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 protect is exposed to air or other elements.
- Visibility – Packaging design is used to capture customers’ attention as they are shopping or glancing through a catalog, website or smartphone app. This is particularly important for customers who are not familiar with the product or in situations where a product must stand out among thousands of other products,such as those found in grocery stores. Packaging designs that stand out 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 (e.g., design of plug-in air fresheners).
- Distributor Acceptance – Packaging decisions must not only be accepted by the final customer, it 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 (e.g., fits maximum height or weight requirements).
- 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 for 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.
- 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 reaction. Also, caution must be exercised in order to create packages that do not infringe on another firm’s intellectual property, such as copyrights, trademarks, or patents.