Archives For CPG

What are the biggest mistakes in CPG package design? How do you avoid them?

April 25, 2013 — 1 Comment

This is a question I was asked to answer on Quora. My response is below.

I think the biggest mistake is not grabbing consumer’s attention. There are so many products on shelf that it’s easy to get lost and not get any attention. This is especially the case if there is limited or no out-of-store marketing to create brand awareness. Consider the following:

  • A study done by Proctor and Gamble 25 years ago indicated that consumers pushing a shopping cart down the aisle of a supermarket look at packaging for 1/6th of a second before they decide to stop and look.
  • According to the Food Marketing Institute, if a customer picks up a package, even if they are not familiar with the product, there is a 71% chance they will put it in the shopping cart.
  • A study conducted by Goldman Sachs in the 1990s indicated that for shoppers who shop with a shopping list, >60% of the content of the shopping cart were impulse purchases, thus the importance of packaging to appeal to that impulse.

Based on this, its important to get it right with your packaging. First, start with some background research:

  1. Have a thorough understanding of your brand – who you are, what you do and how that benefits your target market. Take the time to figure this out as early as possible in the life of your company, and certainly before you are ready to scale.
  2. Know the value your products provide and how they are differentiated from your competitors.
  3. Know the market, customer dynamics and trends of your category(s) where you sell.
  4. Know the purchase drivers that your customers use to make purchase decisions in the category(s) you occupy.
  5. What is your suggested retail price (SRP) and why? A higher price may mean that your brand and packaging should reflect that higher price – i.e, be more upscale.
  6. Know your competitors packaging well. Consider setting up a shelf in your office that is the same height and depth as that found in retail so you can place all your competitor’s product on it to compare and contrast.
  7. Besides knowing your competitors and their packaging, take the time to go through the whole store to see what other kinds of packaging are being used and what might fit with your brand. What grabs your attention and why? This will help give you ideas.

From your research and analysis above, consider the following to create great packaging:

  1. Use the data from the above questions to help figure out how to appeal to your target market and what holes you fill in your category. Consider using two-axis competitor maps to help you arrive at this (example here: http://sdrv.ms/10ei0D5)
  2. Develop words and statements that differentiate you and appeal to your customer’s purchase drivers.
  3. Develop the form factor, size, graphics, and colors, along with your words and statements, that will allow you to be distinctive, differentiated, clear, concise and hard-hitting. How can you use design elements and text to grab attention in 1/6 of a second against the sea of competitors already on shelf? Try to be different, but not so different that customers will get confused about what your product is and what it does.
  4. Be careful about putting too much information on the front of your packaging. Keep it simple. Put the most pertinent info that will differentiate, hits at purchase drivers and gets consumers to pick up the packaging.
  5. Use graphics people who are experienced in packaging design. Use appropriate legal and regulatory experts to review packaging and any claims you use. Proof carefully with many eyes, and do it again, and again.
  6. Get consumer feedback.
  7. Take your time. Don’t rush this. When creating new products, allow plenty of time in your project plan to get the packaging done right and give you time to think about it and get appropriate feedback
  8. Finally, try to do all this before you scale, if you are an early-stage company. That’s not suggesting you never touch your packaging again. On the contrary, you want to keep it fresh and relevant, which requires periodic updating. But if you are a small company with limited resources (cash and time), its best to get it right early on so that you can run for a while without having to touch it again.

Disclosure: I have not received any compensation for writing this post. I have no material connection to brands, products or services that I have mentioned. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255.

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The importance of packaging for a CPG product

November 22, 2012 — Leave a comment

Your packaging is your most important in-store marketing vehicle. Here’s why:

For registered users only. Register for free to gain access

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Why its hard for start-ups and small consumer product companies to secure retail shelf space

May 24, 2012 — 1 Comment

Despite the explosive growth of online e-commerce and its widespread use for buying and selling products, selling products through retailers continues to be the most important mechanism for consumer product companies to earn revenue. In 2010, Forrester Research concluded that on average, 93% of all product sales happens through brick and mortar retailers, and that number is projected to shrink only 1% to 92% by 2014.

The problem with a consumer product company selling at retail is that its getting harder and harder to get on shelf and stay on shelf. Consider the following:

  1. Innovation has exploded. Technology has made it easier, cheaper and faster to design, test and produce products. On top of that, the Internet has made it easier, cheaper and faster to get information, whether its finding out what competitors are doing, locating outsourced manufacturers to produce a product and anything in between. As a result, anyone with an idea can start a company and create superb products.
  2. Capital is relatively available. Compared to previous decades of the twentieth century, many more sources exist. Whether its personal sources such as credit cards, second mortgages, family or friends, or institutional sources such as angel investors, private equity firms and government-supported funding entities, it is far easier to raise capital than ever before, even with the great recession of 2008-2009. Crowdsourced funding is the latest interation, with the likes of Kickstarter allowing anyone with very small amounts of investment to participate in funding a company’s growth.
  3. Vertical integration is a thing of the past. Start-ups and small consumer product companies don’t need to own their entire business. They can outsource almost anything and keep that which they do best in-house.
  4. Markets are sliced into more and more niches. Marketing has fragmented by opening up more channels for reaching customers and niche groups. Think of just TV, which is not just hundreds of channels that can be further targeted to specific geographic areas, but is now being leverage with the rise of second screen marketing that allows viewers to watch TV and interact on their device about the TV program. It is getting easier to reach these niche customers with products that only appeal to them.
  5. Entrepreneurs are the new rock stars. Even since the deep recession of 2008, there is increased interest in starting your own business because people are not happy with their current work and feel starting and owning their own companies will give them more of what they want in their professional and personal lives.
  6. Retail may be shrinking in some categories. Retailers find that 80% of profits come from 20% of products, so there is a move towards smaller stores with more focused product selection (what retailers call “SKU rationalization”).
  7. Success is defined by a small group of early adopters.  I just read an interesting report, where just 1.5% of shoppers decide the success of new CPG products.  If your product marketing, packaging, pricing, features and benefits don’t hit what appears to be a pretty small target of consumers, you’re out.

Well, why not just focus online? In fact, many companies are doing that and many because they can’t get to retail. The biggest difficulty I see with online is that the competition to get your customers attention is that much more than on shelf.

For example, I was doing some retail research recently in the condiments category.  For BBQ sauce, I found 15 brands at Whole Foods to choose from and 20 brands at Safeway.  But, online for “BBQ sauce” at Amazon, and how many brands do you think will come up? I stopped counting at 50.

I love online and part of my background was doing Internet start-ups for 10 years and every consumer product company has to be there, but securing retail shelf space is still where its at.  To learn more about how to secure shelf space, check out my products page, where I have some publicly available content.

Disclosure: I have not received any compensation for writing this post. I have no material connection to brands, products or services that I have mentioned. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255.

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Activity Summary for Weeks of March 5 & 12, 2012

March 18, 2012 — Leave a comment

Posts

How to develop your brand

Links

Retail/CPG (Consumer Packaged Goods)

  • Interesting service: they build and maintain your food garden for you. ow.ly/9tYm4 I think this is a viable biz idea
  • Analysis: Wal-Mart’s price push tests manufacturers’ prowess: ow.ly/9ucwx
  • RT @dhgisme Kleiner Perkins Explores Next-Gen Agriculture Investing bit.ly/wBlsAn Sorry, KPCB, fake chicken not for me.
  • RT @RethinkRetail: CPGs Increase Account-Specific Marketing:supermarketnews.com/latest-news/cp…Great data here.
  • A peak at some possible organic food trends here: Top 5 Organic Products at 2012 Expo West: ow.ly/9CSkP
  • Nordstrom’s offering free shipping for items bought in-store: ow.ly/9Da9E I don’t foresee many other retailers doing this.
  • Kale is hot, and other takeaways from a huge food show: ow.ly/9FSQn Expowest tradeshow write-up

Dogs

Miscellaneous

  • How to embrace Facebook’s Timeline:ow.ly/9x43W Nice how-to with the why for brands

Disclosure: I have not received any compensation for writing this post. I have no material connection to brands, products or services that I have mentioned. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255.

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Activity Summary for Week of January 30, 2012

February 6, 2012 — Leave a comment

Posts

Links

Retail/CPG (Consumer Packaged Goods)

Training (run, ride, hike, alpine-telemark-XC ski, shooting, weightlifting, rock climb)/Outdoors/Health/Food/Weather/GPS

Disclosure: I have not received any compensation for writing this post. I have no material connection to brands, products or services that I have mentioned. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255.

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The importance of knowing where a consumer category is going

February 2, 2012 — 1 Comment

I met with a small CPG food start-up recently and the discussion focused on the company’s growth strategy.  Only 6 months old, the start-up is generating online sales and is looking to retail distribution, which is the primary reason why I was there.  It is entering a crowded and competitive category for its product (what food category isn’t crowded with competitors these days?), and needs help in figuring out how to hit retail with a line or two of products that provide compelling features and benefits and which afford the company some competitive advantages.

A great place to hike/ride: South Valley Park. Lon/Lat: 39.55732,-105.14467

While nothing was decided in the meeting, I think I may have convinced the company to not go the consumer route, which also means they won’t be hiring me, since my focus is more in consumer products and brands.  Here’s why:

1.  What’s important to the company owners?  The founders/owners place a high priority in sourcing their raw materials from farmers that have sustainable environmental and labor practices.  This is so important that one of the founders spends 6 month a year traveling overseas to develop sourcing relationships with farmers and their communities.

2.  What value is the company creating?  The company has spent generous time and resources cultivating its supply chain.  Most small consumer companies focus more on the consumer brand by carefully developing the features, benefits and competitive advantages of the products.  They go to suppliers who have the systems, processes and expertise to source the raw materials from farms.  The raw materials purchased by this company include unique crop varieties not found anywhere else, which they can further blend to create distinct flavors.

3.  Where can this value be most profitable to the company? To answer this question, its critical to understand where the industry is going.  In this case, the industry that this company operates may be moving in the direction that coffee and tea have already been.  In the last few decades, these industries have seen a proliferation of demand for blends and flavors that are further differentiated by where they are geographically sourced.  As a result, the industries have fragmented with many competitors, large and small, fighting for the consumer’s mindshare.

In the final analysis, the company may be better off becoming a raw materials suppliers to other brands, wholesales and institutional buyers and take a pass on directly developing a consumer brand and products.  It appears that they may have developed some competitive advantages with their ability to source raw materials that have unique flavor characteristics not found anywhere else in the world.  With this advantage, why not sell to other brands and let them duke it out in the marketplace for a share of the consumer’s wallet.  For a small CPG start-up, it is difficult enough just focusing on developing the consumer brand and retail products.  Trying to also develop and own the supply chain and manufacturing spreads management too thin and requires far more investment that may not yield the ROI.

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2012 Retail/CPG trends, from my vantage point

January 4, 2012 — 1 Comment

I was asked this question recently via Twitter, so here are some quick thoughts:

  1. The challenge for manufacturers to pass along cost increases to retailers.
  2. Retailers don’t want to hold inventory; burden on manufacturers to hold more inventory & pay more for frequent,smaller shipments.
  3. Consumer demand for more regional/local products…retailers, especially in natural channel, out looking for such products.
  4. But, so many new small CPG start-ups wanting to get into retail makes for competitive environment for brands.
  5. Consumers paying more attention to ingredients/materials…packaging look, feel and content is important to make the sale.
  6. I see little mobile use yet in-store by consumers. What will be tipping point? E-wallet, in-store navigation???
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