Packaging + Perception = Value

by Klaus Oestreicher

Distribution of physical, packaged products versus dissemination of dematerialised content over the internet is the name of the game. It is, today, the battleground for the music industry and tomorrow for the film and games industry.

My own research and that of French academic friends is providing interesting pointers to strategic and organisational changes under way. We come to the conclusion that there are still untapped opportunities that ought to be considered to improve the market.

We generally assume that market pressure leads to unstoppable innovation. But in this industry it seems that innovation is more often than not driven by technology. As Trout and Ries are suggesting, today, consumers’ purchasing behaviour is guided by product perception, rather than its actual physical attributes. So, business strategy should focus on stimulating such perception.

Consider the three constituent elements of a pre-recorded disc – the content, the disc itself and its packaging. The actual price of replication is the smallest part of the overall equation.

Content is essentially an artistic expression that talks to emotions. This impact on the perceived commercial value consumers allocate to the disc. It’s an individual assessment. While some are prepared to spend good money on a disc they particularly like, others, unimpressed, wouldn’t pay a penny for it. The third element, packaging, is the area which could benefit from more attention and opportunities.

Many content releases obey to a simple rule. As regards movies, the more successful a film is at the box office, the less attention is paid to its packaging; it is expected that the DVD will be a shelf-seller. It is the special, collector’s editions that receive more care. Extraordinary packaging, excellent documentation enclosed and more items accompany such a disc. But these 'high-end' attract a far smaller target group than the standard, vanilla DVD version.

But what about music whose dematerialised content can easily be downloaded? Why should consumers buy a disc packed in a jewel case? No research I know of investigate the potential impact on a disc sales of a high-quality, original packaging for music CDs.

Take a look at the perfume industry. There, the approach is totally different. Extraordinary attention, and money is poured over the packaging, even for the most prominent brands and products. It is an industry sector that works on the principle that the more the human senses are excited, the more attractive the products become. Focus groups test the look, shape, colour, material and feel of the packaging that will shift bottles of perfume. What excitement a jewel case or Amaray box provoke? None.

This oversight is surprising because the homevideo entertainment industry ries to follow in the footstep of the perfume industry when it comes to attempts to add value to a product, in that case a DVD. But why are catalogue inserts, embossed material and the finishing generally so poor? After all, those items are meant to make returns investments, generating profits.

The packaging industry, a close partner to the Home Entertainment industry, has many excellent ideas – BDMO’s innovative carton packaging, Scanavo’s SteelBooks, wooden packaging by Woodpack Industries, blood-soaked packs from Key Solution, just to name a few. These products spell opportunities that can add much value.

Psychology is the area increasingly at the forefront of sales activities. But sales do not stop in front of buyers. The really decisive transaction takes place in shops. Consumers are the driving force behind a sales success – they must be given an overwhelming reason to prefer a physical product over a downloaded one. Innovation is in much demand here.

Human beings are hunters and collectors at their core, but they need stimulants. An educational process is essential. Consumers must be presented with incentives to come back to the shops through attractive music in exciting packaging. And this is valid for music, films and games alike. Compelling packaging is a way to secure the industry against future behavioural changes that would see consumers migrate too quickly towards dematerialised content delivery alternatives. Furthermore, high-profile packaging is a high barrier to overcome for pirates and counterfeiters.

Using packaging to build a stronger value perception, buyers will come to the realisation that a higher priced product offers them a higher-level experience and satisfaction – and better sales figures and, thus, profits for the trade.

So, despite some increased costs, sophisticated packaging is, in the final anaysis, more profitable, leading to more sales. Those of you still sceptical of the argument should consider the findings of a study by Puls, a renowned German market research institute. It shows that consumers are prepared to pay more, even much more, if they are provided with the right reasons to do so. Adding perceived value is such a reason.

The conclusion is that the creators behind the three contituent elements of a pre-recorded disc – the content, the disc itself and its packaging – must close ranks, building on each others’ expertise, in order to put in front of the consumer a product radiating compelling emotional value.