Wednesday, October 22, 2008

Packaging & POP Memo: Lights, Sound, Video - On Packaging and In-Store Point-of-Purchase Displays


From the Natural~Specialty Foods Memo Editor's Desk: High technology is making its way to product packaging and in-store point-of purchase displays. Specifically, according to a report in the marketing and advertising publication Advertising Age, lights, sounds and streaming video are beginning to show up on product packages and in-store point-of purchase (POP) displays.

Perhaps in today's 24/7 electronic, plugged-in world, packaging and in-store displays are the next logical extension of technologies such as streaming video? On the other hand, do consumers really care, especially when it comes to packaging? And will the added costs of such packaging enhancements really lead to increased sales for the brands and products that use the electronic elements on the product packages?

Perhaps in the case of in-store point-of-purchase displays, features like electronic lights, video and sound can help draw attention to the displays and thus lead to increased sales. After all, various types of interactive POP displays have been around for many years. They just aren't as sophisticated as the ones mentioned in the Ad Age piece.

When it comes to product packaging we are skeptical. In some special cases, depending on the nature of the product, such technology might have some merit. And in the case of new product introductions it might be interesting to create a limited run say of the new products' labels featuring electronic ink or some form of streaming video for promotional purposes.

But in the case of the majority of food, grocery and health and beauty care-general merchandise items we are hard-pressed to think at this point in time consumers will be drawn to such bells and whistles on the outside of the product -- it's labels.

Rather, we think brand building the good old fashion way will still be what's key. Quality, value, price, an attractive package or label, marketed to generate trial and then to build brand isn't going to be replaced by technology applied to packaging in the vast majority of cases.

We are far from Luddites though, so we welcome the innovation, especially for in-store POP displays, and in those particular product packaging cases like we describe above for product packaging. Generally, the more options the better.

And we like enjoy the "Gee Whiz" factor at times as much as anybody.

Of course there is the "green factor" as well. Such as since the packaging will be electronic, won't it have to be disposed of in special ways like most electronic waste is. That could be a real kettle of worms. It's also something it appears to us the developers and users of this new packaging have yet to take into serious consideration.

Read the report from the October 20, 2008 issue of Advertising Age below:

Soon, Your Mayonnaise Label May Have Sight, Sound, Video
Electric Ink Could Be Low-Cost, Energy-Efficient Option for Advertising
By Jack Neff
October 20, 2008

BATAVIA, Ohio (AdAge.com) -- In-store displays and product packaging are getting a whole lot flashier -- literally, with lights and streaming video.

Henkel's Right Guard is testing use of printed electronics to power flashing lights in corrugated in-store displays at Walgreens stores in the Chicago area, a first step for a technology from Arizona start-up company Nth Degree that could eventually bring low-cost streaming video to printed displays, packaging, direct mail or magazine inserts.

Other tests are in the works involving other marketers and formats, according to people familiar with the matter, including one expected next year involving printed electronics on packaging for a Procter & Gamble Co. brand, believed to be a tissue-towel brand. P&G declined to comment on the project.

Anil Selby, VP-business development for Nth Degree, declined to comment on tests involving marketers, though he said the company has been in discussions with P&G, General Mills, Coca-Cola Co. and PepsiCo, among others.

Even for hardened marketers, it's hard to get past the gee-whiz factor. "It's just incredible what they're doing," said Tom Owen, director of in-store merchandising for Henkel of America (formerly known as Dial Corp.), when Nth Degree executives showed him an 8½-by-11-inch sheet of paper running a video snippet from the original "Star Trek" series. (Moving newspaper photographs in Harry Potter movies come to mind.)

Limited rollout

Henkel is taking a disciplined approach to evaluating the technology's commercial potential, which it's been testing in 27 Chicago-area stores, compared with a control group using the same basketball-themed display without the electronic enhancements in 27 other Chicago stores.

"When it comes to investing in something nationwide, cost will be a factor," said Mr. Owen, who has been working with the Alliance in-store marketing unit of corrugated display maker Rock-Tenn Co.

Nth Degree, based in Tempe, Ariz., near Henkel's Scottsdale headquarters, uses "wafer printing," employing conventional presses to print layers of ink that act like circuit boards.

The Right Guard displays use battery packs, but Mr. Selby said it's also possible to affix a wafer-thin power source directly onto paper or a package. He said he sees printed streaming video as part of a second phase of the technology's rollout.

The wafer-based inks are 90% more efficient than fluorescent lighting, environmentally friendly and can be powered using solar collectors, Mr. Selby said. The technology can be mass-produced cost effectively for as little as 20¢ per unit, he added, though initial installations are in the $3 to $10 range. That's one reason the company has targeted store displays that can reach hundreds or thousands of people at once.

Scale, individual attention

Mr. Selby ultimately sees the technology being used for outdoor ads, or as a cost-effective replacement for LED video displays in retail. Nth Degree can make displays individually addressable, allowing different messages in different stores.

Magazines also have been taking a look at electronic-ink technologies, most notably in the case of Esquire, which used it on the cover of its 75th- anniversary issue. Get a behind-the-scenes look at how that cover was put together in a 3 Minute Ad Age.

2 comments:

Ryan Wanger said...

Your analysis makes sense for people like you and I who care what kind of food we eat, but aren't the majority of people still shopping the aisles in the middle of the supermarket? Those are the people easily fooled and drawn to flashy packaging and advertising.

Even if you aren't knowingly a victim of being biased by advertising, when you have to choose one product amongst 10 competitors, you'll subconsciously reach towards the one that is most familiar...or the one with the fancy e-ink display.

Natural~Specialty Foods Memo said...

Don't disagree with your premise in the main.

But empirical evidence certainly does show increasing numbers of people caring about the foods they eat.

From experience, excellent packaging and point-of-purchase displays DO work in-store; no doubt.

But not sure electronic enhancements do so more than conventional materials.

Certainly a POP display with sound and streaming video, particualry say animation, will draw kids'interest, for example, in the cereal aisle. But will they increase sales? Don't know.

Also, will the display's added cost provide a cost-benefit analysis even assuming such electronic displays did increase sales. Doubt it unless the added costs of the displays is marginal.

That's the key point I am making.

No argument that flashy packaging, ect. can enhance sales in many cases.

Of course, we are seeing lots of movement to retailers that don't use such flashy packaging in their store brands. So, perhaps there is a less is more phenomenon brewing. That certainly is the case in Germany and increasingly so in the UK, where no frills discount grocers are leading in sales andmarket share gains.

In terms of actual electronic product packaging, I think it will remain a novelty.

And the ironic thing about POP displays of any kind is that most chain food and grocery retailers have what are called "Clean Floor" policies -- meaning they allow very few manufacturer POP displays in their store asiles. Usually just a few during the year from the big guys -- and they pay for the store real estate.

It is more frequent during holiday periods like Christmas -- but the marketers pay even more then for the floor space.

If you add in the cost of the in-store real estate, then the extra cost of the electronic add-ons to the displays, it's tough to make margin.

Then there is the issue of returns. Often the retailers will just ship back product left on these displays, deducting it from the accounts payable they have for the respective vendors. Another margin eater.

So personally, I don't see this as a coming retail trend. But could be wrong, of course.

Regarding the center or core of the store verses the perimeter, the center store still produces the highest gross sales in supermarkets. But that's in part because there is merely more product there.

The perimeter departments -- fresh produce, perishables, ect. -- have been where the growth -- and profits -- have been for about the last decade or so. This correlates with the trend towards fresh foods, since that is generally where they are located.

Thanks for your input. Enjoyed reading your Blog and have bookmarked it for regular reading.

Editor.