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Why Packaging Matters

The way a product is packaged has a big impact on consumer buying, even though the consumers may not even realize it at times

I made a promise to myself on the day I completed my MBA, that, I will never wear a tie again. Its been more than a few years since then and I have managed to keep that promise. I see no reason as to why people need to wear a tie in the heat and the humidity of India.

Nevertheless, as one of my favourite Urdu poets Bashir Badr once said "yahan libas ki keemat hai aadmi ki nahi, mujhe gilas bade de sharab kam kar de." In simple English what this means is that more than the content, it matters the way things are packaged and presented.

Businesses understand this much better than others and there is great emphasis on packaging and presenting a product in a way that makes the consumers are more likely to buy it. Leonard Mlodinow deals with this phenomenon in great detail in his book Subliminal-The New Unconscious and What it Teaches Us.

One of the examples he talks about is a research study in which subjects were given three different boxes of detergents and were asked to try them out for a few weeks. The boxes were coloured yellow, blue and the third box was blue with splashes of yellow.

The subjects favoured the detergent in the third mixed coloured box. When they were asked why they preferred the detergent in the third box, they talked about the relative merit of the detergents. But none of the subjects talked about the box. The irony was that all the boxes had the same detergent.

As Mlodinow writes "We judge products by their boxes, books by their covers, and even corporations' annual reports by their glossy finish. That's why doctors instinctively "package" themselves in nice shirts and ties and it's not advisable for attorneys to greet clients in Budweiser T-shirts."

Another similar study was carried out using silk stockings. The stockings were all the same except for the fact that each had a different and very faint scent applied to it. The subjects did not know this and came to the conclusion that one pair out of the four pairs was the best. When asked the reasons for the same like was the case in the detergent study, the subjects attributed their choice to a range of reasons "perceiving differences in texture, weave, feel, sheen, and weight." Only, six out of the 250 subjects noticed that stockings had been perfumed.

So a way a product is packaged has a big impact on consumer buying, even though the consumers may not even realize it at times. In fact, the consumers admit as much when the question is put to them directly. In a piece for AdAge marketing experts Steve Kazanjian and Brian Richard point out a survey they carried out in October 2012. The survey included 3000 American consumers.

As they write "A majority (64%) of the respondents said they will sometimes buy a product off the shelf, drawn by packaging, without prior knowledge or having researched it first." What is interesting that even though most consumers use a smart phone, very few of them actually get around to researching a product while shopping.

As Kazanjian and Richard point out "We found that, despite the smartphone revolution, most consumers (72%) still rarely use a mobile device to research a product while they are shopping." In fact, studies have shown that packaging is one of the highest drivers of repeat purchase. It has more impact than "TV ads, online reviews or even recommendations from friends."

What is interesting is that the way a product is displayed(which is also a part of packaging) also has an impact on sales. As Benjamin Bushong, Lindsay M. King, Colin F. Camerer and Antonio Rangel write in a research paper titled Pavlovian Processes in Consumer Choice: The Physical Presence of a Good Increases Willingness-to-pay "In practice, differences in physical displays of goods also appear to be important."

These academics named above carried out a research study in which they found that people were willing to pay 40-61 per cent more if actual items of junk food were displayed in comparison to choosing from a text or an image display. What was interesting was that if the items of junk food were placed behind the plexiglass, the willingness to pay fell to the same level as an image display condition.

As the academics point out "The introduction in the real condition of a transparent plexiglass barrier between the subject and the food, which has no impact on the sensory information available to the subject, reduces the willingness-to-pay almost to the level of the picture condition, thus eliminating the real-exposure effect."

The moral of the story is that just making a good product is not enough. It needs to be presented in a way which makes consumers think that the product is good. The funny thing, as the above examples clearly showed, is that chances of consumers being influenced by irrelevant factors are rather high.

And that also explains why people choose to wear a tie in the heat and the humidity of India. There chances of being taken seriously go up, even though it is an irrelevant factor.

Vivek Kaul is the author of 'Easy Money'. He tweets @kaul_vivek.

This column appeared in the November 2014 Issue of Wealth Insight.