1

PROJECT REPORT ON THE ROLE OF PACKAGING IN THE SALE OF FMCG

PRODUCTS

BACHELOR OF MANAGEMENT STUDIES

SEMESTER V

2014 – 2015

SUBMITTED BY:

AAMIR ANEES MUNSHI

ROLL NO. 46

NAME OF PROJECT GUIDE:

PROF. LAJU SHARMA

H.R. COLLEGE OF COMMERCE AND ECONOMICS

VIDYASAGAR PRINCIPAL K.M. KUNDNANI CHOWK

123, D.W. ROAD, CHURCHGATE, MUMBAI – 400 020

SUBMISSION: DECEMBER 2014

2

DECLARATION

I, Aamir Anees Munshi, student of H.R. College of Commerce & Economics of T.Y.BMS

(SEMESTER V), hereby declare that I have completed this project on ‘The Role of

Packaging in the Sale of FMCG Products’ in the Academic Year 2014 – 2015.

This information submitted in true and original to the best of my knowledge.

SIGNATURE OF THE STUDENT

3

CERTIFICATE

I, Prof. Laju Sharma, hereby certify that Aamir Anees Munshi of H.R. College of

Commerce & Economics of T.Y.BMS (SEMESTER V) has completed a project on ‘The

Role of Packaging in the Sale of FMCG Products’ in the Academic Year 2014 – 2015.

This information submitted is true and original to the best of my knowledge.

SIGNATURE OF THE PROJECT DR. MRS. INDU SHAHANI

CO-ORDINATOR SIGNATURE OF PRINCIPAL OF COLLEGE

INTERNAL EXAMINER EXTERNAL EXAMINER

4

ACKNOWLEDGEMENT

I would firstly like to thank Mumbai University for introducing research projects as a part of

the BMS Curriculum and I feel indebted to H.R. College of Commerce and Economics for

allowing me to choose from among a variety of topics available, to do my project on. The

infrastructural support received from college in terms of reading material has been

tremendous.

This project has been a great learning experience and I gratefully acknowledge the valuable

assistance I received from my Mentor, Project Guide and Professor, Ms. Laju Sharma,

without whose help, guidelines and constant encouragement, this project wouldn’t have been

possible.

I would like to thank my classmates, who helped me in all ways possible despite being my

competitors.

Last but not the least; I would like to thank my parents for their help and support and The

Almighty for having His grace upon me all throughout.

5

EXECUTIVE SUMMARY

The purpose of this project is to study the role of packaging on the sale of FMCG products.

While conducting my research, the survey methodology was employed to understand

consumer buying behaviour toward good packaging and how packaging elements can affect

buying decisions.

The aim of this research is to know the factors that a customer searches for in a package when

he/she is buying an FMCG product and the impact of that package on his/her purchase

decision. It also seeks to identify preferable packaging materials with special emphasis on the

respondent’s views on ‘eco-friendly’ packaging and his/her attitude towards the same.

Packaging is the most important factor. The consumer buying behaviour is dependent on the

packaging and on its features. Packaging elements like color, texture and contrast; shape and

size; cultural references and emotional response are taken as predictors.

Due to increasing self-service and changing consumers’ lifestyle the interest in package as a

tool of sales promotion and stimulator of impulsive buying behaviour is growing

increasingly. So package performs an important role in marketing communications,

especially in the point of sale and could be treated as one of the most important factors

influencing consumer’s purchase decision.

6

TABLE OF CONTENTS

SR. NO. TOPIC PAGE NO.

1. Introduction

- Statement of the Problem

- Objective of the Study

- Hypothesis for the Study

8

2. Research Methodology: Methods and Tools

Research Methods

Data Collection Methods

- Quantitative Data: Surveys

- Qualitative Data Collection

Sampling

Limitations of the Study

11

3. Jo Dikhta Hai Woh Hi Bikta Hai 16

4. Introduction to Packaging

- Meaning of Packaging

- Distribution Related Packaging Considerations

- History of packaging

19

7

5. Packaging Industry

- Introduction

- Origin of Modern Packaging and Canning

- Overview of the packaging industry – A Global as

well as Indian Perspective

23

6. Packaging Types 29

7. Functions of Packaging 34

8. Packaging and Marketing 39

9. Waste Management of Materials used in Packaging 46

10. Overview of FMCG Industry 49

11. Marketing Strategies Adopted by FMCG

- FMCG Marketing Strategy in Rural India

55

12. Role of Packaging in FMCG 61

13. Factors influencing Packaging Decisions 64

14. Packaging as a Medium to Increase Sales 68

15. Research Findings and Analysis of Data 72

16. Recommendation 89

17. Conclusion 90

18. Bibliography 92

19. Annexure 95

8

INTRODUCTION

STATEMENT OF THE PROBLEM

This study will primarily investigate consumer behaviour towards packaging of FMCG

products.

It is about all those factors that must be considered while designing a package which induces

a consumer to buy, also keeping in mind what the consumers will pay for and how it will

benefit them; simultaneously keeping a track of the environmental consequences of the

packaging material used.

Thus, the research is titled “The Role of Packaging in the Sale of FMCG Products.”

9

OBJECTIVES OF THE STUDY

The main objectives of this study are:

1. To find out if Packaging influences a consumer to shift from one brand to another

2. To find out what factors comprise of a good package

3. To find out which aesthetic factor attracts the consumer towards the purchase of an

FMCG product

4. To find out whether the reusability of a package influences a consumer to buy an

FMCG product

5. To find out the most preferred packaging material a consumer would opt for

6. To find out the attitude of consumer towards changes in packaging of preserved foods

7. To find out the impact of an 'eco-friendly' package on the consumer

10

HYPOTHESIS FOR THE STUDY

1. Packaging does not influence a consumer to shift from one brand to another

2. The consumer considers 'convenience' as the only factor which describes a good

package

3. 'Color, texture and contrast' is not an important aesthetic factor that attracts consumers

towards the purchase of an FMCG product

4. The reusable value of a package does not influence the purchase of an FMCG product

5. Plastic is the most preferred packaging material in the 21st century

6. Consumers will prefer innovative packaging each time in case of preserved products

7. Consumers are not willing to pay more for eco-friendly products

11

RESEARCH METHODOLOGY: METHODS AND TOOLS

RESEARCH METHODS

Primary as well as Secondary research was employed in this project.

Primary research is the first hand research that the researcher collects, by interacting with the

sample population and the conclusions and analysis he/she draws from the data that has been

obtained.

Primary research in this project involved interacting with 150 consumers to know,

understand and comprehend the influence of packaging on their buying behaviour and their

individual views on eco-friendly packaging.

Secondary research is the background research done by the researcher on already existing

information regarding the topic.

This helps the researcher in determining whether previous research papers have been written

on that particular topic and if and how new ground on that particular topic can be covered. It

also helps the researcher in building a base for the questions to be asked to the sample

population and to construct an informative questionnaire and ask all the right questions.

Secondary research in this project involved reading and examining various research papers,

journals and books written on or related to ‘The Role of Packaging on the Sale of FMCG

Products’.

12

DATA COLLECTION METHODS

Quantitative Data: Surveys

This method captures information through the input of responses to a research instrument

containing questions (such as a Questionnaire). Information can be input either by the

respondents themselves (E.g.: An Online Survey) or, the researcher can input the data (E.g.: a

phone survey, a one-on-one survey, a mall intercept, etc).

The main methods for distributing surveys are via a website, postal mail, phone, or in person.

However, newer technologies are creating additional delivery options including through

wireless devices, such as smart phones and technologies wherein the information gets

recorded in real time and can be viewed and intercepted very easily through pie charts and

bar graphs.

Surveys for this study were conducted via one-on-one personal interviews with consumers at

their households or workplaces.

Most consumers were forthcoming with their responses and displayed significant interest and

involvement.

Qualitative Data Collection

Qualitative data collection requires researchers to interpret the information gathered, most

often without the benefit of statistical support. If the researcher is well trained in interpreting

respondents’ comments and activities, this form of research can offer very good information.

However, it may not hold the same level of relevancy as quantitative research due to the lack

of scientific controls with this data collection method.

13

For example, a researcher may want to know more about how customers make purchase

decisions. One way to do this is to sit and talk with customers using one-on-one interviews.

However, if the interview process allows the researcher to vary what questions are asked (i.e.,

not all respondents are asked the same questions), then this type of research may lack controls

needed to follow a scientific approach.

14

SAMPLING

Survey Started: June 2014

Survey Completed: October 2014

Geographical Area Covered by the Survey: Across Mumbai City, India – Predominantly

South Bombay including areas of Churchgate, Worli and Byculla.

Definition of the Population:

The survey was done for consumers who indulge in the buying process and make purchases

for their dependants.

Sample Taken:

15

LIMITATIONS OF THE STUDY

1. The paucity of time and resources was the major constraint.

2. The sample size was limited.

3. The sample was taken from the population residing in Mumbai only. Thus the results

are not applicable to the whole of India.

4. Non co-operation of some respondents has also affected the research results.

5. Being an opinion survey, a lot of subjectivity is involved in the study.

6. The possibility of respondents being biased cannot be ruled out.

7. The limited knowledge of the respondents regarding the topic may hamper the true

conclusion of the study.

16

JO DIKHTA HAI WOH HI BIKTA HAI

The earlier approach to marketing was simple enough: make sure the product is visible -

on store shelves and through mass media advertising - and the product will sell itself.

With the evolution of modern retail, the emphasis is shifting to in-store displays and

promotions - probably also because for the first time, the space for such initiatives is

available.

But manufacturers no longer have the last word on what will happen at the store. Modern

trade has a significant say in promotions, perhaps because it offers far superior results

with a much faster lead time.

Sunil Sethi from Cadbury India points out that retailer are more open to brand promotions

and displays - including posters, gondolas and danglers - when manufacturers back up

their ideas with shopper insights. "There will be a shift from traditional media to

increased communication at the point of purchase," he says.

Initiatives that help grow the category as a whole are particularly welcome, say analysts,

since that boosts the retailers' revenue. And many FMCG companies are predicting that

spends on promotion, in-store and point of purchase displays will increase significantly

from the present 20-30 per cent share of the marketing budget.

Consumer goods companies need to make several changes - in strategy and in attitude - if

they are to achieve the same level of success with organized retail as they have with

traditional formats. Printing barcodes on their products would probably be a good place to

start.

17

SHOW YOUR PRODUCTS TO CUSTOMERS

Buyers spend lots of energy in buying and developing the merchandise before it finally

hits the stores. Sometimes, however, it is forgotten that one very critical aspect is the way

the product is presented to customers in the store and overlook issues such as packaging

and in-store display.

The importance of the saying “JO DIKTA HAI WOH BIKTA HAI” cannot be

overestimated. Proper display and presentation can make all the difference between

achieving and not achieving sales targets.

Remember the following:

1. Visual Merchandising: Be involved in the planning of the in-store presentation of

your merchandise. Adequately plan the MDQ‘s (Minimum Display Quantities).

2. Communicating Ideal Presentation Standards: Effectively communicate to the store

staff on how the merchandise should be displayed and the ideal presentation

standards. This could be by way of talking to sales staff directly, sending a mail

before the merchandise arrives at the stores or making a detailed manual at the

beginning of each season.

Remember to look for ways in which the job of the sales staff can be made easier by

improving packing and display methods of the product.

18

Visual Merchandising by Milo

Success Factors for Visual Merchandising

19

INTRODUCTION TO PACKAGING

MEANING OF PACKAGING

Packaging is the science, art and technology of enclosing or protecting products for

distribution, storage, sale, and use.

Packaging also refers to the process of design, evaluation, and production of packages.

Packaging can be described as a coordinated system of preparing goods for transport,

warehousing, logistics, sale, and end use. Packaging contains, protects, preserves,

transports, informs, and sells. In many countries it is fully integrated into government,

business, and institutional, industrial, and personal use.

The wrapping material around a consumer item that serves to contain, identify, describe,

protect, display, promote and otherwise make the product marketable and keep it clean is

a package.

Packaging is more than just your product's pretty face. Your package design may affect

everything from breakage rates in shipment to whether stores will be willing to stock it.

For example, "display ability" is an important concern.

DISTRIBUTION-RELATED PACKAGING CONSIDERATIONS:

Labeling: You may be required to include certain information on the label of your

product when it is distributed in specific ways. For example, labels of food

20

products sold in retail outlets must contain information about their ingredients and

nutritional value.

Characteristics of a Good Labeling

Opening: If your product is one that will be distributed in such a way that

customers will want to--and should be able to--sample or examine it before

buying, your packaging will have to be easy to open and to close again.

If, on the other hand, your product should not be opened by anyone other than the

purchaser--an over-the-counter medication, for instance--then the packaging will

have to be designed to resist and reveal tampering.

Easy to open Dettol packages

21

Size: If your product must be shipped a long distance to its distribution point, then

bulky or heavy packaging may add too much to transportation costs.

Different Packaging Sizes of Amul Ice-cream

Durability: Many products endure rough handling between their production point

and their ultimate consumer. If your distribution system can't be relied upon to

protect your product, your packaging will have to do the job.

22

HISTORY OF PACKAGING

From the very earliest times, humans consumed food where it was found. Families and

villages made or caught what they used. They were also self-sufficient, so there was little

need for packaging of goods, either for storage or transportation. When containers were

needed, nature provided gourds, shells, and leaves. Later, containers were fashioned from

natural materials, such as hollowed logs, woven grasses and animal organs. As ores and

chemical compounds were discovered, metals and pottery were developed, leading to

other packaging forms.

Packaging is used for several purposes:

Carries the products and defines the amount the consumer will purchase.

Protects the products from contamination, environmental damage and theft

Facilitate transportation and storing of products.

Provides relevant information and colorful designs that make attractive displays.

Some of the most popular packaging developments are:

Paper and Paper products

Glass

Metals

Plastic

23

PACAKGING INDUSTRY

INTRODUCTION

In preindustrial society, packaging of food was far from being unknown. It was used for

food storage at home and for transport from the production place, the farm, or workshop

to the local or regional market.

Examples are the transport of cereals or flour in bags, tea in wooden boxes or tinplate

canisters, and oils in jars. At the household level, people salted meat and pickled

vegetables and preserved them in jars.

In groceries at the end of the nineteenth century, most commodities were still unpacked

and sold in bulk. Products such as tea, coffee, sugar, flour, or dried fruits were weighed

out in front of the customer and wrapped in paper or put into a bag.

In major cities in the 1880s, the milkman came around with a dipper and can to deliver

milk, which was often dirty.

ORIGIN OF MODERN PACKAGING AND CANNING

Early methods of sealing jars included waxed paper, leather, or skin, followed by cork

stoppers and wax sealers. The beginning of modern food technology started with the

experiments of the French confectioner Nicolas Appert (1750–1841).

24

In 1795, the French government offered a prize of 12,000 francs to anyone who could

find a way to preserve food because Napoleon Bonaparte needed to provide the military

with a safe food supply. (The requirements of providing adequate food supplies for

armies and navies have been of great significance in the history of modern packaging and

food preservation.) After fourteen years of experimentation, Appert developed a method

for preserving foods by heating.

The food, meat, or vegetables, was first cooked in open kettles and placed in glass jars.

After removing as much air as possible, the jars were carefully sealed with corks wired in

place and then submerged in boiling water.

Appert chose glass for the container because he believed that it was air that caused the

spoilage—glass is a material least penetrated by air. It is of importance to note that, in

Appert's time, it was not known that micro-organisms caused food to spoil. The processes

involved in food spoilage were not understood until the second half of the nineteenth

century.

In 1810 Appert published his prize-winning essay on food preservation and the French

emperor Napoleon awarded the 12,000-franc prize to him. Within a year, an English

version appeared in London, and the new method of preserving food in glass spread

quickly to other countries.

25

CANNING:

Two individuals in England are given credit for applying and improving Appert's

invention, Bryan Donkin and Peter Durand.

Bryan Donkin, an associate of John Hall's at his Dartford Iron Works, realized in 1811

that iron containers could be used instead of the fragile glass, and in 1812 the factory

began to produce canned food such as meat. In 1810, Peter Durand patented the use of

metal containers, which were easier to make and harder to break than glass jars. (The

glass jars used by Appert frequently broke.) He covered iron cans, which were prone to

rust, with a thin plating of tin (which is not adversely affected by water), and invented the

"tin can." By 1813, Durand was selling canned meat to the Royal Navy. The British

admiralty bought these foods as part of the medical stores for distribution to sick men as

well as to supply expeditions.

By 1819 canning had arrived in the United States, but no one wanted canned food until

the Civil War started. In 1821, the William Underwood Company in Boston introduced

commercial canning in the United States. For a long time, people regarded canned foods

with suspicion, and for good reasons.

In the middle of the nineteenth century, the foods produced by the canning industry were

as likely to spoil as not because of inadequate heating techniques. Then, beginning in

1868, first in the United States and later in Europe, handmade cans were replaced by

machine-cut types. The new technology made it possible for giant meat-canning firms to

emerge in Chicago and Cincinnati.

26

The product, however, was packed in big, thick, clumsy red cans and was not very

appetizing.

The American Gail Borden was a pioneer in food canning. In 1856 he successfully

produced sweetened condensed milk in cans and was granted a patent on the process.

With financial support, the New York Condensed Milk Company was established in

1857. The demand for condensed milk was at first limited, but during the American Civil

War (1861–1865) it was introduced on a large scale.

The Civil War contributed significantly to the popularization of canned foods in general.

The army had to be fed and the government contracted with firms to supply food. Under

difficult circumstances, people learned that canned foods such as condensed milk can be

tasty and nourishing. The invention of practical can openers at the end of the nineteenth

century made cans easier to open, making them even more convenient for consumers.

For many years, however, the flavor of most canned food left much to be desired. On the

other hand, it should be realized that products such as canned peas and salmon were

usually sold to people living on the American prairies or in the urban slums in Great

Britain, most of whom had never eaten the fresh product. In addition, losses due to

spoilage caused by microorganisms remained high.

It was not until the end of the nineteenth century that research carried out at

Massachusetts Institute of Technology made a substantial contribution to improving the

keeping quality, nutritional value, and taste of food products preserved in cans and glass.

27

In the early twentieth century, the heavy cans were replaced by those made of lighter

materials, and manufacturers could stress that their products were hsygienically processed

and, therefore, safer to eat than the traditionally unpackaged products that had been sold

in bulk. As food technology advanced, numerous chemical additives were developed to

control or speed up food processing and to increase the keeping quality of canned foods.

Originally, the nutritional value of food preserved by canning was not high, mainly due to

the length of time required by the heating techniques. From the 1920s onward, however,

the nutritional value of canned foods gradually approached that of the fresh product,

thanks to modern food technology. Finally, in the 1960s, Reynolds and Alcoa companies

succeeded in making all-aluminum cans out of one piece of metal, thereby solving the

problem of the weight of the cans; only the lid needed to be attached (Clark, 1977). At the

same time, the invention of the rip-off closure and the pop-top lid on aluminum cans

made them even more convenient, and made can openers unnecessary. For consumers, the

choice between fresh or canned food became largely a question of taste, convenience, and

preference.

28

OVERVIEW OF THE PACKAGING INDUSTRY – A GLOBAL AS WELL AS

INDIAN PERSPECTIVE

The annual turnover of Indian packaging industry will touch $ 32 billion by 2025 from

the present $ 24.6 billion, said Union Minister of State for Commerce and Industry, E M

Sudarsana Natchiappan.

"In the world scenario, the total turnover of packaging industry is about $ 550 billion

where Indian share is about $ 24.6 billion per annum.”

"The annual growth rate of this sector is about 15 per cent per annum.” Natchiappan said

after laying foundation stone of new educational complex and international packaging

centre.

As per the Mckinsey report, there will be ten times increase of middle class population by

2025 in India which will further trigger the consumption of packaging material and thus,

the packaging industry will grow further, he said, adding that the country needs more

packaging professionals.

If you look at packaging design in rural India, it’s very compelling as everything is

natural. India can become a technology transfer driven country by rejuvenating the use of

agricultural by-products for packaging. India has the potential to be a world leader in

packaging and innovation going forward

29

PACKAGING TYPES

Protecting goods is very important. Food, electronics, clothes, furniture and other

consumer goods all come in packaging meant to protect them during transportation and

storage. There are different types of packaging solutions and materials. Packaging can be

standard or custom made, for instance.

Paper and Carton Packaging:

Paper and carton packaging is used for different types of goods (food, electronics,

toys, shoes, kitchenware and even other packaging materials). Paper and carton

packaging companies produce wrapping paper, inflated paper, sheets, boxes,

tubes, pallets, interlayer‘s, corners, edges and custom protective systems

(depending on the dimension and shape of the packed good, the carton is cut and

modeled to fix and protect the product). Paper can be used to laminate other

materials in order to make them stronger. There is also anticorrosive paper that

can be used to wrap goods or to laminate other materials.

Paper and Carton Packaging

30

Film Packaging:

There are multiple types of films used in the packaging industry, most commonly

polyethylene (PE), polypropylene (PP), polyolefin and polyvinyl chloride (PVC)

films. The films usually come on a roll and are used to wrap goods, cover goods,

protect boxes and make other packaging products (such as bags, tubes, bubble

wrap and sheets). Films can be used for lamination, printed or perforated. They

can be anticorrosive, antistatic, shrinkable or non shrinkable, and slippery or non

slippery.

Film Packaging

31

Foam Packaging:

Foam used for packaging can be produced on a roll or in sheets of different

thicknesses. The foam is used to wrap goods or make bags, corners, edges and

custom systems. The corners and edges are used to protect flat glass, furniture and

sharp edges. Foam can be cut and modeled on the product's shape to fix and

protect it. It can be antistatic and has good insulation properties.

Foam Packaging

32

Textile Packaging:

There are some goods that are best protected by textiles. For example, there are

custom-made textile insertions used in the automotive industry to protect car parts

during transportation. The textile insert is put on a metal frame that fits into a

metal container. There is also textile material used for box covers.

Plastic Boxes and Containers:

Multiple types of plastic boxes and containers are used in all industries. For

example, in the food industry there are plastic containers for goods like ketchup,

yogurt, milk and juices. Plastic boxes are mainly used for transporting goods and

are reusable. They can be stacked, folded when empty to save storage space and

recycled.

Plastic Containers

33

Packaging Systems:

Packaging companies offer different types of systems that can be divided into two

categories: special solutions and packaging machines.

The special solutions are used for valuable products that don't have a regular,

simple shape. For example, parts of airplanes or expensive decorative glass

objects need special solutions to be packed. The goods fit perfectly into the

packaging and are protected against damages.

Packaging machines are used for wrapping (wrapping the stretch film on the

pallet), strapping (applying and sealing straps on boxes), sealing (with tape for

boxes and with heat for films) and shrink wrapping (applying PVC or polyolefin

film on products or boxes). There are also machines that inflate film, paper and

instant foam.

Other Types:

Adhesive tapes are also considered packaging materials, as they help seal boxes.

They are usually made out of PE or PP film that has acrylic or solvent glue

applied to it and that can be printed on. Strapping tapes are usually applied on

boxes or pallets. They are made out of PE or PP and can be printed with one color.

The standard colors are black and clear for PP and green for PE.

34

FUNCTIONS OF PACAKGING

The basic functions of packaging are – to protect, distribute, inform, attract and sell.

However, here you face a special challenge: how to combine beauty and practicality?

How to convey the vital product promise in a superbly aesthetic way and at the same time

optimize all those functions necessary for a profitable business?

The choice of material is crucial: durability, weight, formability, color, texture, touch and

feel, costs, filling line requirements, source reduction and other ecological aspects. In

primary packaging, glass and plastic are the predominant options but not the only ones.

In secondary packaging, paperboard carton is the clear winner with superb performance

across all packaging functions.

The heart of the matter, however, is not the material but how to use it. There‘s no end to

what innovation can do – better functionality from product protection to user

convenience, new designs, forms and packaging concepts, even totally new business

models. Therefore, promoting innovativeness is the key ingredient in the service palette.

Billions of pounds are spent on packaging food and other items each year. Sixty percent

of all packaging is for food products. At the beginning of the 20th century most food was

sold loose. It was weighed and measured out and placed in bags or directly into the

shopper‘s bag to carry home. Packaging and advertising were virtually unknown. Today

packaging is a massive, lucrative industry and often it is the way the packaging looks that

persuades the shopper to buy the product inside it.

35

FUNCTIONS

Protective Function:

The protective function of packaging essentially involves protecting the contents

from the environment and vice versa. The inward protective function is intended

to ensure full retention of the utility value of the packaged goods. The packaging

is thus intended to protect the goods from loss, damage and theft. In addition,

packaging must also reliably be able to withstand the many different static and

dynamic forces to which it is subjected during transport, handling and storage

operations. The goods frequently also require protection from climatic conditions,

such as temperature, humidity, precipitation and solar radiation, which may

require "inward packaging measures" in addition to any "outward packaging

measures".

36

The outward protection provided by the packaging must prevent any

environmental degradation by the goods. This requirement is of particular

significance in the transport of hazardous materials, with protection of humans

being of primary importance. The packaging must furthermore as far as possible

prevent any contamination, damage or other negative impact upon the

environment and other goods. The inward and outward protective function

primarily places demands upon the strength, resistance and leak proof properties

of transport packaging.

Sales Function:

The purpose of the sales function of a package is to enable or promote the sales

process and to make it more efficient. It is rightly said that packaging works as

silent, salesman. It catches the attention of customers, who pick up the product, go

through its description and are induced to purchase the product. Self service is

becoming more and more common in the field of shopping, where the customer

picks up the product himself and makes its payment on the counter. Packaging in

these circumstances promotes the sales.

Promotion Function:

Promotional material placed on the packaging is intended to attract the potential

purchaser's attention and to have a positive impact upon the purchasing decision.

Promotional material on packaging plays a particularly important role on sales

packaging as it is directly addressed to the consumer. This function is of

37

subordinate significance in transport packaging. While product awareness is

indeed generated along the transport chain, excessive promotion also increases the

risk of theft.

Service Function:

The various items of information printed on packaging provide the consumer with

details about the contents and use of the particular product. Examples are the

nutritional details on yogurt pots or dosage information on medicines. The

package may also perform a further function once the contents have been used

(e.g. storage container, toy).

Guarantee Function:

By supplying an undamaged and unblemished package, the manufacturer

guarantees that the details on the packaging correspond to the contents. The

packaging is therefore the basis for branded goods, consumer protection and

product liability. There are several legalislative requirements to be followed in

every country with respect to packaging.

Highlighted below are the common requirements in India as per The Standards of

Weights and Measures Act, 1976:

The name and address of the manufacturer or where the manufacturer is

not the packer.

38

The name and address of the manufacturer and packer.

The common or generic names of the commodity contained in the

package.

The net quantity in terms of the standard unit of weight or measure, of the

commodity contained in the package or where the commodity is packed or

sold by number, the number of commodity contained in the package.

The month and year in which the commodity is manufactured or pre-

packed.

The retail price of the package.

The retail sale price of the package.

39

PACAKGING AND MARKETING

Thousands of new products are introduced every year, more than 15,000 to be exact. How

can your product compete, not only with established brands but with the plethora of new

products that are being introduced? The answer of course is THE PACKAGING. The

right packaging with the right message will rise above the competitive landscape.

But how many companies understand the value behind packaging as a marketing tool?

Most just look at it as a way to convey the product or recycle tired images and product

packaging that doesn't work.

Understanding the complexities of how a package reaches out to a consumer is one of the

most important things to understand. Communicating that message on product packaging

is a time consuming and difficult challenge.

The answer derives from understanding what the consumer wants from their product

packaging.

A good way to assess this problem is to look at yourself and how and where you shop?

What compels you to look at a new product? What drew you to pick it up and take a

closer look?

Your answer may be different from that of another member of your family or a significant

other but the message is the same. You were intrigued enough by whatever ever that

40

made you pick up the product and take a closer look. That's half the battle won because

your product will never sell if someone doesn't pick it up in the first place.

Here are a few questions to ask yourself about your package. Remember think from the

consumers' perspective not from the manufacturers.

Is it new and innovative?

Is it fulfilling a need?

Is it easy to use and convenient?

Is it a good value?

Does it make the consumer happy?

Does it inspire consumer trust and loyalty?

Is it safe and secure?

Does it compel you to want to know more?

How does your product stack up in solving a consumer want or need?

Would your package make someone desire to take a closer look?

Remember it's the package talking here. It's the one doing the work – marketing what's

inside to the customer. That's what you need to drill in your brain about your package -

why buy me?

Evaluating or developing product packaging with the consumer in mind is your first step

in creating a package that markets all the products attributes to the ultimate decision

maker – the customer.

41

Don't get concerned if your package doesn't do all of the above. It only takes one unique

attribute that will intrigue a consumer to take a closer look. Of course the more needs you

can fulfill the better "connection" to the consumer. The "consumer connection" is what

you are trying to create. So think outside the typical behavior and solve the hidden need

that will make a consumer buy your product and not competitors.

Packaging is a complicated intricate process. Understanding it requires time and

consideration. It‘s not just about getting the product there. It‘s also about getting the

product to SELL.

Branding and packaging are two of the most important components of marketing.

Branding is a term used to describe the name, description and design of a product.

Branding differentiates a company's product from their competition. Packing is a

marketing tool used to reflect the brand. A company uses packaging to sell the product

inside. The colors, fonts, descriptions and logo are designed to drive consumers to buy the

product.

Sales:

The entire focus of a marketing department is to strategize methods to sell the company's

products. Branding and packaging are two of the most effective ways to do this. Once a

brand has been determined, methods are employed to sell the product. Advertising, the

company website and product packaging must all present a cohesive brand or image. In

successful brand campaigns, customers recognize the company's product packaging and

purchase in part because they identify with the brand.

42

Branding:

When a company brands a product, they determine its "personality." Creating a brand that

is instantly recognizable and perceived positively is the ultimate goal. Branding integrates

components such as color, style and visual imagery to distinguish a company's products

from the competition. Developing logos, slogans and tag lines are all ways that marketers

communicate a specific brand.

Slogans:

One of the most effective methods of branding is the use of slogans. Companies often

identify a specific characteristic that sets their product apart from the competition. The

slogan becomes a key component in all marketing efforts, including packaging. For

example, Nike has effectively marketed both their logo and slogan "Just do it" into an

easily recognized brand.

Packaging:

Packing is designed to capture a customer's attention and it can directly affect whether

they buy the product or not. Innovation and creativity come into play when it comes to

packaging. A well-marketed product is packaged in a way that compels the customer to

pick it up and take a closer look, at which point product descriptions and graphics must be

clear.

Packaging Tools:

Colors, fonts, descriptions and logos are the tools that are used in packaging design.

Companies market their brands by creating a specific "look and feel" to their product's

43

packaging. A customer must feel comfortable enough with the presentation of the

company's brand to want to purchase the product.

Company Image:

Branding and packaging are created by a company. While these efforts are used to market

products, they in turn market the company itself. Branding reflects the image that the

company seeks to project. For example, IBM takes on a more conservative, well-

established corporate image while Apple brands itself as a hip and cutting edge company.

These images reflect the market that the company has identified as target customers.

IBM Packaging

Apple Packaging

44

Brand Identity and Differentiation:

As the only part of the marketing communication that the consumer takes home,

packaging plays a key role in communicating and reinforcing brand values over time.

Packaging has the power to make, but also to break brand relationships.

A key example of the latter, is a case cited by Hofmeyr and Rice, where a change in pack

design contributed towards a drop in a leading beer brand‘s market share by more than

20% in the space of just one year. Nothing other than the packaging had changed – the

product itself had not changed in any way. The pack change, although not dramatic (the

same style but with lighter coloring) led to a perception that the beer‘s quality had been

compromised and that it was now weaker. This caused many previously loyal consumers

to lose faith in the brand and to move to the brand’s – stronger competitors instead. This

is a clear example of the power of bad packaging. Although a non-favorable

advertisement might be quickly forgotten, poor packaging (if it remains with the brand

throughout its usage cycle) provides a continual reminder of the brand’s perceived failing.

Likewise, favorable packaging can be a means of continually reinforcing the brand‘s

appeal.

Bear Beer which was Darker in Color

45

Hogshead Beer which was Lighter in Color

46

WASTE MANAGEMENT OF MATERIALS USED IN PACKAGING

Package development involves considerations for sustainability, environmental

responsibility, and applicable environmental and recycling regulations. It may involve a

lifecycle assessment which considers the material and energy inputs and outputs to the

package, the packaged product (contents), the packaging process, the logistics system,

waste management, etc. It is necessary to know the relevant regulatory requirements for

point of manufacture, sale, and use.

The traditional three R‘s – reduce, reuse, and recycle are part of a waste hierarchy which

may be considered in product and package development.

Waste Management Hierarchy

47

Prevention:

Waste prevention is a primary goal. Packaging should be used only where needed.

Proper packaging can also help prevent waste. Packaging plays an important part

in preventing loss or damage to the packaged-product (contents). Usually, the

energy content and material usage of the product being packaged are much greater

than that of the package. A vital function of the package is to protect the product

for its intended use: if the product is damaged or degraded, its entire energy and

material content may be lost.

Minimization/Source Reduction:

The mass and volume of packaging (per unit of contents) can be measured and

used as one of the criteria to minimize during the package design process. Usually

―reduced packaging also helps minimize costs. Packaging engineers continue to

work toward reduced packaging.

Reuse:

The reuse of a package or component for other purposes is encouraged.

Returnable packaging has long been useful (and economically viable) for closed

loop logistics systems. Inspection, cleaning, repair are often needed. Some

manufacturers re-use the packaging of the incoming parts for a product, either as

packaging for the outgoing product or as part of the product itself.

48

Recycling:

Recycling is the reprocessing of materials (pre and post consumer) into new

products. Emphasis is focused on recycling the largest primary components of a

package: steel, aluminum, papers, plastics, etc. Small components can be chosen

which are not difficult to separate and do not contaminate recycling operations.

Energy recovery:

Waste-to-energy and refuse-derived fuel in approved facilities are able to make

use of the heat available from the packaging components.

Disposal:

Incineration and placement in a sanitary landfill are needed for some materials.

Certain states within the US regulate packages for toxic contents, which have the

potential to contaminate emissions and ash from incineration and leach ate from

landfill. Packages should not be littered.

Development of sustainable packaging is an area of considerable interest by

standards organizations, government, consumers, packagers, and retailers.

Sustainable packaging must meet the functional and economic needs of the

present without compromising the ability of future generations to meet their own

needs.

49

OVERVIEW OF FMCG INDUSTRY

The FMCG industry manages consumer packaged goods - production, distribution to

marketing. The Indian FMCG industry is the fourth largest industrial sector that has

stayed recession-resilient and shows signs of bright future.

The Fast Moving Consumer Goods (FMCG) industry primarily deals with the production,

distribution and marketing of consumer packaged goods, i.e. those categories of products

that are consumed at regular intervals.

Examples include food & beverage, personal care, pharmaceuticals, plastic goods, paper

& stationery and household products etc.

The industry is vast and offers a wide range of job opportunities in functions such as

sales, supply chain, finance, marketing, operations, purchasing, human resources, product

development and general management.

FMCG & SMCG Products

50

India is a consumer driven market, with consumer spending in the country projected

to more than double by 2025. These days, the Indian consumer segment, broadly

categorized into urban and rural markets, is attracting marketers from across the globe.

Global corporations see India as a key market for the future. The growth in the country's

consumer market is largely driven by a young demographic and rising disposable income.

If India sustains its current pace of growth for the foreseeable future, average household

incomes will likely triple over the next twenty years and the country will become the

world's fifth largest consumer economy by 2025, as per a study by the McKinsey Global

Institute (MGI).

The Government of India has also played a significant role in the growth of the Indian

consumer segment. It has brought about policies which have attracted foreign direct

investment (FDI) and consequently boosted economic growth.

Market size

India has the potential to become the world's largest middle class consumer market with

an aggregated consumer spend of nearly US$ 13 trillion by 2030, as per a report by

Deloitte titled 'India matters: Winning in growth markets'.

Driven by growing incomes and increasing affordability, the consumer durables market is

projected to expand at a compound annual growth rate (CAGR) of 14.8 per cent, from

US$ 7.3 billion in FY12 to US$ 12.5 billion in FY15.

51

Online retailing, both direct and via marketplaces, will grow threefold to become a Rs

50,000 crore (US$ 8.26 billion) industry by 2016, driven by a 50-55 per cent per year

growth over the next three years, as per rating agency CRISIL. The growth

of internet retail is also expected to boost offline retail stores.

Urban markets account for the major share (65 per cent) of total revenues in the consumer

durables sector in India. Demand in urban markets is likely to increase for non-essential

products such as LED TVs, laptops, split ACs and beauty and wellness products. In rural

markets, durables like refrigerators as well as consumer electronic goods are likely to

witness growing demand in the coming years as the Government of India plans to invest

significantly in rural electrification.

Demand growth is likely to accelerate with rising disposable incomes and easy access

to credit. Increasing electrification of rural areas and wide usability of online sales would

also aid growth in demand.

Future Prospects:

The only threats to this strong growth trajectory remain the high portion of unorganized

trade, the limited distribution network of new entrants and the pressure on profit margins

due to increasing competition. But these are likely to be of diminished importance as

proportion of organized trade increases and players invest in improving distribution.

Going forward, the industry prospects remain attractive, and new graduates can hope to

leverage the training and on-the-job learning at the leading players in various functional

roles, across the metros as well as the interior heartlands of India.

52

Scope of the Sector:

The Indian FMCG sector is the fourth largest sector in the economy. A well-established

distribution network, intense competition between the organized and unorganized

segments characterizes the sector.

Hair care, household care, male grooming, female hygiene, and the chocolates and

confectionery categories are estimated to be the fastest growing segments, says an HSBC

report. Though the sector witnessed a slower growth in 2002-2004, it has been able to

make a fine recovery since then.

Growth Prospects:

With the presence of 12.2% of the world population in the villages of India, the Indian

rural FMCG market is something no one can overlook. Increased focus on farm sector

will boost rural incomes, hence providing better growth prospects to the FMCG

companies. Better infrastructure facilities will improve their supply chain.

FMCG sector is also likely to benefit from growing demand in the market. Because of the

low per capita consumption for almost all the products in the country, FMCG companies

have immense possibilities for growth. And if the companies are able to change the

mindset of the consumers, i.e. if they are able to take the consumers to branded products

and offer new generation products, they would be able to generate higher growth in the

near future.

53

Increase in the urban population, along with increase in income levels and the availability

of new categories, would help the urban areas maintain their position in terms of

consumption. At present, urban India accounts for 66% of total FMCG consumption, with

rural India accounting for the remaining 34%. However, rural India accounts for more

than 40% consumption in major FMCG categories such as personal care, fabric care, and

hot beverages.

In urban areas, home and personal care category, including skin care, household care and

feminine hygiene, will keep growing at relatively attractive rates. Within the foods

segment, it is estimated that processed foods, bakery, and dairy are long-term growth

categories in both rural and urban areas.

Indian Competitiveness and Comparison with the World Markets:

The following factors make India a competitive player in FMCG sector:

Availability of raw materials:

Because of the diverse agro-climatic conditions in India, there is a large raw

material base suitable for food processing industries. India is the largest producer

of livestock, milk, sugarcane, coconut, spices and cashew and is the second largest

producer of rice, wheat and fruits & vegetables. India also produces caustic soda

and soda ash, which are required for the production of soaps and detergents. The

availability of these raw materials gives India the location advantage.

54

Labor cost comparison:

Low cost labor gives India a competitive advantage. India's labor cost is amongst

the lowest in the world, after China & Indonesia. Low labor costs give the

advantage of low cost of production. Many MNC's have established their plants in

India to outsource for domestic and export markets.

Presence across value chain:

Indian companies have their presence across the value chain of FMCG sector,

right from the supply of raw materials to packaged goods in the food-processing

sector. This brings India a more cost competitive advantage. For example, Amul

supplies milk as well as dairy products like cheese, butter, etc

Growth of FMCG Industry over the years

55

MARKETING STRATEGIES ADOPTED BY FMCG

Marketing strategy is a process that can allow an organization to concentrate its limited

resources on the greatest opportunities to increase sales and achieve a sustainable

competitive. A marketing strategy should be centered on the key concept that customer is the

main goal.

SWOT Analysis Strategy:

Strengths:

a) Low operational costs

b) Presence of established distribution networks in both urban and rural areas

c) Presence of well-known brands in FMCG sector

Weaknesses:

a) Lower scope of investing in technology and achieving economies of scale,

especially in small sectors

b) Low exports levels

Opportunities:

a) Untapped rural market

b) Rising income levels i.e. increase in purchasing power of consumers

c) Large domestic market- a population of over one billion.

d) Export potential

e) High consumer goods spending

Threats:

a) Removal of import restrictions resulting in replacing of domestic brands

b) Slowdown in rural demand Tax and regulatory structure

56

FMCG MARKETING STRATEGY IN RURAL INDIA

Rural Marketing in India is still about a van campaign, a badly-made commercial, a few

painted walls and the occasional participation in village mandis and melas.

But then, "rural" means different things to different people: from 500,000 people for

consumer durables, to less than 50,000 for fast-moving consumer goods.

Still, it is heartening to note the increasing awareness of the importance of rural markets - or,

at least, of companies wanting to move beyond urban boundaries.

According to estimates by the Rural Marketing Agencies Association of India, the total

budget for rural marketing is only about Rs 500 crores (Rs 5 billion), compared to the over Rs

13,000 crores (Rs 130 billion) allotted to mass media.

This is grossly inadequate to cover the huge potential for different products in rural markets.

Of course, clients' reluctance to spend big money for bigger results in rural markets is

because there are no standard performance yardsticks for judging the efficacy of the rural

marketing efforts.

Companies like Cavin Kare (Chik Shampoo, Meera Herbal Powder, Fairever Cream and so

on), Anchor (100 per cent vegetarian toothpaste), Ghadi detergent powder and Power soap

are proof that regional brands can become brands to reckon with. And don't forget Nirma, the

most enduring example of a brand that began as a regional player and is now a giant.

57

What did these products do that was so different? Most of them identified a segment that was

vacant in terms of product and area of operation. They all started in small, concentrated

markets, appealing to the local ethos and aspirations of the targeted area.

Their communication, be it a simple radio spot or a wall painting or a theatre film, touched a

chord in the target audience. And, most importantly, their policies were flexible and they

could adopt to fast changing marketing situations.

What should companies do to step up their payback from rural marketing efforts? Here are

some steps that should help.

People power:

Total commitment from top leadership, keeping in mind that rural marketing is a

long-term relationship, is imperative - the successes of Hindustan Unilever and

ITC are proof of this statement.

But even more important is the need for a dedicated task force. Rural marketing

efforts need special mindsets, which many of the urban-oriented management

graduates who are at the helm of affairs at most organizations do not possess.

A separate marketing and sales vertical headed by people with passion and

commitment to rural marketing and supported by a field team that can face the

rough and tough of the vast country-side with courage and conviction is a must.

58

The best bet is to recruit students from specialized institutes such as the Indian

Institute of Rural Management, or at least, management graduates who have

studied the subject as an elective.

Many of these are students from small towns, people with fire in their bellies who

want to prove themselves in big companies and have no issues about working in

smaller markets. Pay them well - remember and discuss the path their careers are

likely to take in the organization. And send them out in the field only after

thorough training.

Ensure the consistency of the team involved in any project, until the completion of

a specific task.

Goals are good

Early on in the campaign, define your objective: is it a tactical effort to achieve

increased sales in specific areas during a specific time, or do you want to build a

strong equity for your brand in rural India?

Experience with FMCG companies shows that they are more interested in the first

choice. Most of them have previously appointed vendors who implement the

company's ideas blindly, be they van campaigns or below-the-line activities.

59

There is very little effort to tailor whatever communication is made in such

efforts, to suit the local audience or fit it with the overall campaign efforts in the

mass media.

This invariably leads to less than satisfactory results in terms of awareness of the

brands and long-term impact of the efforts in the targeted markets. If you are

interested in the second alternative, a comprehensive brand building strategy in

rural India, with both short term and long term goals, is a must.

Know your customers

A good place to begin is studying the mindset of your customers, so you can

create a customized plan of action. All too often, clients insist their knowledge of

their customers (based on studies of urban India) is enough on which to base an

action plan. Our experience shows that the attitudes, aspirations and fears of rural

customers, with regard to products and brands, are very different from their urban

counterparts.

Research can give you invaluable ideas for new product development as well as

new methods of reaching your target audience. The refrigerator with standby

power for 12 hours, pressure cookers with two handles and a radio with key-

winding mechanism are all the result of research.

More and more companies turn to the local mandis to sell their products. While

mandis offer opportunities to target consumers from several villages at one place,

60

and to that extent make your effort cost-effective, ensure that the people who

patronize these mandis are the kind who will buy your brand.

Ensure availability

It is a task of physically reaching your product to over 600,000 villages, most of

them without motorable roads. But it's not really as nightmarish as it is made out

to be, at least keeping in mind the present goals of marketing companies in rural

India.

We've all heard about the shampoo sachets that are available in even the smallest

villages. How does that happen? It's a direct result of rising aspirations, fuelled by

television commercials. The consumer demands the product from the local

shopkeeper, who then buys the products from the nearest feeder markets.

Which means if you can ensure distribution to the feeder markets in towns or

villages with populations of 10-15,000, you‘ve already taken the first step towards

reaching your target customer?

Studies also indicate that rural consumers prefer to shop for durables such as

televisions, automobiles and appliances in the nearest big town or city. So, if your

products are in towns with populations of 50,000, you're closer to the rural

consumer than you would have thought.

61

ROLE OF PACKAGING IN FMCG

The importance of packaging design as a vehicle for communication and branding is

growing in competitive markets for packaged FMCG products.

The challenge for researchers is to integrate packaging into an effective purchasing

decision model, by understanding consumer‘s behavior towards the packaging of FMCG

products.

When consumers search for and process information in-store, the product's package can

contain relevant and useful information for the consumer. Product packaging forms the

end of the 'promotion-chain' and is close in time to the actual purchase and may therefore

play an important role in predicting consumer outcomes.

Packages also deliver brand identification and label information like usage instructions,

contents, and list of ingredients or raw materials, warnings for use and directives for care

of product.

“Packaging is the container for a product – encompassing the physical appearance of the

container and including the design, color, shape, labeling and materials used”

Packaging has a huge role to play in the positioning of products. Package design shapes

consumer perceptions and can be the determining factor in point-of-purchase decisions

which characterize the majority of shopping occasions.

62

In recent years, the marketing environment has become increasingly complex and

competitive. A product‘s packaging is something which all buyers experience and which

has strong potential to engage the majority of the target market. This makes it an

extremely powerful and unique tool in the modern marketing environment.

In addition to its benefits in terms of reach, some marketers believe that packaging is

actually more influential than advertising in influencing consumers, as it has a more direct

impact on how they perceive and experience the product.

“In most cases, the experience has been that pack designs are more likely to influence the

consumer perception of the brand.”

For products with low advertising support, packaging takes on an even more significant

role as the key vehicle for communicating the brand positioning.

Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods

(CPG), are products that are sold quickly at relatively low cost. Though the absolute

profit made on FMCG products is relatively small, they generally sell in large quantities,

so the cumulative profit on such products can be large.

Examples of FMCG generally include a wide range of frequently purchased consumer

products such as toiletries, soap, cosmetics, teeth cleaning products, shaving products and

detergents, as well as other non-durables such as glassware, light bulbs, batteries, paper

products and plastic goods. FMCG may also include pharmaceuticals, consumer

packaged food products and drinks.

63

Unlike other economy sectors, FMCG share float in a steady manner irrespective of

global market dip, because they generally satisfy rather fundamental - as opposed to

luxurious - needs.

The Relevance of Packaging as a Marketing Tool:

Never underestimate the importance of packaging. Marketers often measure consumer

brand perceptions and ignore the pack. Yet we know from the way that consumers react

to unbranded products that packaging plays a huge role in reinforcing consumer

perceptions. Packaging helps to drive the way consumers experience a product. Yet, we

spend little time researching the connections between packaging and the direct experience

of the product (Rice and Hofmeyr, 2000, Commitment-led Marketing, pg 216). Before

one can assess or question the current thinking regarding packaging research (and

whether the research into packaging suitably reflects its value within the marketing mix),

one must first assess whether packaging as a marketing tool really justifies more

attention.

64

FACTORS INFLUENCING PACKAGING DECISIONS

Packaging decisions are important for several reasons including:

Protection:

Packaging is used to protect the product from damage during shipping and

handling, and to lessen spoilage if the package is exposed to air or other elements.

65

Visibility:

Packaging design is used to capture customers‘attention as they are shopping or

glancing through a catalog or website. This is particularly important for customers

who are not familiar with the product and in situations, such as those found in

grocery stores, where a product must stand out among thousands of other

products. Packaging designs that standout are more likely to be remembered on

future shopping trips.

Added Value:

Packaging design and structure can add value to a product. For instance, benefits

can be obtained from package structures that make the product easier to use while

stylistic designs can make the product more attractive to display in the customer‘s

home.

Distributor Acceptance:

Packaging decisions must not only be accepted by the final customer, they may

also have to be accepted by distributors who sell the product for the supplier. For

instance, a retailer may not accept packages unless they conform to requirements

they have for storing products on their shelves.

66

Cost:

Packaging can represent a significant portion of a product‘s selling price. For

example, it is estimated that in the cosmetics industry the packaging cost of some

products may be as high as 40% of a product‘s selling price. Smart packaging

decisions can help reduce costs and possibly lead to higher profits.

Expensive to Create:

Developing new packaging can be extremely expensive. The costs involved in

creating new packaging include: graphic and structural design, production,

customer testing, possible destruction of leftover old packaging, and possible

advertising to inform customer of the new packaging.

Long Term Decision:

When companies create a new package it is most often with the intention of

having the design on the market for an extended period of time. In fact, changing a

product‘s packaging too frequently can have negative effects since customers

become conditioned to locate the product based on its package and may be

confused if the design is altered.

67

Environmental or Legal Issues:

Packaging decisions must also include an assessment of its environmental impact

especially for products with packages that are frequently discarded. Packages that

are not easily bio-degradable could draw customer and possibly governmental

concern. Also, caution must be exercised in order to create packages that do not

infringe on intellectual property, such as copyrights, trademarks or patents, held

by others.

68

PACKAGING AS A MEDIUM TO INCREASE SALES

“Catching consumers’ attention is the first step in making the sale”

Packaging plays an important role as a medium in the marketing mix, in promotion

campaigns, as a pricing criterion, in defining the character of new products, as a setter of

trends and as an instrument to create brand identity and shelf impact in all product groups.

A central conviction held by the packaging industry: that the shopper appreciates and in

fact explicitly wants to receive stimulation for the buying decision he is making when

standing in front of the supermarket shelf, often even preferring this to other forms of

communication. He is keen to be informed and inspired, tempted and pampered by

surprising and persuasive functions, emotions and sensual impressions.

THE TOP TEN REQUESTS ABOUT PACKAGING

Even though the consumer is not dissatisfied with the packaging available on the market,

he would still like to be tempted by functional and attractive packaging ideas, by

multisensory appeal and creative design - preferably with packaging ideas made from

board. He acknowledges additional benefits and appeal and is even willing to pay an extra

charge for them. Good starting points for improvements, changes, innovations which

optimize the features of packaging that determine buying decisions and thus generate new

market potential can be summarized in consumers' top ten requests about product

packaging:

69

1. Eye-catching appearance:

A distinctive, unmistakable and eye-catching appearance is a signal at the POS to

which all consumers and particularly the younger ones respond positively. Whatever

stands out clearly in the monotonous competitive environment, whatever is surprising

scores points with the consumer. Special effort makes a special impression - and is

allowed to cost more too.

2. Design, shape and color:

The purpose of well-considered design, creative printing and finishing is to entice the

consumer to devote attention to the pack and its contents at the POS. Aesthetics and

attractiveness are major distinctive features - and are in fact essential in some product

segments: beautiful packaging design is of central importance in the cosmetics and

confectionery product groups. Consumers like to buy agreeably designed and

decorative products.

3. Functionality:

Functional aspects are the basis for all successful packaging which contributes to

overall higher product success. Product and aroma protection, hygiene and tightness,

environmental responsibility and practical handling (in both use and storage) are just

as important here as ideas that improve comfort such as closure mechanisms,

portioning, see – through windows displays, etc.

70

4. Innovation:

Novelty has exceptionally strong appeal. An innovative pack can even make "new

products" out of familiar ones. Unusual solutions, functional new developments and

originality not only set design trends but also boost sales!

5. Material:

What is printed on board is read particularly willingly, while what is packaged in

board sells particularly well. Sustainability, easy disposal and, above all, great design

variety and potential are particular features of the material. Popular with consumers,

particularly high appeal and many other advantages too.

6. Efficient communication:

The packaging is the credible medium at the point of sale and is consulted willingly

and intensively. This makes it an efficient means of communication and, in addition,

one that gets closer to the consumer than all others. If several of his senses are

appealed to as well, he can be persuaded particularly successfully.

7. Multisensory appeal:

Anyone who approaches consumers via several of his senses attracts greater attention,

intensifies perception and stimulates interest in buying. Packaging that can be felt,

71

smelled and heard as well as looked at wins the customer's favor. So much so that he

is willing to pay a higher price for this multisensory appeal.

8. Appropriateness:

For the product Packaging is considered to be an important indicator of quality. The

quality of the product therefore has to be communicated by good packaging and not

just by promises of quality made in the text on the packaging. A credible "overall

work of art" is created as a result, in which the contents and the packaging are

coherent and the consumer is convinced by their consistency.

9. Value Packaging:

It is an excellent way to communicate sophistication, class and value. This makes it an

ideal strategic option for expressing premium positioning - as well as being the

instrument of choice when a product needs to be upgraded or a brand needs to be

revitalized. Products in classy packaging are particularly popular presents too.

10. Additional benefits:

Successful packaging not only combines what is pleasant with what is functionally

useful but also provides additional benefits. For example, as a gift or for presentation,

with entertaining components or simply by making it possible to continue using the

packaging for something else after the product has been consumed.

72

RESEARCH FINDINGS AND ANALYSIS OF DATA

1. Do you identify a brand through its packaging?

o Yes

o No

Image is important in our society. The image that brands project is critical to their success,

and those images must be conveyed by packaging-the ultimate touch point for consumer

product brands. If the packaging doesn’t appeal to the consumer, why would the brand or

product (too much space) appeal.

Consumers identify with the brands that match the perceptions of their lifestyles. The role of

the package designer has expanded from being a researcher, marketer and communicator to

73

that of an image maker. This may sound simple but it has actually added to the complexity

surrounding the development of successful packaging.

While analyzing the data, I realized that 80.7% of the sample identified a brand through its

packaging, while 19.3% did not.

74

2. Is your buying decision influenced by packaging?

o Often

o Sometimes

o Never

Stand at the end of an aisle in the supermarket or large retail store. Can you, while scanning

hundreds of items, pick out a few that are instantly recognizable from that vantage point?

Now, ask yourself what it is about specific products that make them quickly identifiable from

the myriad other products in the retail environment. There has to be something unique about

the packaging of those products that makes them stand out.

What my survey highlighted was that 26.7% of the people are often influenced by the

packaging for consumer buying, 8.7% are never influenced and 64.7% are sometimes

influenced.

75

3. Does Packaging influence you to switch from one brand to another?

o Yes

o No

Remember that today’s savvy consumer wants to be associated with a certain lifestyle and

wants to be associated with the products that fit that profile. Consumers will be motivated to

purchase products that project the right image for them. Packaging will have to do

increasingly more work to sell brand and product, creating image and consumer perception in

the process, as retail environments become more crowded with offerings. When products

meet with consumer expectations, time after time, consumers will not only become loyal

customers, they will generally spread the word about how wonderful these products are to

their circle of family and friends.

However, on the contrary to the above research findings, 53.3% of the sample does not

switch from one brand to another on account of packaging, while 46.7% are influenced by

packaging to switch from one brand to another.

76

Thus, the Null Hypotheses ‘Packaging does not influence a consumer to shift from one brand

to another’ proved to be not true.

77

4. What factors according to you describe a good package?

o Package should be Protective

o Package should be Eco-friendly

o Package should be Convenient

o All the above

While analyzing the results, I found out that 19.3% of the respondents felt that the package

should be protective, 4% of the respondents felt that the package should be eco-friendly,

18.67% of the respondents felt that the package should be convenient and 58% respondents

said all of the above.

Thus, the Null Hypotheses - ‘The consumer considers 'convenience' as the only factor which

describes a good package’ is proved not true as consumers prefer it to be protective, eco-

friendly and convenient.

78

5. Which of the following aesthetic factor attracts you towards the purchase of an FMCG

product?

o Color, Texture and Contrast

o Shape and Size

o Cultural References

o Emotional Response

Packaging has an important role in marketing. It protects the product and helps in sales

promotion. So, the container or cover, design of packaging, color, size etc. should be suitable

to the nature of product. It also should be convenient, attractive, economical, communicative

etc. Only good and effective packaging can protect the product, keeps safe from declining its

quality, it makes adulteration impossible. Good packaging also increases prestige, brand

loyalty and promotes sales.

79

Majority of the respondents (54.67%) said that color, texture and contrast attracted them

towards the purchase of an FMCG product, 24% said shape and size mattered, 12.67% are

affected by cultural references and 8.66% felt an emotional response.

Thus, the Null Hypothesis - 'Color, texture and contrast' is not an important aesthetic factor

that attracts consumers towards the purchase of an FMCG product is proved not true as it is

the most preferred (54.67%) aesthetic factor.

80

6. Do you deliberately purchase a product whose package has a reusable value?

o Yes

o No

The Indian consumer always wants to make maximum use of the amount that he is spending.

Therefore also, some consumers deliberately purchase a product whose package has a

reusable value. However, the results have shown that majority do not have that thinking in

mind.

40.7% respondents deliberately purchase a product whose package has a reusable value,

while 59.3% respondents made no such deliberate purchase.

Thus the Null Hypothesis, ‘The reusable value of a package does not influence the purchase

of an FMCG product’ is proved true as majority consumers do not purchase a product

deliberately whose package has a reusable value.

81

7. Select the most preferred packaging material that you would opt for:

o Paper

o Glass

o Aluminium

o Fiberboard

o Plastic

o Steel

o Any other, Specify

The most widespread types of packaging material are paper, glass, aluminium, fiber board,

plastic and steel.

The use of plastic as packaging material tops the list with 38.67%, brings so many

advantages for instance plastic is light weighted, long lasting and easily available

material. The cost of plastic is a bit cheaper as compare to aluminum and steel.

82

- Paper is preferred by 34.67% of respondents. It is one of the most extensively used

packaging materials, because of it being light in weight, cheap in price and easily

available.

- The use of Glass, as Packaging Material has almost been given up, especially for food

items, clearly indicated by only an 8% response.

- Aluminium, voted by 9.33% respondents is commonly used in packaging of food

items, such as in cans of soft drinks and in tin packed provisions as foil to protect

foodstuff from decomposition by preventing access of oxygen.

- Steel being the least popular with 2.66% is being used as packaging material for

foods, beverages and paints as well as aerosols.

- Fiberboard is a paper-based material consisting of a fluted corrugated sheet and one or

two flat linerboards was voted by 6.67% respondents.

Thus, the Null Hypotheses - ‘Plastic is the most preferred packaging material in the 21st

century’ is proved true as majority respondents (38.67%) voted for prefer plastic over other

forms of packaging material.

83

8. Your attitude towards the new packaging of preserved products

o Will always prefer innovative packaging

o Does not like the frequent change in packaging

o Will prefer unpacked food product

o Will prefer hygienic packaging

Because packaging helps to control the immediate environment of a food product, it is useful

in creating conditions that extend the storage life of a food. Packaging materials commonly

used for foods may be classified as flexible (paper, thin laminates, and plastic film), semi-

rigid (aluminum foil, laminates, paperboard, and thermoformed plastic), and rigid (metal,

glass, and thick plastic). Plastic materials are widely used in food packaging because they are

relatively cheap, lightweight, and easy to form into desired shapes.

84

- 47.33% respondents prefer hygienic packaging for preserved products

- 37.33% respondents prefer innovative packaging

- 14.67% respondents don’t like frequent changes in the packaging

- 0.67% respondents prefer unpacked food products

Thus, the hypotheses ‘Consumers will prefer innovative packaging each time in case of

preserved products’ proves not true, as consumers don’t bother whether it is innovative or

not. What they bother about is that the packaging should be hygienic.

85

9. You change your purchase decision when you see ‘eco-friendly’ printed on the label of

a product:

o Often

o Sometimes

o Never

Eco-friendly packaging is the development and use of packaging which results in

improved sustainability. This involves increased use of life cycle inventory (LCI) and life

cycle assessment (LCA), to help guide the use of packaging which reduces the environmental

impact and ecological footprint.

- 48% respondents sometimes changed their purchase decision when they saw ‘eco-

friendly’ printed on the label

86

- 34% respondents never changed their purchase decision when they saw ‘eco-friendly’

printed on the label

- 18% respondents often changed their purchase decision when they saw ‘eco-friendly’

printed on the label

87

10. You are willing to pay more for eco-friendly FMCG products:

o Always

o Sometimes

o No

The process of engineering more environmentally acceptable packages can include

consideration of the costs. Some companies claim that their environmental packaging

program is cost effective. Some alternative materials that are recycled/recyclable and/or less

damaging to the environment can lead to companies incurring increased costs. It is common

that when any product begins to carry the true cost of its production (producer pays, producer

responsibility laws, take-back laws), there may be an expensive and lengthy process before

the new forms of packaging are deemed safe to the public, and these incremental costs are

ultimately passed on to the ultimate buyer.

88

- 51.3% respondents are sometimes willing to pay more for eco-friendly FMCG

products

- 26.7% respondents are always willing to pay more for eco-friendly FMCG products

- 22% respondents are not willing to pay more for eco-friendly FMCG products

Thus, the hypotheses ‘Consumers are not willing to pay more for eco-friendly products’

proves true as it is only on few occasions that consumers do not mind paying a higher

price.

89

RECOMMENDATIONS

- Product packaging is valuable for brand equity, product differentiation, market

segmentation, new product introduction, pricing, promotion etc. Brand name using

plan implementation must be effective in the units.

- All the marketing units must pay attention towards good packaging as people identify

a brand through its packaging; it induces them to purchase FMCG products and it also

leads to shifting customer loyalty. They accept that poor packaging is one of the

causes of product failure in the market. It is necessary to set the packaging standard

and to implement accordingly for better protection and promotion of a product.

- The package must be of such material that the customer prefers and which has a

reusable value to the end customer.

- New consumer product manufacturers mostly use the package as a communication

medium. It describes where it was made, when it was made, what it contains, how to

use it etc. Furthermore they believe that the consumers are properly guided by label to

use the products.

- The ‘eco-friendly’ label has an immense value and must be highlighted while

promoting the product in the market. There is a section of society that is environment

conscious and would not mind paying a higher price for products with an ‘eco-

friendly’ package.

90

CONCLUSION

The world is rapidly turning into a global village and with the passage of time business is

being expanded; and the importance of using correct type of packaging material has become

essential.

- Packaging is rightly called an art because packaging material is first the introduction

of any product to the consumers, as well as it provides a physical blockade between a

product and the surroundings by maintaining hygiene and reducing the risk of product

wastage due to impurity. Packaging is indispensable for a safe distribution, storage,

sale, and use.

- Packaging can be described as a coordinated system of preparing goods for safe,

efficient and cost-effective transport, distribution, storage, retailing, consumption and

recovery, reuse or disposal combined with maximizing consumer value, sales and

hence profit.

- Packaging is a tool to form good relationship between Retailers and Food

Manufacturers because both work more closely to create products designed for

current lifestyles, based on the latest technology. A Retailer, having direct link with

end users, can easily be well aware of the perception of consumers. On the other hand

manufacturers modify packaging style and product quality on the basis of information

provided by retailers.

91

- Numerous market trends suggest a growing role of packaging as a brand

communication vehicle that helps in reducing expenses on traditional brand building

mass media advertising. Importance of the role of packaging is acknowledged round

the globe for brand building and consequently the expenses on advertisement have

been found to be reduced. Once a brand becomes familiar and captitalizes on factors

such as Color, Texture and Contrast, Shape and Size, Cultural References, Emotional

Response – companies do not have to spend a huge amount on advertising because

consumer will reach the brand automatically.

- Packaging attracts and sustains attention, helping consumers identify with the images

presented and therefore induce them to purchase the product or shift brand loyalty.

- When viewing pollution as a problem of the world, it becomes essential to take

necessary steps to reduce waste and garbage. The role of packaging in waste reduction

is the most evident when companies use eco-friendly packages and that the end

customers are even willing to pay a higher price for the same.

92

BIBLIOGRAPHY

JOURNALS:

- Rita Kuvykaite, Aiste Dovaliene, Laura Navickiene "Impact Of Package Elements On

Consumer's Purchase Decision" Journal Of Economics And Management 2009.

- Pinya Silayoi, Mark Speece "Packaging And Purchase Decision" Journal Of British

Food 2004.

- Robert L Underwood, Noreen M Klien, Raymond R Burke "Packaging

Communication: Attentional Effects Of Product Imagery" Journal Of Product And

Brand Management 2001.

- Olga Ampuero, Natalia Vila "Consumer Perceptions Of Product Packaging" Journal

Of Consumer Marketing 2006.

- Pinya Silayoi, Mark Speece "The Importance Of Packaging Attributes: A Conjoint

Analysis Approach" European Journal Of Marketing 2007.

- Adelina Broadbridge & Henry Morgan , "Consumer Buying Behavior And Perception

Toward Retail Brand Baby Products" 2007

- Bytyqi Hysen, Vegara Mensur, “Analysis of Consumer Behavior In Regard To Dairy

Products In Kosovo, Agric. Res.” 2008, 46(3)

93

- John Thgersen, “The Ethical Consumer Moral Norms and Packaging Choice” Journal

of consumer policy Kluwer Academic Publishers. Printed in the Netherlands. Journal

2006, pp. 100-112. (2000)

- Kriti Bardhan Gupta, “Consumer Behaviour For Food Products In India” 19th Annual

World Symposium Indian institute of management (2009)

- Kuvykaite R, Madden, T. J., Hewett, K., & Roth, M. S. “Managing Images In

Different Cultures: A Crossnational Study Of Color Meanings And Preferences”

Journal of International Marketing, 8(4), 90-107. (2001)

- L Alice, “The Power Of Packaging” USA, pp 186-216

- Liang Lu (2008) Packaging as a strategic tool University of Halmstad School of

Business and Engineering

- Mitul Deliya & Bhavesh Parmar “Role of Packaging on Consumer Buying Behavior”

Global Journal of Management and Business Research, Volume 12 Issue 10 Version

1.0 June 2012.

- Pires Gon¸calves, Ricardo, “Product Characteristics And Quality Perception”,

University at Autonoma de Barcelona (2008)

94

RESEARCH PAPERS:

- Sahil Mahajan, Rahul O Vaishya, Anurag Gupta, Veejhay Dholle "Role of Packaging

for Enhancing the Sales Appeal" Global Research Analysis International July 2013

WEB LINKS:

- http://www.ukessays.com/essays/business/the-relationship-between-different-

packaging-characteristics-business-essay.php#ixzz2HanAaW4e

- www.marketinglord.blogspot.com

- www.packaginghub.org

- http://www.foodproductiondaily.com/Packaging/Effective-packaging-grabs-snackers

- http://www.britannica.com/EBchecked/topic/212684/food-

preservation/50583/Packaging

- http://blog.hubspot.com/marketing/why-people-buy-factors-influence-purchase-

descision

95

SURVEY – THE ROLE OF PACKAGING IN THE SALE OF FMCG PRODUCTS

Dear Survey Respondent,

I am Aamir Munshi from H.R. College of Commerce and Economics, who is

conducting this research as a part of my academic requirements.

The purpose of this study is to assess – ‘The Role of Packaging in the Sale of FMCG

Products’.

Your responses will be kept confidential.

Thank you for participating in my survey!

Aamir Munshi.

Personal Details:

Name:

Age Group:

o 16 to 21

o 25 to 35

o 35 to 50

96

Occupation:

o Student

o Housewife

o Business

o Profession

o Service/Employment

1. Do you identify a brand through its packaging?

o Yes

o No

2. Is your buying decision influenced by packaging?

o Often

o Sometimes

o Never

3. Does Packaging influence you to switch from one brand to another?

o Yes

o No

97

4. What factors according to you describe a good package?

o Package should be Protective

o Package should be Eco-friendly

o Package should be Convenient

o All the above

5. Which of the following aesthetic factor attracts you towards the purchase of an

FMCG product?

o Color, Texture and Contrast

o Shape and Size

o Cultural References

o Emotional Response

6. Do you deliberately purchase a product whose package has a reusable value?

o Yes

o No

7. Select the most preferred packaging material that you would opt for:

o Paper

o Glass

o Aluminium

o Fiberboard

o Plastic

98

o Steel

o Any other, Specify

8. Your attitude towards the new packaging of preserved products

o Will always prefer innovative packaging

o Does not like the frequent change in packaging

o Will prefer unpacked food product

o Will prefer hygienic packaging

9. You change your purchase decision when you see ‘eco-friendly’ printed on the

label of a product:

o Often

o Sometimes

o Never

10. You are willing to pay more for eco-friendly FMCG products

o Always

o Sometimes

o No