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Product packaging as tool to demand a price premium: Does packaging enhance consumers‘ value perception to justify a price premium

©2014 Textbook 61 Pages

Summary

This study addresses the question of the impact of packaging to demand a price premium leveraging <br>the example of retailer brand premium products in the food segment in Germany. Product tiering is a pricing structure that is commonly used by producers, in which consumers are segmented by willingness to pay for specific (added) product benefits. This is a way of maximizing utility for both consumers and producers, and is commonly already leveraged by producers of branded products, but lately also by retailer brands, especially to enable growth outside the value tier.<br>This research uses a survey across grocery purchase decision makers in Germany to identify the relationship of packaging and willingness to pay across a sample of retailer brand Tier 1, Tier 2 and Tier 3 products as well as a branded product in four different grocery categories. The intent is to answer whether i) packaging currently justifies the premium price of retailer brand tier 1 products compared to other product tiers, ii) packaging justifies the tier 1 retailer brand price premium, and iii) demographics influence the willingness to pay a premium price.

Excerpt

Table Of Contents


List of figures
Figure 1: Value market share development German trade based on GFK (2012) ...6
Figure 2: German retailer ranking according to food turnover based on Lebensmittelzeitung (2013) ...7
Figure 3: Overview of retailer brands and respective tiers at national retailer Rewe ...7
Figure 4: Generations of retailer brands based on Berentzen, J.B. (2010) ... 18
Figure 5: Distribution of survey replies ... 23
Figure 6: Gender distribution in the sample... 24
Figure 7: Age distribution in the sample ... 24
Figure 8: Net income distribution in the sample ... 24
Figure 9: Household size distribution in the sample ... 25
Figure 10: Shopping behaviour distribution in the sample ... 25
Figure 11: Overview of ham products included in the survey ... 26
Figure 12: Willingness to pay and packaging scores for ham ... 27
Figure 13: Previous purchase for ham ... 27
Figure 14: Summary of regression outcomes for packaging and price premium for ham ... 28
Figure 15: Summary of regression outcomes for packaging and willingness to pay for ham ... 28
Figure 16: Impact of demographics on willingness to pay for Tier 1 ham (ANOVA results) ... 29
Figure 17: Overview of cheese products included in the survey ... 30
Figure 18: Willingness to pay and packaging scores for cheese ... 31
Figure 19: Previous purchase for cheese ... 31
Figure 20: Summary of regression outcomes for packaging and price premium for cheese ... 32
Figure 21: Summary of regression outcomes for packaging and willingness to pay for cheese ... 32
Figure 22: Impact of demographics on willingness to pay for Tier 1 cheese (ANOVA results) ... 33
Figure 23: Overview of jam products included in the survey ... 34
Figure 24: Willingness to pay and packaging scores for jam ... 35
Figure 25: Previous purchase for jam ... 35
Figure 26: Summary of regression outcomes for packaging and price premium for jam ... 36
Figure 27: Summary of regression outcomes for packaging and willingness to pay for jam ... 36
Figure 28: Impact of demographics on willingness to pay for Tier 1 jam (ANOVA results) ... 37
Figure 29: Overview of ice cream products included in the survey ... 38
Figure 30: Willingness to pay and packaging scores for ice cream ... 39
Figure 31: Previous purchase for ice cream ... 39
Figure 32: Summary of regression outcomes for packaging and price premium for ice cream ... 40
Figure 33: Summary of regression outcomes for packaging and willingness to pay for ice cream ... 40
Figure 34: Impact of demographics on willingness to pay for Tier 1 ice cream (ANOVA results) ... 41
Figure 35: Comparison of price premium in-store and mean survey results ... 42
Figure 36: Summary of research questions analysis results ... 42
Figure 37: Frequency table for gender distribution in the sample ... 50
Figure 38: Frequency table for age distribution in the sample ... 50
Figure 39: Frequency table for net income distribution in the sample ... 50
Figure 40: Frequency table for household size distribution in the sample ... 50
Figure 41: Frequency table for self-descriptor of shopping behaviour in the sample ... 50
Figure 42: Willingness to pay descriptive statistics for ham ... 51
Figure 43: Price premium descriptive statistics for ham ... 51
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Figure 44: Packaging score descriptive statistics for ham ... 51
Figure 45: Purchase frequency table for ham ... 51
Figure 46: Summary of one-way ANOVA tests for willingness to pay for ham ... 51
Figure 47: Willingness to pay descriptive statistics for cheese ... 51
Figure 48: Price premium descriptive statistics for cheese ... 52
Figure 49: Packaging score descriptive statistics for cheese ... 52
Figure 50: Purchase frequency table for cheese ... 52
Figure 51: Summary of one-way ANOVA tests for willingness to pay for cheese... 52
Figure 52: Willingness to pay descriptive statistics for jam ... 52
Figure 53: Price premium descriptive statistics for jam ... 52
Figure 54: Packaging score descriptive statistics for jam ... 53
Figure 55: Purchase frequency table for jam... 53
Figure 56: Summary of one-way ANOVA tests for willingness to pay for jam ... 53
Figure 57: Willingness to pay descriptive statistics for ice cream ... 53
Figure 58: Price premium descriptive statistics for ice cream ... 53
Figure 59: Packaging score descriptive statistics for ice cream ... 53
Figure 60: Purchase frequency table for ice cream ... 54
Figure 61: Summary of one-way ANOVA tests for willingness to pay for ice cream... 54
Figure 62: Comparison of research question 1 results between all participants and no previous purchase
participants ... 54
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1. Introduction
1.1. Arrangement of the study
The study is arranged into five chapters. Chapter 1 (Introduction) will provide an overview of the German
trade and retailer brand environment and its development over the past five years. Based on this the
research problem, hypothesis and questions are posed as well as the potential limitations of the
research. Following, chapter 2 (Literature review) will discuss the existing literature on the role of
packaging, the consumer purchase decision and the role and development of retailer brands. Chapter 3
(Research methodology) lays out the methods of analysis used in the paper and identifies
methodological limitations and issues. The selected analysis approach requires quantitative data
collection which is described. Further, any ethical limitations as well as the reliability, validity and
potential for generalization of the findings are discussed. Chapter 4 (Quantitative analysis results and
discussion) presents the analytical results of the collected data and presents the key findings and
conclusions from the survey data. Lastly, chapter 5 (Conclusions and recommendations) provides a
summary of the findings and conclusions of the previous chapters and places them in context, as well as
recommendations for retailers as well as areas for future research.
1.2. The German trade and retailer brand environment
In the past years retailer brands have continued their share growth in the German trade environment and
marked in 2012 a new record high value market share of 37,9% (+3,2 ppts. vs. 5yrs. ago and +0,8 ppts.
vs. 2011). Whilst the low cost retailer brands, or also so called value retailer brands, stagnated at around
25% market share, the growth is coming from the mid and high tier retailer brands which have grown by
+3,9 ppts. versus five years ago. This growth has been mainly delivered at the expense of non-market
leading branded products in a category. Market leader brands are showing stable market shares.
Figure 1: Value market share development German trade based on GFK (2012)
The sales in the German food segment are dominated by four key retailers who account for 69% of the
total food segment turnover based on the top 30 retailer sales. The number one and two Edeka group
and Rewe group offer both: i) the traditional supermarket stores as well as ii) discounter stores (e.g.
Netto by Edeka, Penny by Rewe). Both sell branded products as well as retailer brands, however the
amount of products and brands is limited at discounter stores. Importantly, hard discounter Aldi
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represents with 12% a channel which so far was not open for branded products and hence limited to
mainly low cost retailer brands, until recent in/out activities starting in 2013.
Figure 2: German retailer ranking according to food turnover based on Lebensmittelzeitung (2013)
Consumers already associate especially the long-time existing value retailer brands such as ja! (Rewe),
Gut & Günstig (Edeka) or also Tip (Real/Metro) with the respective retailer chains (Berentzen, J.B. 2010).
However, given their classification as mainly value brands they represent a segment which not
necessarily stands for quality. In order to overcome this, retailers started to widen the portfolio of retailer
brands introducing mid and high tier retailer brands. Kumar, N., Steenkamp, J.B. (2007) identified two
types of mid and high tier retailer brands: premium lite retailer brands (rather mid-tier) and premium price
retailer brands (high tier). Especially the latter pursues a quality leadership over branded products which
should also justify a premium pricing, whilst premium lite retailer brands aim for the same quality but a
cheaper price than national brands. Figure 3 below illustrates the lineup of retailer brand tiers at national
retailer Rewe, who offers a fairly complete three tier retailer brand offering across key categories.
Figure 3: Overview of retailer brands and respective tiers at national retailer Rewe
An example from the UK where this differentiation is already well developed is Tesco, with Tesco
Everyday Value (value tier), Tesco Brand (mid-tier) and Tesco Finest (premium tier). Especially the mid-
tier (premium lite) category is also already well developed in Germany, with most national retailers,
excluding hard discounters (like Aldi), carrying a low and mid-tier product which also has an effect on
consumer quality perception.
For example, the ARD (2013) has conducted a consumer test with orange juice. The same orange juice
was used for all samples, but the packages shown were from four different retailers (national retailers
Rank
Retailer
Turnover Food 2012
in million Euro
Turnover Food 2012
in % of Top 30
Food % of total
turnover
Turnover 2012 in
million Euro
1
Edeka-Gruppe, Hamburg
44.567
26%
90,5%
49.267
2
Rewe-Gruppe, Köln
26.225
16%
71,3%
36.766
3
Schwarz-Gruppe, Neckarsulm
24.084
14%
81,1%
29.700
4
Aldi Gruppe, Essen/Mülheim
20.931
12%
82,0%
25.525
5
Metro-Gruppe, Düsseldorf
11.311
7%
37,3%
30.362
6
Lekkerland, Frechen
8.182
5%
99,0%
8.265
7
dm, Karlsruhe
4.601
3%
90,0%
5.112
8
Rossmann, Burgwedel
4.005
2%
90,0%
4.450
9
Bartels-Langness, Kiel3)
2.802
2%
77,7%
3.607
10
Transgourmet, Neu-Isenburg
2.596
2%
86,4%
3.004
Cheese
Jam
Pudding
Ham
Tea
Tier 1 -
Feine Welt
Rewe Feine Welt Fleur de
Biere
Rewe Feine Welt Sonnige
Erdbeere
Rewe Feine Welt Crème
au Chocolat
Rewe Feine Welt
Kochschinken
Rewe Feine Welt Kräuter
des Südens
Tier 2 -
REWE
Rewe Weichkäse
Rewe Erdbeermarmelade
Rewe Schokopudding mit
Sahne
Rewe Delikatess
Metzgerschinken
Rewe Schwarztee Earl
Grey
Tier 3 -
ja!
Ja! Camembert
Ja! Erdbeermarmelade
Ja! Schokodessert mit
Sahne
Ja! Delikatess
Kochschinken
Ja! Ceylom Assam
Rewe retailer brands
rdbeere
beerm
erm
e
erm
e
erm
erm
erm
erm
erm
erm
erm
e
rm
rrm
m
m
erm
e
e
e
erm
erm
erm
erm
erm
e
r
r
rm
m
m
m
m
m
marm
a! Ceylom Assam
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Rewe and Edeka, discounters Aldi and Lidl) and partially in the case of Rewe and Edeka the mid-tier
brand. Despite being the same orange juice the consumers voted Rewe and Edeka as the best tasting
ones. In more formal terms, the packaging of a product acts as one of the elements in the consumer's
quality and price cognition, which is referencing the willingness to pay more for a given product (Brunso,
K., et al. 2002). Also, consumers tend to rely on packaging when they make the in-store decision (Silayoi,
P., Speece, M. 2004) which however is also related to the total brand perception. Ultimately, price
influences the perception of quality of a product, but perception of quality (e.g. through packaging) also
influences willingness to pay the price (Imram, N. 1999). Given the increased importance of tier 1 retailer
brands (premium) for retailers, the intention of this study is to further investigate the relationship between
willingness to pay higher pricing and packaging in the grocery segment.
1.3. Research
problem
In the past two decades retailer brands have been growing mainly behind the value retailer brands.
However, growth rates have stalled since mid-2000 and retailers can only continue to grow their retailer
brand market share by expanding their retailer brands also in higher class tiers. Given the higher price
levels they effectively compete with branded products and need to deliver a high quality impression to
justify the pricing. The literature suggests that packaging and pricing are strongly correlated and that as
such retailers might be able to sustain a price premium for their tier 1 retailer brands behind a qualitative
strong packaging. The quality perception might be influenced by underlying demographics such as age,
gender or shopping behaviour.
1.4. Purpose of the research
The purpose of this research is to use an analysis-led approach to identify the effect of packaging on the
price elasticity i.e. what the consumer is willing to pay for the product. This will be evaluated in the
context of differently tiered retailer brands and respective branded products in various food categories.
1.5. Research
questions
The main underlying research question is if retailers can succeed in demanding a price premium for their
premium tier retailer brands behind premium packaging. The research question will be explored using a
quantitative analysis approach. In order to approach the research question in more depth the following
sub-research questions will be explored:
1. Are consumers willing to pay a price premium for retailer brand Tier 1 products compared to
branded and retailer brands Tier 2 / Tier 3 products based on the packaging appeal?
2. Do current retailer brand tier 1 premium priced products justify their price premium based on the
packaging impression?
3. Are there demographic specifications such as gender, age, household size, household income or
shopping behaviour influencing the willingness to pay a premium price?
1.6. Limitations of the research
Provided the given limitations of this study, this study only covers four grocery categories with retailer
brands of one specific retailer. Hence, the generalization to the total food industry might be limited.
Further, there may be limitations such as cultural aspects that might affect the findings in one way or
another. This research is specific to the German shopper and its cultural, social and political context.
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Given that this could be a potential determinant of how acceptable the findings of this research are
globally, this is a significant limitation on the possible generalization of results. The research approach is
retrospective as it is based on products available in-market. However, there is no actual sales data
available to compare the true in-market results of the products and hence the research relies on a
consumer survey only.
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2. Literature
review
2.1. Arrangement of the chapter
This chapter provides an overview of the existing literature with key focus on the role of packaging, the
consumer purchase decision and the role of retailer brands. The literature review is structured in three
parts. The first part is investigating the role of packaging in the food segment and especially its relation to
pricing, shelf impact and gaining a competitive advantage. Following the drivers of the purchase decision
in the food segment are reviewed. Lastly, the chapter is then concluded with a review of the role of
retailer of brands and recent trends leading to multi-tier retailer brand offerings.
2.2. The Importance of packaging in the food segment
The core principle of this research is that packaging is an important factor of the food merchandising
business. The first section of the literature review evaluates the role of packaging in the marketing mix
and where it serves to create a competitive advantage. Following, the regulatory requirements for food
packaging, including materials and information that must be included are reviewed. This acknowledges
both the functional and the brand-building role of packaging in food merchandising.
2.2.1. Packaging in the marketing mix
The marketing mix is a loose framework of marketing strategies and attributes that is used as a working
set of guidelines for a given product (Drewniany, B.L., Jewler, A.J. 2011). It is often conceptualized as
the `4Ps' (Product, Price, Placement and Promotion), which are aspects of the marketing offer that are
perceived by the consumer (Drewniany, B.L., Jewler, A.J. 2011). Packaging plays a particular role in the
marketing mix, including brand building, offering price cues and providing shelf impact. This, if done in a
consumer relevant way, should result in a competitive advantage from the packaging choice. This will be
evaluated in the following detailed review.
2.2.1.1. Building a brand with packaging
One of the most important things to understand about packaging is the fact that it is one of the most
visible representations of the product and brand. The brand can be defined as the set of associations that
are generated by the product's physical attributes (like trademarks, symbols and packaging), including
quality associations, social associations, sensory or emotional associations and previous brand
experience (Drewniany, B.L., Jewler, A.J. 2011). The brand is the fundamental aspect of how the product
is presented to consumers and how consumers recognize their potential experience with the brand
(Drewniany, B.L., Jewler, A.J. 2011). Thus, it is particularly important to understand how the packaging of
a product contributes to the development of the brand.
Branding is intended as a mean of product differentiation (Grimes, A., Doole, I. 1998). Generally, product
differentiation between closely related consumer products is considered to be relatively meaningless,
since it does not refer to functional qualities or differences between products. However, Grimes, A.,
Doole, I. (1998) noted that previous research by Carpenter et al. (1994) had shown that consumers
actually value the seemingly meaningless differentiation through packaging. A highly effective form of
differentiation is the inclusion of pictures of the product on the package, which serves as a resource to
communicate brand equity (Underwood, R.L, Klein, N.M. 2002). According to Underwood, R.L, Klein,
N.M. (2002) product pictures serve a number of purposes, they set consumer expectations for the brand,
help them define the brand as a brand and improve assessment of the brand's suitability to meet
consumer needs. Thus, in a way, pictures of the product itself (even though this may not serve to
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differentiate the product) can result in improved brand recognition for food products (Underwood, R.L,
Klein, N.M. 2002).
It is important to evaluate the impact of packaging for the specific target market, since the meaning
assigned to packaging attributes can be variable. For example, one study that explored different
perceptions of international brands in the UK and Taiwan found that the impact of color choices was very
different between these two cultural contexts (Grimes, A., Doole, I. 1998). These differences in color
perceptions resulted in differences in brand equity perceptions for brands such as Pepsi and Marlboro
(Grimes, A., Doole, I. 1998). Thus, while packaging is important to branding, the meaning of packaging is
neither consistent nor reliable across cultural boundaries. Furthermore, food products are commonly
characterized by low product involvement and low brand loyalty (Grunert, K.G., et al. 1996). This means
that the power of the brand itself is relatively low and cannot be relied upon to generate significant
increased sales (Grunert, K.G., et al. 1996).
2.2.1.2. Packaging as pricing criterion
In the current literature packaging also serves as a criterion for consumers to determine whether the
price is appropriate. Whilst the food quality remains a key criterion, the judgments are also driven by two
other factors, i) information on the food packaging and ii) previous brand or product experience
(Steenkamp, J.E.M., Van Trijp, H.C.M. 1996). In more formal terms, the packaging of a product acts as
one of the elements in the consumer's price cognition, which is related to the willingness to pay for a
given product (Brunso, K., et al. 2002). Some of the factors in consumer choice that may be
communicated by the product packaging in order to influence price include hedonic and sensory
elements (perceptions of taste of the product), quality, convenience and health (Brunso, K., et al. 2002).
This means that it is particularly important for the new customer to have a positive impression of the
brand's quality through its packaging in order to justify its price.
There are various aspects of packaging that influence the price that consumers are willing to pay. For
example, some consumers are willing to pay more for functional, natural, or healthy products. However,
still some are unwilling to pay a price premium for these products (Steenkamp, J.E.M., Van Trijp, H.C.M.
1996). The price of the product and the packaging may also set certain sensory expectations (Deliza, R.,
MacFie, H. 1996). For example, products that have a higher price, accompanied by packages that imply
a special sensory experience (such as a luxurious or rare product), may actually encourage purchase,
while products that promised this experience without the accompanying higher price may not have such
a strong impact (Deliza, R., MacFie, H. 1996). Thus, the choice of packaging and price should be
congruent in order to support an understanding of the premium product as being `worth' the higher price.
It is important to note that not all consumers want the cheapest possible products. Hence, fitting the price
and packaging expectations congruently together can offer positive benefits even for a product that is not
targeting cost leadership (Drewniany, B.L., Jewler, A.J. 2011). Ultimately, price influences the perception
of quality of a product, but perception of quality (e.g. through packaging) also influence willingness to pay
(Imram, N. 1999).
There are a number of different ways to communicate the price directly via packaging. One such
possibility is a price flash, where the price is displayed prominently on the packaging (Rettie, R., Brewer,
C. 2000). This is often done when a product is offered at a special price and when placed on the left has
a moderate positive impact on recall of the product and price (Rettie, R., Brewer, C. 2000). This type of
direct display may not be the most effective, but it does have the advantage of increasing the consumer
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awareness of the product's price. Other approaches, including shelf labeling, are also factors in
regulatory management, discussed below.
2.2.1.3. Importance of packaging in-store (shelf impact)
The importance of the packaging of a given product in-store is that it serves to distinguish very similar
products from each other (Rundh, B. 2009). So-called shelf impact refers to the ability of the product to
stand out from competing products displayed nearby and is primarily driven by the colors, shapes and
other characteristics of the product packaging (Klimchuk, M.R., Krasovec, S.A. 2013). However, simply
being different is insufficient to effectively provide shelf impact; instead the products need to be different
in a way that makes them appealing to the consumer (Klimchuk, M.R., Krasovec, S.A. 2013). Ultimately,
as Klimchuk, M.R., Krasovec, S.A. (2013) note, the consumer will come to select a preferred product
based on its color and packaging shape. Hence, controlling this aspect of the packaging and making it as
appealing as possible is an important part of the product mix.
A number of studies have shown that choice of products is largely dependent on easily identifiable and
positive aspects of the product, such as product packaging. A study in preschoolers suggests that
packaging choice is to some extent individualistic and driven by favorite colors and personal preferences
(Marshall, D. et al. 2006). However, other studies have shown that the importance of color is much more
consistent for adult consumers. In particular, adult consumers have undergone associative learning
processes that have cemented consistent color meanings and implications (Grossman, R.P., Wisenblit,
J.W. 1999). This means that as adults, consumers are no longer driven by idiosyncratic personal
preferences, but instead have more consistent responses informed by culture and previous experience
(Grossman, R.P., Wisenblit, J.W. 1999). Of course, this does mean that color associations are culturally
variable, as shown by the study of UK and Taiwan consumers and their color associations (Grimes, A.,
Doole, I. 1998). However, it is generally the case that by using color perceptions and associations within
a culture, packaging can represent various aspects of the product in an immediate fashion.
The graphics and colors used on packaging may be even more important for shelf impact than the
verbiage (Bone, P.F., France, K. 2001). Bone, P.F., France, K. (2001) suggested that vividness and
confirmation bias associated with colors and images on packaging have a much stronger impact on
consumer choice in the store than wording on the package, which may not be absorbed under conditions
of rapid selection. Their study found that even when specific verbal information was offered on the
package (such as mitigation of health claims), images and colors resulted in a different understanding of
the value of the product than the verbiage offered (Bone, P.F., France, K. 2001). This study suggests
that, although verbiage is important, in terms of immediate impact on the consumer in the store,
packaging colors and graphics are far more relevant (Bone, P.F., France, K. 2001).
2.2.1.4. Gaining competitive advantage from packaging
The ultimate question for marketers is, whether packaging actually represents a competitive advantage.
Competitive advantage can be defined briefly as a characteristic or resource of the product that is
valuable, rare, inimitable and non-substitutable (Drewniany, B.L., Jewler, A.J. 2011). Most importantly,
the competitive advantage increases the sales of the products. In consumer-led food product
development, in which market-oriented firms identify needs from consumers themselves and seek to
meet them (Costa, A.I.A., Jongen, W.M.F. 2006), packaging may be particularly important because it
illustrates the precise needs that are being met by the product (Grunert, K.G. et al. 1996).
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Packaging is an important element of competitive advantage because it is fundamental to consumer
acceptance of the food product, influencing perceptions of safety, quality and sensory aspects of the food
contained within it (Imram, N. 1999). The package offers competitive advantage because it is a primary
mechanism for communication to consumers about these aspects of the product, as well as how it may
be best used, how it is differentiated from competitors and what benefits the consumer may gain from its
use (Nancarrow, G. et al. 1998). These communications are not just surrounding sensory experience.
For example, communications about health on food packaging may play into social discourses on healthy
eating and dietary needs, making the product either more or less desirable to a certain group of people
(Bech-Larsen, T., Scholderer, J. 2007; Chrsyochou, P., et al. 2010). Packaging can allow for functional
foods (or those that are marketed as serving a further purpose than general nutrition or sensory aspects
of the eating experience) to communicate and differentiate themselves from others based on these
refined characteristics, although care must be taken not to make unsupportable or illegal claims (Bech-
Larsen, T., Scholderer, J. 2007). This offers a potentially large benefit for the marketer of such foods in
developing consumer desire for its products.
In addition to its selling role, packaging also plays a logistical role in maintaining competitive advantage
(Rundh, B. 2005). For example, packaging can extend the shelf life of products or make them more
easily traceable, making them more appealing to retailers as well as consumers (Dainelli, D. et al. 2008;
Rundh, B. 2005). Packaging also encourages interaction between the consumer and the product; by
looking at and reading packages, the consumer becomes aware of the product and its potential benefits
(Rundh, B. 2009). This offers a potential significant competitive advantage for the firm that can
encourage this interaction. There are some tricks that can be used in this case. For example, by placing
non-verbal information (images) on the left and verbal information on the right, package designers can
create situations where consumers can accommodate both types of information more rapidly (Rettie, R.,
Brewer, C. 2000). These types of design aspects of the package can generate competitive advantage by
making them stand out more from competitors and improving consumer understanding.
2.2.2. Regulatory aspects of food packaging
In addition to its marketing information, food packaging plays a number of other roles. For example, it
protects and preserves food, provides tamper protection and indicates food waste reduction (Marsh, K.,
Bugusu, B. 2007). Many of these roles are enhanced by the choice of material (such as metal, plastics,
or paperboard); however, the choice of material can also lead to excessive packaging, which creates a
waste problem and can cause disposal difficulties (Marsh, K., Bugusu, B. 2007). This makes functional
characteristics and solid waste disposal a key area of packaging regulation, although the precise
regulations vary by jurisdiction. For example, many states and countries have bottle deposit rules, which
encourage post-consumer recycling (Marsh, K., Bugusu, B. 2007). Others limit the types of materials that
can be used in packaging, in order to control the amount of hard to recycle packaging that ends up in
landfills (Marsh, K., Bugusu, B. 2007).
Difference in regulatory regimes mean that packages sometimes must be redesigned multiple times for
international markets (Heckman, J.H. 2005). Heckman, J.H. (2005) compares food packaging content
regulation in the United States and European Union, citing a number of differences in these regulatory
regimes. He notes that there are similar requirements for testing of materials, although toxicity thresholds
and specific tests used may differ (Heckman, J.H. 2005). Thus, there may be differences in whether a
given packaging material is allowed in the US and EU (Heckman, J.H. 2005)
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New types of packaging also pose a regulatory challenge. Active and intelligent food packaging, which is
a novel type of packaging that reacts environmentally to extend the life of food and directly indicate
freshness using a monitoring system, also poses a regulatory challenge (Dainelli, D. et al. 2008). This
type of packaging may use nanotechnology to prolong shelf life of products, while intelligent labels may
indicate freshness (Dainelli, D. et al. 2008). These would clearly be positive factors for marketing, but the
regulatory implications of this type of packaging have not yet been fully resolved.
A further regulatory issue in food packaging is required information. For example, nutritional information
has been required on most food packages sold in the United States since 1990 (Underwood, R.L.,
Ozanne, J.L. 1998). Nutritional labeling is also required in the EU (Cheftel, J.C. 2005). There are also
other regulatory package labeling requirements, including size and volume requirements (Underwood,
R.L., Ozanne, J.L. 1998). Other verbal claims on packaging that may be regulated include nutritional and
origin claims (such as `organic' and `low-fat'), allergens or potential allergens, suitability for special diets
and ingredient information (Cheftel, J.C. 2005). Overall, the regulatory environment (which may vary
depending on the market) means that use of packaging materials and information may be constrained.
2.3. Consumers and the purchase decision in the food segment
While product packaging is particularly important in the marketing mix, the most important point is the
role of packaging in the formation of consumer expectations and its ultimate role in the decision to
purchase a given product. Thus, understanding consumer expectations and packaging's role in their
formation, as well as understanding the actual purchase decision, is fundamental in understanding how
packaging influences the actual purchase decision.
2.3.1. Influence of packaging on consumer expectations
There have been a number of studies done on how packaging influences consumer expectations of a
given product. These studies generally show that the choice of wording, images and colors on product
packaging set sensory and other expectations for the product.
The images included on food packaging serve as one factor in setting consumer expectations. A study
on orange juice cartons revealed that the choice of image actually influenced the consumer's sensory
assessment of the product (Mizutani, N., et al. 2010). Mizutani, N., et al. (2010) used four different sets of
images to represent orange juice with different pleasantness and congruence characteristics. They then
performed a taste test (using the same orange juice) to determine the effects on taste. The authors found
that pleasant packaging images resulted in perceptions that the juice was fresher and more palatable,
while those with pleasant congruent images were also rated as having a better aroma (Mizutani, N., et al.
2010). This study strongly suggests that package imagery can generate consumer perceptions and
expectations of the sensory experience of the product.
There is also evidence that the shape and color of packaging will play a role in setting consumer
expectations. One study found that packaging resulted in sensory perception differences, although these
differences were modulated by the individual's sensitivity to design (Becker, L., et al. 2011). Becker, L., et
al. (2011) studied the perception of `tough' yogurt containers (as indicated by different curvatures and
coloration of the container) and its effect on consumer expectations of taste. They found that the designs
that were bolder did result in a difference in taste expectations and experience by consumers (Becker, L.,
et al. 2011). A second study on milk desserts also found that the shape and color of the packaging was a
relevant aspect of the consumer expectation (Ares, G., Deliza, L. 2010). Ares, G., Deliza, L. (2010)
designed six packages with varying shapes and coloration for the same milk dessert and then asked
14

consumers to rate them based on expectations of liking and sensory expectations. They found that
consumers associated different packaging colors with different flavors; for example, cream was
associated with dulce de leche (sweet, delicious), while black was associated with bitter chocolate
(disgusting, interesting) (Ares, G., Deliza, L. 2010). Shape was also important, with square packages
being viewed more positively and round packages being viewed as runny or disgusting (Ares, G., Deliza,
L. 2010). This study provides direct evidence that the choice of packaging will influence the consumer's
expectation of the product. A third study of Cheddar cheese packaging also showed that package
attributes, including color, shape and wording, influenced the sensory perception of the contents (Murray,
J.M., Delahunty, C.M. 2000).
Volume perceptions related to the shape of the packaging are also a potential factor in setting consumer
expectations (Raghubir, P., Krishna, A. 1999). Raghubir, P., Krishna, A. (1999) tested seven different
packaging configurations with different shape and height characteristics, in order to determine the effect
on consumer perceptions and expectations. They found that the height of the product packaging was the
simplest heuristic used by consumers to guess at the total volume of the package (Raghubir, P., Krishna,
A. 1999). Furthermore, they also found that perceived value was influenced by height, with reduced
height being associated with reduced perceived consumption (Raghubir, P., Krishna, A. 1999). Overall,
they indicated that the height and perceived volume of the packaging influenced perceived consumption
and satisfaction with the product, even though in all cases consumers had access to containers of the
same absolute volume (Raghubir, P., Krishna, A. 1999). Thus, shape of the container is not just an
aesthetic perception, but also related to the functional value and potential satisfaction experienced by the
consumer.
Sometimes, packaging choices may set up contradictory consumer expectations. For example, a study of
health claims on packaging in Nordic countries found that the presence of a health claim tended to
reduce consumer expectations of other characteristics, like naturalness and taste (Lahteenmaki, L. et al.
2010). This study also suggested that health claims do not necessarily increase perceptions of the
healthiness of the product, even though it may negatively impact other perceptions (Lahteenmaki, L. et
al. 2010). Thus, marketers need to choose their packaging claims carefully in order to prevent conflict
between claims reducing the power of the primary claim.
2.3.2. What drives the purchase decision in-store
While packaging clearly influences consumer expectations of the product, this does not fully explain how
consumers make decisions in-store. There have been a number of approaches to answer this question.
One study of milk desserts focused on product involvement and attitude to packaging characteristics as a
driver of the in-store purchase decision (Ares, G. et al. 2010). Ares, G., et al. (2010) found that product
involvement (or the extent to which a consumer will think about a purchase) was a factor in determining
how a consumer will assess willingness to purchase. The authors used a series of different packages for
chocolate milk desserts, varying between hedonic and functional attributes and with different package
shapes, colors, brands and pictures (Ares, G. et al. 2010). They compared perception pairs such as
useless/useful and mundane/fascinating to determine how interested the individuals were in the product;
additionally they assessed the importance of the functional claim of high levels of anti-oxidants (Ares, G.
et al. 2010). The authors found that willingness to purchase the product was driven both by high
involvement (or the extent to which the purchase was interesting or important) and the personal
importance of the anti-oxidant claim (Ares, G. et al. 2010). Thus, the packaging and its claims is a clear
factor in the in-store purchase decision.
15

It is not only involvement that contributes to in-store purchasing decisions. A study of packaging
influences on in-store decision making found that time pressure also played a role in the decision
process (Silayoi, P., Speece, M. 2004). Silayoi, P., Speece, M. (2004) concluded that consumers relied
on packaging cues in order to make in-store decisions, especially when they were hurried and did not
have much involvement with the purchase decision. The consumers in their focus groups suggested that
package wording was important, but also that complicated package wording could actually impede
decision making in-store, especially in environments when they were rushed (Silayoi, P., Speece, M.
2004). This suggests that, once again involvement is key, but also that consumer resources like time and
attention play a role in determining the outcomes of the purchase decision.
Finally, environmental cues and the in-store experience can influence the purchase decision (Bellizzi,
J.A., Hite, R.E. 1992). Bellizzi, J.A., Hite, R.E. (1992) tested two simulated retail environments, one
primarily blue (denoting calmness and coolness) and one primarily red (denoting tenseness and
negativity). They found that the blue environment resulted in more immediate purchases and fewer
postponements than the red environment (Bellizzi, J.A., Hite, R.E. 1992). This is a very basic finding
about the importance of the store environment on the purchase, but it points to a very important aspect
that needs to be understood. Not all purchasing factors are under the control of the marketer.
Uncontrolled environmental factors need to be taken into account when considering the consumer
purchase decision.
2.4. Retailer Brands and the shopper in the food segment
The final focus of this literature review is an exploration of why consumers buy retailer brands. Retailer or
private label brand products are produced by the retailer for in-store sales, hence they may have a
distinct brand identity from the store (Grunert, K.G. et al. 1996). The actual supply chain for retailer
branded products is often similar to (or even identical to) national branded products, though retailer
policies on quality and consistency of goods may vary (Grunert, K.G. et al. 1996).
Most of the examples of packaging design that are held out as positively influencing consumer decision
making are from large-scale international brands, which are marketed to a wide range of individuals and
markets. However, retailer brands are not widely marketed and may not have as much marketing
support or multi-faceted development behind them. In this section, the consumer motivations for
purchase of retailer brands and a recent movement away from the value brand paradigm of the retailer
brand are discussed as a mean of understanding better the increasing complexity within this sector.
2.4.1. Why do consumers buy retailer brands?
There have been a number of studies why consumers buy retailer or private label brands. While many of
these studies focus on price (and related issues), other aspects of the brand choice include perceptions
of quality and brand loyalty. It should be noted that packaging, while it is seen as an area for
improvement by retailers, is not necessarily viewed as a strength or determining feature in the selection
of products, unlike for national brands (Garrettson, J.A. et al. 2002). However, this does not necessarily
indicate that packaging is unimportant.
One study focused on the choice of retailer brands as a risk assessment exercise (Batra, R., Sinha, I.
2000). The authors posited that the selection of retailer brands was associated with a certain amount of
risk and found that the willingness to purchase was increased when there was a reduction in perceived
risk (Batra, R., Sinha, I. 2000). The authors found that purchase of retailer brands was more commonly
associated with products that had high `search' characteristics (or need for information that could be
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Details

Pages
Type of Edition
Erstausgabe
Year
2014
ISBN (eBook)
9783954897322
ISBN (Softcover)
9783954892327
File size
1 MB
Language
English
Publication date
2014 (March)
Keywords
Packaging Retailer Brands Pricing Can packaging justify higher pricing Consumer value perception
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Title: Product packaging as tool to demand a price premium: Does packaging enhance consumers‘ value perception to justify a price premium
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