pervasive. It is language-neutral, but loaded with meaning. It’s completely overt, yet each person sees color through different eyes, both literally and figuratively.”84

Color can define a brand, from Tiffany’s blue box to Cadbury’s purple wrapping and UPS’s brown trucks. Orange, the telecom mobile operator, uses color as both its name and its look. Table 13.3 summarizes the beliefs of some visual marketing experts about the role of color in Western culture.

Packaging updates and redesigns can occur frequently to keep the brand contemporary, relevant, or practical. Although these changes can have immediate impact on sales, they also can have a downside, as PepsiCo learned for its Tropicana brand.85

TROPICANA PepsiCo experienced great success with its Tropicana brand, acquired in 1998. Then in 2009, the company launched a redesigned package to “refresh and modernize” the brand. The goal was to create “emotional attachment by ‘heroing’ the juice and trumpeting the natural fruit goodness.” Arnell Group led the extreme makeover, which led to an entirely new look, downplaying the brand name, highlighting the phrase “100 percent orange pure & natural,” and replacing the “straw in an orange” graphic on the front with a close-up of a glass of orange juice. Consumer response was swift and negative. The package was deemed “ugly” or “stupid,” and some even confused the product with a store brand. Sales dropped 20 percent. After only two months, PepsiCo management announced it would revert to the old packaging.

After the company designs its packaging, it must test it. Engineering tests ensure that the package stands up under normal conditions; visual tests, that the script is legible and the colors harmonious; dealer tests, that dealers find the packages attractive and easy to handle; and consumer tests, that buyers will respond favorably.

Although developing effective packaging may require several months and several hundred thousand dollars, companies must consider growing environmental and safety concerns about excess and wasteful packaging. Fortunately, as discussed above, many firms have gone “green” and are finding creative new ways to package their wares.

Dell introduced bamboo packaging as an alternative to corrugated cardboard, foam, molded paper pulp, and plastic and took other steps to reduce the overall volume of packaging used.86 Developmental environmentally friendly packaging that also satisfies customers’ needs can be challenging, as Frito-Lay found out.87

SUN CHIPS Frito-Lay’s Sun Chips multigrain snacks, containing 30 percent less fat than potato chips, have succeeded as a healthier, “good for you” snack option. Part of the firm’s effort to also support a “healthier planet” was to to run its factory in Modesto on solar power and unveil a novel 100 percent compostable bag made of plant-based materials. Much research went into the development of the bag, and it was launched with fanfare in 2010. Unfortunately, it included polymers that made it “kind of crispy and crunchy” at room temperature, and consumers began to complain about how noisy it was. One Air Force pilot said it was louder than the cockpit of his jet. To prove his point, he squeezed the new Sun Chips bag and recorded a 95-decibel level with a sound meter, considerably more than the 77-decibel level recorded when he squeezed a conventional Tostitos bag. When thousands of people chose to friend a Facebook page called “Sorry But I Can’t Hear You Over This Sun Chips Bag”—and with sales sliding—Frito-Lay decided to drop the bag after an 18-month run.

2. LABELING

The label can be a simple attached tag or an elaborately designed graphic that is part of the package. It might carry a great deal of information, or only the brand name. Even if the seller prefers a simple label, the law may require more.

A label performs several functions. First, it identifies the product or brand—for instance, the name Sunkist stamped on oranges. It might also grade the product; canned peaches are grade-labeled A, B, and C. The label might describe the product: who made it, where and when, what it contains, how it is to be used, and how to use it safely. Finally, the label might promote the product through attractive graphics. Advanced technology allows 360-degree shrink-wrapped labels to surround containers with bright graphics and accommodate more product information, replacing glued-on paper labels.

Labels eventually need freshening up. The label on Ivory soap has been redone at least 18 times since the 1890s, with gradual changes in the size and design of the letters. As Tropicana found out (see above), companies with labels that have become icons need to tread very carefully in order to preserve key branding elements when under­taking a redesign.

A long history of legal concerns surrounds labels and packaging. In 1914, the Federal Trade Commission Act held that false, misleading, or deceptive labels or packages constitute unfair competition. The Fair Packaging and Labeling Act, passed by Congress in 1967, set mandatory labeling requirements, encouraged voluntary industry packaging standards, and allowed federal agencies to set packaging regulations in specific industries.

The Food and Drug Administration (FDA) has required processed-food producers to include nutritional labeling that clearly states the amounts of protein, fat, carbohydrates, and calories contained in products, as well as vitamin and mineral content as a percentage of the recommended daily allowance.88 The FDA has also taken action against potentially misleading uses of such descriptions as “light,” “high fiber,” and “low fat.”

Not all countries apply such strict definitions. In the United Kingdom, “light” and “lite” do not have an official meaning in law, though “low fat” does—the food product must be less than 3 percent fat to qualify. As a result, some foods branded “light” there have been found to contain up to seven times more fat than those described as “low fat.”89

3. WARRANTIES AND GUARANTEES

All sellers are legally responsible for fulfilling a buyer’s normal or reasonable expectations. Warranties are formal statements of expected product performance by the manufacturer. Products under warranty can be returned to the manufacturer or designated repair center for repair, replacement, or refund. Whether expressed or implied, warranties are legally enforceable.

Extended warranties and service contracts can be extremely lucrative for manufacturers and retailers. Analysts estimate that warranty sales have accounted for a large percentage of Best Buy’s operating profits.90 Despite evidence that extended warranties do not pay off for them, some consumers value the peace of mind.91 These warranties still generate multibillion dollars in revenue for electronic goods in the United States, though the total has declined as consumers have become more comfortable seeking solutions to technical problems online or from friends.92

Many sellers offer either general or specific guarantees. A company such as Procter & Gamble promises general or complete satisfaction without being more specific—“If you are not satisfied for any reason, return for replace­ment, exchange, or refund.” A. T. Cross guarantees its Cross pens and pencils for life. The customer mails the pen to A. T. Cross (mailers are provided at stores), and the pen is repaired or replaced at no charge.

Guarantees reduce the buyer’s perceived risk. They suggest that the product is of high quality and the company and its service performance are dependable. They can be especially helpful when the company or product is not well known or when the product’s quality is superior to that of competitors. Hyundai’s and Kia’s highly successful 10-year or 100,000-mile power train warranty programs were designed in part to assure potential buyers of the quality of the products and the companies’ stability.

Source: Kotler Philip T., Keller Kevin Lane (2015), Marketing Management, Pearson; 15th Edition.

2 thoughts on “Packaging, Labeling, Warranties, and Guarantees

  1. Randi Alessandrini says:

    Very efficiently written post. It will be supportive to everyone who usess it, including yours truly :). Keep up the good work – for sure i will check out more posts.

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