A number of years ago I had the privilege of attending an openday to better understand the capabilities of Digital Print with HP, and it was good to be able to better understand the technology driving growth in this market as well as realise its potential.
The packaging industry is hardly the first sector to consider the implications of cost vs value but it is uniquely positioned to make the most of it.
Let's face it, packaging tends to be seen as "in the way" of whatever it is the average consumer is trying to get at. While those days of needing a samurai sword to cut into your clamshell package and retrieve your scissors, knives etc are behind us in today's busy world our tolerance is at an all time low. This is the world of 20 then 10 then 5 minute abs, 24/7 news and instant social media; we want to be able to cook a michelin worthy gourmet supper in 30 seconds without having to spend to much time or energy on the creation of the dinner, just its enjoyment.
All this sits firmly under cost. It costs me precious time to seek out the product, its costs me my money to purchase it, more time to get back home and prepare it and finally the pay off of being able to use it. If this is a can of drink it might be a short cycle; go into the shop buy the can open and drink it , start to finish could be 10 minutes. Or , it could be that expensive after shave or perfume that lasts months. The manufacturers are having to get that product in its best possible condition allowing for as low a cost as possible to keep their profits reasonable.
But this is a defensive trend. Cost can only go down and it can only go down so far. Eventually you can go no further and a bottom line is reached with nowhere to go. Enter value. If I am providing a sense of occasion, something that saves time, that is a talking point that is easy to use or dispose of , or simply that I see some personal value in I will buy it. I will keep buying it too, even if the price rises as it will require a much higher movement in price to remove value. Value implies prestige or craft or trustworthiness while cost ends up being commodity or generic.
The point that was being made at the HP event was simple. Conventional print might cost less then digital, but digital adds infinitely more value. Consider Coca Cola. With advertising spend of 3.6Billion USD and over 650 Billion servings per year the rough price paid for advertising (cost) works out to about .5 cents per serving. With all the advertising spend the actual volume of sales does not differentiate all that much. However, when you put in a new detail like with the "share a coke" campaign there are volume gains of about 5-7%, while the price per serving remains essentially the same. Jan Van Daele of HP who was explaining this process made the point exceptionally clear; the value of engaging with the consumer at a personal level pays dividends against the mass market approach we used to see.
Value is the positive to cost's negative. If I value something its price increases, I will keep using it and it becomes a habit, accelerating the path to purchase chain in my mind. As one expert put it " When the first I Phone came out, I did my research, I spoke with my friends and I probably spent 3-4 months considering my decision before I bought the phone. Since then I doubt I have given it more then 2 minutes thought before upgrading.". In addition once we settle on this product as providing value we tell our friends about it, re-enforcing to us we made the right decision while bringing new customers on board, and all this without any money changing hands from the brands we are subconsciously or consciously pushing.
The big trends that are being seen across the market in 2015; premiumisation, convenience, sense of occasion , healthy , artisanal, sustainable all provide value which is why they will continue to grow. Even when cost is part of the equation for a manufacturer ; for example light weighting packaging so that it costs less per unit to make, for the consumer there is still a value - less environmentally damaging, longer shelf life, easier to recycle etc.
As always I welcome questions and comments - where do you see the differences between cost and value?
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