Package Design - January/February 2015 - 42

DEBATE & DISCUSS

Dermody: Design has to have a
say as they have an ROI too. It has to
be collaborative among all parties.
Bates: I believe designers not
only have control over this, but also
have a duty to understand the unit
costs going into an assignment so
the solution fits the commercial
needs placed on that product. Also,
designers as well as marketers need
these boundaries to focus their
efforts. I've only seen more creative
and relevant solutions from designers when challenged by these boundaries.
Wallace: Right now, design tries to influence
marketing to set an appropriate budget based on
best practices of prior assignments. Procurement
then cuts these budgets so as to save costs. This
too often inhibits the package design from realizing its full potential and optimizing its ROI.
In the future, quantifying design's value will
change everything-making procurement
design's biggest ally and encouraging marketing
to make the appropriate investment to optimize
the package designs. No longer will chief design
officers need to justify their spend. Rather, these
spends will be rightfully acknowledged as the
most cost-effective and most revenue-generating
investments that the brand can make in itself.
PD: How has the trend towards premiumization changed how your team and upper
management looks at cost of materials?
Clarke: There has been a revolution in how
design is conducted as management has
embraced the power of "design thinking." Designers are now envisioning designs and then finding
out how to cost effectively realize those designs.
This differs from the old way of doing things,
which is to start with limitations in an attempt to
eke out a better look and feel.
Yes, costs are still real and very important. But
design thinking starts with a solution in order to
define enough of the parameters to optimize the
path to the goal. This differs from the scientific
method, which starts with defining all the
parameters of the problem in order to later
define the solution.
However, it is better to start with a desirable

42

JANUARY/FEBRUARY 2015

Want to drive a higher
margin at an increased
price over competition?
Then you had better
communicate that premium experience
through the package...
Rob Wallace, president,
Best of Breed Branding Consortium

design, measure its value (what someone is willing to pay for it and how often they'd want it) and
then later establish its price point and necessary
cost of goods.
Chibe: Premiumization gives the freedom to
charge more and to have a more profitable product line. The trend toward premiumization has
changed the perspective of the discussion about
the "cost" of materials to looking at it as an
"investment."
Wallace: Establishing and then elevating
brand value perceptions happen at the first
moment of truth. The package sets the expectation. Want to drive a higher margin at an
increased price over competition? Then you had
better communicate that premium experience
through the package-and your product had
better deliver on that promise.
Dermody: All channels and customers have
different needs, however, it is our responsibility
to put the consumers' needs first. In addition, we
need to factor in sustainability and environmental footprint to balance out our new packaging
development.
de Vlam: I'm not sure if I agree with the
premise of your question. Not all brands require
premiumization as part of their makeover strategy, but getting to a higher price point is always
an inherent benefit. Cost of goods is part of the
equation, but it is not the be-all, end-all.
Most organizations look unilaterally at costs,
though, so perhaps a more expensive label-one
with gold foil inks, for instance-can be offset with
a more efficient bottle shape that improves palletization, shipping and warehouse efficiencies.
Bates: I'm not a fan of changing something
into something that it is not. And if premiumiza-

tion is a trend, it will fall the way of
all trends or fads that grow tired
with the public and are shallow. If
your brand is premium, then be
premium. If you are not, then don't
try to be. You'll only wind up disappointing, especially if what's inside
the package does not live up to the
premium depiction of the
packaging.

PD: What best practices can be
implemented to contain recurring packaging costs without losing premium features
in a package design?
Chibe: I always looked at bundling changes as
the way to contain costs. Also, give your teams a
budget that forces them to make choices. This
installs a discipline to choose those features that
really drive purchase intent and brand equity.
Clarke: Consider the entire production and
distribution process when seeking to costreduce, don't just immediately resort to pulling
cost out of the package itself. Also, keep abreast
of changes in market conditions that can cause
material cost fluctuations and present opportunities to evolve to more cost-effective materials
without compromising the design aesthetic.
Finally, constantly seek to improve production
efficiencies to help sustain a more premium
package and reduce costs over time. While all of
these approaches can help prevent the devolution of a premium package design, stakeholders
should also understand that investing in premium packaging can be a tremendous long-term
asset as opposed to an expense to be cut over
time. By fully leveraging premium package
design as an opportunity to reach a broader or
different audience and/or increase price, the
cost/value equation can remain balanced despite
the uptick in packaging costs.
Dermody: Packaging is not a "thing," but a
living component that we must review constantly. Monitor the success, design and functionality of the packaging every six months.
Wallace: Packaging costs come down as volume goes up. Sell more product at a higher margin
and there will be no need to reduce package costs.
My argument is not to invest more in packag-
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