Product Packaging Strategies to Maximize Profitability

by Kyle Ous
@PKGPlaymaker
Chainalytics

When it comes to designing products for the marketplace, it seems there are countless tasks to complete before products are introduced and available on the retail shelves. While speed to market is important, packaging design is a critical component to the overall profitability of the product and is important to evaluate before entering the marketplace. Does this mean companies need to follow a rigorous packaging engineering design process and justify each added cost?

Companies that are best in class are doing iterative package design analysis and testing before phasing in new packaging. Although this is an involved process, this task prepares the packaged product for distribution year-over-year and enables companies for future growth within their categories.

Profit margin is a key metric for success. As it relates to packaging, there are a handful of ways to maximize this metric. It is important to understand the supply chain channels that your customers are using to buy their new products. Online retail sales are a growing channel and seem to be a popular buying experience across many demographics.

Keurig 2.0 On Shelf Retail Package for Consumers

Keurig 2.0 coffee maker systems are using customized packaging strategies for different supply chain channels through to the customer. Out of the box, Keurig utilizes high-end lithographic labels with an integrated carrying handle for sales at the retail shelf. Although the packaging is more expensive, it tends to differentiate from other products on shelf and offers enhanced customer experience in the final mile. Contrary to popular belief, the same packaging does not need to be used for online sales or replacement parts that are sent directly to the consumer. Kraft corrugated with direct print on the outside of the shipper box is a cost effective alternative to retail packaging. Typically a 15-30% cost-take-out can be achieved in this simple, yet operationally challenging opportunity.

Online direct to customer packaging of similar product

Companies that utilize best-in-class packaging strategies are continuously analyzing different ways to maximize profit margin. One simple truth behind packaging is the most successful design concepts plan for transportation efficiency and minimize the amount of packaging related damage through package testing. Inside the box, Keurig uses an engineered cushioning design made out of molded pulp for the Keurig 2.0 system. In this example, retail sales and online sales use the same style and type of cushioning to protect the product. While the supply chains are different, the performance of the cushion was likely tested for both shipping environments. 

If you are looking to become ‘best-in-class’ in your category, packaging strategy and alternatives are a ‘must-have’ on your packaging design check sheet. Feel free to reach out to kyle.ous@chainalytics.com if you’d like to sound out alternatives and logical steps in your design process with our Packaging Consulting Services at Chainalytics.