Packaging buyers tend to stick with branded products because they’re familiar with them and they know what they are getting. Generally, most successful packaging suppliers follow a strategy based on building brands.
What comes to your mind when you think of Bubble Wrap, Tyvek, and Valeron? These are all well recognized brand names in the packaging industry that are known not for what they are made out of but for what they do. Their suppliers — Sealed Air Corp., DuPont and Valeron Strength Films (formerly Van Leer Flexibles), respectively — could completely change the underlying material of construction, but their users will continue to buy these as long as they perform the functions that the brand is associated with.
Despite this, it continues to amaze me that the number of well recognized brands in the packaging industry is still so small. Our industry has been so focused on product attributes, manufacturing capabilities and materials of construction that we have failed to build brands.
The traditional approach to marketing in our industry has been rather product-centric. The basic assumption has been that if your product is superior to competitive offerings, customers will simply rush to buy it. Secondly, it has been generally believed that the customer is technical-competent enough to disregard the marketing message and evaluate the product strictly on its attributes and performance.
Thirdly, customers have been successful in commoditizing packaging materials so that they can negotiate better prices, and suppliers have fallen into this trap by introducing products that are practically indistinguishable from competitive products (or, in other words, customers do not always like brands because they are reluctant to pay premium pricing).
But why do companies continue to buy branded products despite the availability of cheaper/better alternatives? The answer is relatively simple: because they are guaranteed a definite level of performance on a consistent basis.
Developing brand equity
To develop brand equity, packaging suppliers must consider a number of factors regarding their product(s):
Performance: While the basic concepts of brand equity in the packaging industry are the same as those for consumer products, there are a few subtle differences. While heavy advertising with creative commercials may lead to building a consumer brand, this is not enough in our industry. Remember, the customers of these products are knowledgeable enough to still evaluate a product on its merits. Thus, you have to make sure that your product is as good as other competitive products.
Innovation: Product innovation is extremely critical to buyers of packaging materials. As companies struggle with either increasing shelf-appeal or reducing damage during shipping, they look to their packaging supplier for innovative solutions. Make sure that your product development does not become stagnant. Instead, as customers’ needs change, your product must continue to operate at the cutting edge.
Addressing product problems: There are innumerable examples of how companies can destroy years of brand equity simply by poor handling of product problems. The only time when product problems do not affect brand equity is when management reacts responsibly by immediately addressing the issue. My simple recommendation is to address a product problem immediately rather than denying it or blaming others.
Features and benefits: Suppliers of high-tech products get so enamored with the properties of their products that they fail to fully advertise what the product does for the customer. While charts and tables are needed, make sure that you connect the features with the benefits. Thus, the advertising message has to strongly emphasize how the product will add value to the user.
Co-branding: Consider a co-branding campaign with your key customers. Perhaps a clearly visible logo on a bag of potato chips with the message “Packaged in [name of packaging product].” While a company like Intel can successfully market an extremely high-tech product to an average consumer, packaging companies do not establish a similar connection with the consumers when packaging might very well be the reason they buy the product.
Look at products as brands: The most important approach to building a brand is to completely redefine the way you internally look at your products. If you think of yourself merely as a supplier of products that have certain attributes similar or better than other products in the marketplace, your customers will perceive these in the same manner and will compare them accordingly. If you think of yourself as a seller of brands that make your customers’ brands even stronger, your customers will start setting your products apart from competitive products.
Impact of brand equity on profitability
There is no hard evidence at this time that developing brand equity alone will necessarily result in higher profitability. However, my limited research shows that most successful packaging companies follow a strategy based on building brands. It is increasingly important to do so at this time when emergence of e-marketplaces is based on essentially eliminating product differentiation.
I can clearly visualize a future in which a product will either be a brand or a commodity. The former will demand premium pricing while the latter will be traded on an online exchange like any other commodity. Where do you want your products to be?