Global brands need to strike the right balance between localization and globalization when packaging their consumer goods. That’s because many markets are conditioned by local traditions and inherited cultural values that may influence consumer response to package features such as shape, colors and text. The Chinese, for example, associate the color red with happiness and luck, while in most Western cultures the same color has more negative connotations. Similar examples are legion. Given these complexities, can any best practices be identified for global packaging?
Several years ago, McDonald’s announced plans to introduce a single line of product packaging for use around the world. But last February, the company seemed to step back from that strategy in favor of one in which nutritional information and some graphics on the packages are localized. McDonald’s reportedly plans to have these new packages in 20,000 of its restaurants in Europe, the United States, Asia, Latin America and Canada by the end of this year.
Why the apparent about-face? In spite of McDonald’s reputation as a leading global brand, its restaurants are actually positioned very differently around the world. In the United States, for example, the Golden Arches are associated with a low cost meal. But in the UK, where the chain got a later start, the brand represents something more premium. And in China, McDonald’s is viewed as a very premium gateway to the West. Says Mark Kennedy, chief strategy officer at Landor Associates, “Even though the physical product itself looks the same, it does very different things.”
From the point of view of product positioning, McDonald’s local packaging would seem to be just what is called for. But Kennedy also makes a distinction between product brands and experiential brands. And McDonald’s would seem to fall in both categories. On the one hand, the company is a purveyor of food products that require local adaptation; but perhaps even more than that, Kennedy says McDonald’s is a highly experiential brand that demands global consistency. “Although the food product is important,” he says, “what the company is really selling is the McDonald’s experience.”
To the extent that the company is selling a product, its product has to be focused on the needs of local audiences. McDonald’s retreat from its global packaging strategies would seem to make perfect sense, according to Kennedy, if the company has in fact decided to alter its brand image from one that is experiential to one that is more product-oriented.
Let the category be your guide
Professor Kees Sonneveld of Australia’s Victoria University argues that product categories should be the guide for a brand’s global packaging strategies. He feels, for example, that global food and beverage products are better off with local—or regional—packaging because these products often have low dollar value and are more sensitive to taste and flavor perceptions of the local market. As an example, he cites the marketing of Coca-Cola in parts of Asia where the brand name on the package has been translated into an Asian script but the typeface design resembles the original logo. An associated advantage of local packaging, he notes, is the ability to comply with local and regional regulations such as food labeling requirements and environmental legislation.
In the case of more functional, fast moving products such as personal hygiene and care, household care, cleaning products, OTC pharmaceuticals and cosmetics, Sonneveld believes consumers in local markets are less sensitive to packaging variations. In these cases, the functional characteristics of the product or package may outweigh the need for localized package design. Since profit margins are usually larger in this category than in the food and beverage sectors, he thinks packaging design can be more universal. Economies of scale can then be achieved by making use of more centralized manufacturing and standard packaging.
In branding universal products such as consumer electronics, appliances, toys and the like, Sonneveld argues that packaging—at least in marketing and selling the product to consumers—has traditionally played a much smaller role than in the other two categories. Prospective buyers tend to be more focused on the design and functionality of the product than the packaging, he says. Aside from its role in drawing attention to the brand, the package in these categories largely serves to protect the product and facilitate transport. Brand owners in these segments, according to Sonneveld, are likely to reap the highest rewards when they minimize their packaging costs.
To reduce packaging costs associated with localization efforts, some global companies have looked to Internet-based virtual management tools. One virtual management company, Interbrand’s BrandWizard Technologies, has developed software that takes brand information and automatically channels it to product distributors around the world. In this way, packages in various parts of the world can retain the basic brand identity but display different information locally.
Richard Gerstman, chairman emeritus of Interbrand US, explains. “It might be the language that’s used on the packages or it could be the illustrations used on them. Certain things would change, but the basic brand look would be there.” He says the technology provides economies of scale. “Global corporations can take their brands and their packages to different regions without each region having to work on its own. All the brand information on these packages comes through a central source and is channeled to different regions.”
BrandWizard’s vice president of marketing, Robert Thomas, says this strategy works best for decentralized companies. “One of our biggest clients is Hewlett-Packard,” says Thomas. “HP is trying to achieve global consistency in its packaging. The packaging doesn’t really change; the company is just trying to accommodate local languages and imagery.”
According to Thomas, HP is focused on using its color palette as well as its logo in such a way that customers will immediately identify a box with “HP blue” wrapped around it as an HP product.
Thomas concedes that the BrandWizard’s tools are not for everyone. “It’s a very customized solution. It’s time-intensive and fee-intensive, and it can take upwards of two to three years to develop,” he says. Thomas adds that his clients tend to develop packaging for large regions such as Europe or Africa, rather than for individual countries. As a result, a single package may have to display text in multiple languages.
Case in point: Hewlett Packard
Randy Boeller, a manager on Hewlett-Packard’s global packaging team, likes the flexibility that a decentralized approach gives him in adapting packaging materials regionally. He says this freedom allows him to better accommodate the processes that dictate material types, especially when moving away from paper and toward cushioning packaging. “Different processes are more readily available and more economical in different regions,” he notes.
Size and weight of the package are important considerations for Boeller when deciding whether to distribute globally or regionally. “When you change the size and weight, you’re changing the outbound logistics cost. The bottom line is that you are changing the amount of fuel it takes to deliver that finished good from where it was produced to where it will be sold. The smaller and lighter you can make it, the better,” he says.
In the case of Hewlett-Packard printers, production is localized within regions, and final packaging takes place locally. Products that can be localized with the fewest package modifications, on the other hand, are produced in one location and distributed worldwide from that location. These products tend to be small with high dollar value, and available in a limited number of stock keeping units. Products that may lose value rapidly due to advances in technology—digital cameras, for example—also fall in this category.
According to Boeller the physical structure of the package in most of these centrally distributed products is the same around the world, with mainly the graphics changing to meet regional needs. “But there are some exceptions,” he says. “It really just depends on a lengthy analysis of material costs, transportation costs, take-back fees where they exist and that sort of thing.”
In the case of the company’s digital cameras, the package may be a carton or PET clamshell. The camera is packed in its final package at the central distribution site, in either case. Individual cameras are then assembled into a master pack containing typically 10, 15, or 20 units, depending on the targeted retail environment. Full pallet loads of master packs are then shipped either by air or sea to a local distribution center from which the individual boxes are shipped out.
The company has had to overcome at least one major hurdle in regionalizing its packages. In the case of packages displaying multiple languages, the package may not be able to easily accommodate all of the information normally placed on it. Says Boeller, “One of the things about increasing the number of languages on a package is that you force the marketing people to earn their keep. You’ve just taken away the amount of real estate they have to communicate the product and its specifications and ‘why-to-buy’ information. When you increase the number of languages on a package, and reduce that real estate, the marketing guys have to be really good at communicating with the customer.” With challenges like that, it’s no wonder HP has a wizard on call. BP
Randall Frost, a freelance writer based in Pleasanton, California, is the author of The Globalization of Trade. His work has appeared in Worth, The New England Financial Journal, CBSHealthWatch, Brandchannel and a variety of educational publications.
Where to go for more information...
Brand consulting and design. At Landor Hong Kong, contact Mark Kennedy at +852.2851.8173 or www.landor.com.
Packaging strategies. At Victoria University in Australia, contact Kees Sonneveld at +613.9919.8043 or email@example.com.
Digital global branding. At Brandwizard Technologies, contact Robert Thomas at 212.798.7600 or www.brandwizard.com.
Global market intelligence. At Mintel, call 312.932.0600 or visit www.gnpd.com.
Are there packaging strategies that could work across cultures by appealing to basic human nature? Davis Masten, chairman of the consulting and market research firm Cheskin, thinks the key here may be design.
Like many brand owners and package designers, Masten believes design can trigger impulsive buying; but he cites research as support. Says Masten, “The latest cognitive science would have us believe that you react before your brain processes the story; then, what we do is make up a story about how we reacted. Within that, I argue that we as human animals—or animals that are human beings—are all susceptible to [impulsive behavior].”
Professor Kees Sonneveld, who currently serves as president of the International Association of Packaging Research Institutes, believes packaging strategies should accommodate product type in terms of added value, branding sensitivity and market sensitivity. Some of Sonneveld’s thoughts on global packaging follow:
Individual markets often require adjustment of the packaging shape, color or text to meet local perceptions. Therefore, not only the package but also the content will require some re-engineering.
Within countries, markets are becoming increasingly differentiated—not only by age and social standing but also in terms of cultural diversity. Most consumer markets around the globe are moving towards multi-sector markets with the sectors decreasing rapidly in size.
The challenge for brand owners is to match large-scale production economics with individualized product packaging. Bulk production and distribution close to market locations, with final consumer packaging and maybe some last minute product adjustment taking place just before retailing, may be an answer for high added value, premium food products. However, for low cost consumables, local production—including straightforward packaging—may be a better option.
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