Printer Friendly

Balancing traditional packaging functions with the new "green" packaging concerns.

Each consumer in the United States contributes an estimated 3.5 lbs of trash per day to the nation's refuse.(10) About half of this trash is believed to be packaging-related. Landfills are scarce, expensive, and reaching a saturation point. Reducing the amount of product packaging is seen as an important way of fighting the rising tide of trash.

As environmental responsibility is developing into part of everyday life, product packaging is becoming a major concern of some consumer groups, governmental agencies, manufacturers, and marketing intermediaries. Consumer groups are pressuring manufacturers to reduce waste at the source. Marketing intermediaries are being pressured by consumers and manufacturers to support the national drive for recycling and adjust to consumers' demands for ecologically safe products. The urgency of the situation has prompted a number of states and the Environmental Protection Agency (EPA) to take actions that will increase the public's awareness of packaging-related environmental issues. Some states have even suggested taxing unrecyclable packaging as a solution to the problem, which means that manufacturers would have to re-evaluate their packaging options.

As a result, balancing the environmental problem of too much packaging waste with the three essential packaging functions of protection, preservation, and promotion has become a central problem. The ability to anticipate and respond to the demands of various stakeholders is key to successful "green" packaging strategies. In turn, these strategies call for packaging that is safe to handle, safe to use and has minimal pollution impact on living things, the ecological system, and natural resources.

But what are the main problems a company is likely to encounter in its pursuit of "green" packaging? Who are the main stakeholders and how can a firm best respond to their demands? How do "green" packaging decisions influence a product's life-cycle? This article attempts to apprise marketing managers of the problems, threats, or opportunities presented by the current changes in outlook toward the environment and ecology. In so doing, it identifies the constraints faced by consumer goods manufacturers, investigates the marketing problems associated with the changes, and provides some strategic marketing options to some of today's packaging problems.

Internal and External Constraints

The problems of landfills, refuse, and hazardous waste are all too obvious(10) Everyone agrees that these problems are serious. Where manufacturers and environmental advocates disagree is how much and what type of packaging is sufficient and safe. In addition, consumer goods manufacturers are faced with internal and external constraints which cause them to resist "green" packaging.

Two major internal constraints are the costs associated with packaging changes and the resistance to new ways of doing things (see Table 1). An internal constraint is that a company may lack the equipment and manpower needed to make the transition to "green" packaging. Also, being the first to introduce "green" packaging can lead to unsafe package choices. Because most packaging decisions call for major expenditures, a firm often has to make many cost adjustments to assure that the packaging choices are also source efficient. The packaging so developed should satisfy the functions of protection, preservation and promotion. The desire to keep things the same, which influences and is influenced by trade ties (external sources), may make it difficult to readily embrace environmentally safe packaging. Among other things, maintaining the status quo may be seen by the manufacturer as a way to keep the same cost structure, and implicitly, control price changes -- at least initially.

The major external constraints include the inability or inconvenience of recycling and the preference for the familiar. Consumer perception is particularly important, because manufacturers risk losing customers if their packaging is seen as less convenient or less recognizable than that of the competition.(2) The lack of materials and other supplies, market uncertainties, and the lack of infrastructure in support of recycling efforts are other important constraints in the decision to go "green". Further, since firms buy their packaging from outside sources, they are faced with the problems of getting supplies that are safe, environmentally-friendly, and economical. For example, packaging changes may be resisted by suppliers, especially if they result in a reduction in packaging material sales.

Stakeholders' Expectations and Concerns

"Green" packaging holds several promises and many problems. Whether it is treated as an opportunity or a threat depends on the outlook of the various stakeholders: (1) consumers; (2) manufacturers (i.e., the companies themselves); (3) marketing intermediaries; and (4) consumer advocacy groups and governmental agencies. The changes in environmentally-improved packaging -- however small -- are being made in response to the interplay among these four groups.

Each of these four groups have different expectations about "green" packaging. What consumers expect from "green" packaging is not necessarily what manufacturers traditionally offer. Complicating matters further, what consumer advocacy groups want from packaging today is distinctly different from what they felt packaging should accomplish just a couple of years ago.

Consumer Concerns

As shown in Figure 1, consumers expect "green" packaging to provide ease and convenience at the time of purchase and use. They also expect it to be just as easy to store, reuse, and recycle as traditional packaging. Consumers also expect the packaging material to be imprinted with a list of ingredients and instructions for use; information on expected life of the product; methods of disposal; and an 800-number to call in case of a problem. Increasingly, consumers are looking not only for performance guarantees, but also for guarantees in environmental safety. Even for throw-aways, consumers would like to dispose of the waste without worrying about biodegradability. In the future, consumers may expect all packaging to be biodegradable and yet psychologically appealing.

Manufacturer Concerns

Manufacturers have a whole array of concerns about "green" packaging. They want the packaging to be sturdy enough to protect the contents from physical damage and buyer abuse, supple enough to withstand climatic extremes and artificial lights, and attractive enough to satisfy the display requirements of intermediaries. They want the contents as well as the packaging to be safe at all times. But they also want the cost of materials, fabrication, manpower, inventory, shipping and storage to be reasonable. There is internal resistance to packaging changes if these changes result in higher costs and fewer units sold.

Manufacturers realize the economic benefits of lighter weight packages; however, the safety of lighter weight packages in general has become a critical issue. If the package is perceived by consumers as not capable of keeping the product safe, the manufacturer is likely to lose sales. Because safety is such a primary concern, one of the most important issues facing consumer goods' manufacturers is whether new packaging will expose their product to tampering risks -- a serious problem in food and medicine. The need to overcome this problem may necessitate changes in ingredients or manufacturing process, as was apparent in the Tylenol case.

Since eliminating the packaging altogether or shrinking the packaging to a smaller size leaves less space for on-the-package advertising, another concern in packaging is whether less packaging results in less promotional space. Manufacturers may resist "green" packaging if the sacrifice in promotional space is considerable.

Once the decision to manufacture a new "green" package is made, manufacturers need to know whether they will have access to the raw materials needed to meet future demand. They also need to be in a position to meet internal equipment and manpower needs, and their external obligations to handle damaged goods, refunds and marketing allowances. Nevertheless, manufacturers may be pressured by packaging and materials suppliers to resist "green" packaging if the changes call for totally different packaging, new contents and ingredients; if they result in reduced sales to former clients; or if they require additional research and development expenditures. Suppliers' resistance to packaging changes are likely to be high, especially if the future of the product is uncertain. Goal -- and cost-related interdepartmental conflicts may also impair a firm's ability to introduce environmentally safe packaging. Thus to succeed in the marketplace, a company should develop environmentally safe packaging, but the packaging it has created should also satisfy the demands of consumers, marketing intermediaries, and consumer advocacy groups and governmental agencies.

Marketing Intermediary Concerns

Retailers and wholesalers are directly concerned about consumers' response to packaging. However, because they expect manufacturers to be responsive to consumers' needs and wants, their focus tends to shift to other marketing tasks. Their concerns mostly pertain to sturdiness of case and package, convenience of package removal, ease of protection against pilferage, ease of product storage, and ease of package and shelf-stacking. The packaging should also make it easier to identify the brand through its unique colors and designs, provide adequate space for price stickers, and enable the intermediaries to monitor stock movements through computer scanning.

Marketing intermediaries may resist the changes if their cost of doing business increases as a result of undertaking additional functions. Such a problem may slow down or even frustrate the effort to adopt ecologically safe packaging or to recycle. In the mean time, ecologically-minded consumers may switch to other brands if they feel that the firm is not responding to their demands. For example, in 1989, consumers were angry at producers of polystyrene egg cartons. Because of this, the manufacturers lost 25% of their market share to makers of molded egg cartons in just one year.(3) In contrast, The Faucet Queen, a hardware manufacturer, gained a competitive advantage by redesigning its package to be an after-the-sale storage case for nails, tacks, and picture hangers. This has helped the company garner more customers, including Walgreens drugstore chain.(2)

Advocacy Group/Governmental Agency Concerns

Governmental agencies and consumer advocates want an all-round safe packaging.(1) They expect the packaging to be safe to handle and safe to use, to be self-informative, to be free of deception, and to be free of any harmful effects to the ecological system. That is, they want the packaging as well as the product to have minimal pollution impact on natural resources and living things; they expect the packaging to be biodegradable, recyclable, and free of health hazards. They force manufacturers and marketing intermediaries to make these concessions through moral suasion, social pressure, and legislation.(1,5) Manufacturers can expect local, state, and federal laws to affect future packaging. For example, the Minneapolis City Council unanimously passed one of the most severe laws in the nation in 1989 regulating food and beverage packaging. Meanwhile the federal government has proposed legislation, including the Environmental Marketing Act(9) and the Solid Waste Disposal Act.(4) The former is designed to formulate definitions and standards for environmental claims; the latter, to govern federal garbage management policy.

As shown in Figure 1, a company's response to "green" packaging may be determined as much by the commitments of 'within' company stakeholders as by the support it receives from external stakeholders. Internally, labor, various departments and cost centers, top management, and owners are important stakeholders, supporting or resisting "green" packaging. Externally, consumers, marketing intermediaries, suppliers, competitors, and consumer advocacy groups, including governmental agencies are the allies of the detractors of the decision to go "green."

Strategic Implications -- What Companies Can Do

There are three distinct problems for which consumer goods manufacturers have to find practical and well coordinated solutions. The first problem is the hesitation -- and often the resistance -- of internal forces to embrace "green" packaging. The second problem is external pressure to adopt "green" packaging. Because they represent various stakeholders, the goals and desires of external sources are varied. Harnessing their divergent goals and developing packaging that is responsive to each of their concerns is a serious challenge. The third problem, then, is the reconciliation of the expectations of these internal and external sources and the consequent development of a packaging strategy which is acceptable to all four stakeholders.

Strategic Options

Given the internal and external constraints and various stakeholders expectations, the responses of companies to the challenge of going "green" generally fall into the following four R's: (1) Reduce, (2) Recycle, (3) Reuse, and (4) Redesign.

Companies can reduce their packaging by using less materials, especially materials used at the source (source reduction). This strategy often calls for smaller, thinner, and lighter packages.

Recycling involves the collection and reuse of existing package materials. It also involves the recasting of these materials. One of the important advantages of recycling is waste reduction. Another is a possible reduction in metal refining and smelting costs. However, the savings from manufacturing are often outweighed by collection and processing costs. The most critical focus of recycling is generating adequate consumer and intermediary support for the effort. Therefore, this strategy calls for a consumer-oriented information campaign and intermediary-oriented infrastructural changes. Nevertheless, recycling is the most difficult of the strategic options because it requires the cooperation and direct involvement of all four stakeholders: manufacturers, intermediaries, customers, and governmental agencies. An excellent example of the effort to involve all or almost all stakeholders is Re-Source America Inc.'s network of Authorized Package Producers. According to the plan, the network will provide a close-loop reuse and recycle program wherein packaging materials that are shipped to customers are recaptured and directed back to a refurbishment center for multiple use. At the end of their useful life, the packaging materials will be re-pelletized so they can be converted into new packaging materials. Participants in the current network include Hewlett Packard and IBM plants in New Jersey.

Reuse requires companies to find new uses for existing packages. The main objective is to communicate to customers the various uses they may make of the container. The life of the package may be substantially extended by reuse. This strategy is currently employed by some cosmetics manufacturers.

Last, companies may engage in redesign in an effort to facilitate the other three R's: reduce, recycle and reuse. By redesigning existing packages, a company develops a new package. The objective of this strategy is (1) to cut down on packaging materials use at the source, and (2) to make the package refillable and long lasting. Subsequent communication strategy focuses on the benefits of the redesigned package to both channel members and customers.

Getting Stakeholders on the Company's Side

Facilitating "Green" Packaging

Three strong arguments favor changes in packaging. The first is environmental.(7,11) Resources are wasted when less material could be used to perform the same tasks. Further, much of the packaging used cannot be easily discarded and is not biodegradable. Both add to the nation's waste disposal problems. The second argument is cost. Resources are expensive, and packaging can be a significant portion of a product's cost. Reducing waste saves money for manufacturers and consumers. The third argument is competitive advantage. As "green" marketing starts to permeate management thinking, proactive actions in packaging could provide a competitive advantage to the companies who are perceived as being at the forefront of this movement. These three arguments notwithstanding, consumer goods manufacturers are faced with internal and external constraints which cause them to resist "green" packaging.

Clearly, "green" packaging represents an opportunity; however, manufacturers cannot benefit unless they adopt appropriate strategies directed at each of the four stakeholders. Specifically, they must address the concerns of internal and external forces. Getting stakeholders on the company's side is a difficult balancing act and may involve a trade-off in company objectives. Figure 1 presents the options.

Overcoming Internal Resistance

Without doubt, one of the most difficult tasks consumer goods manufacturers and marketers face is balancing environmental concerns with the essential functions of packaging. One of manufacturers' primary concerns is the safety of lighter weight packages. Another concern is the trade-off resulting from less packaging; that is, whether or not less packaging results in less advertising space, less protection, and less sales revenues.

By reducing package size, a manufacturer may sacrifice the product's protection and preservation. This is true for both food and non-food items. For many non-food items, for example, protective packaging is required to prevent the merchandise from being scratched, bumped, dented or damaged. This concern is particularly strong for big ticket items like air conditioners, microwaves, and stereos. For food items and medicines, adequate packaging is the safeguard against damage and health hazards. No one wants crushed cookies, broken eggs, or medicines that are tampered with. Unless the new packaging is as effective as the old, decreasing the packaging may cause problems. It was this concern which prompted the makers of Tylenol to modify the package. In the process, they used more packaging as a way of protecting the consumer from future tampering.

Preservation is another important function in food and medicine packaging. For example, food packaging is usually designed to prevent air from entering the product. Could decreasing the package size and protective layers expose food products to air penetration? Companies that switch to new but ineffective packaging may find consumers avoiding their products; not switching at all could have similar results.

If packaging becomes less convenient or less recognizable, the firm risks losing customers. If, on the other hand, firms do not change their packaging, they are likely to draw fire from irate consumer groups. For example, some consumers prefer buying pre-mixed detergents rather than the concentrate and mixing it with water themselves. However, not having the concentrate may make the firm look unconcerned about environmental issues. Offering both may require bartering for more shelf space in stores.

Procter & Gamble is attempting to deal with the issues of convenience, recognizability, and environmental pressure by introducing a concentrated version of its flagship fabric softener, Downy, to be sold alongside the company's traditional non-concentrate formula. Another example is Nabisco's decision to cut down some of its packaging. By reducing the thickness of inner bags for snack crackers, Nabisco stands to save over 300,000 pounds of plastic per year, and the change will not adversely affect the function of the package. Such companies have been praised for providing "an excellent example of solid waste reduction at the source."

Encouraging Consumers to go "GREEN"

The introduction of source-reduction methods and products is a huge task and will not take place unless consumers are aware of the difference they can make by altering their buying habits. Changing consumers' attitudes and behaviors, however, is difficult.

Ultimately the consumer decides which products to purchase. According to a recent study, "78% of the American public, compared to 64% in the prior year, would pay 5% more for an environmentally friendly package".(12) It is in the manufacturer's interest to listen to consumer concerns regarding waste. As consumers become increasingly aware of the advantages of ecologically safe packaging and pay closer attention to the materials used, they will begin to purchase brands that are better for the environment. Conversely, companies that do not invest in environmentally safe packaging will eventually face shrinking demand and reduced market share.

Some consumers see environmentally-safe packaging as less convenient. Others see it as necessary and will buy a product because of its ecological safety claims. This, however, does not mean they will continue to buy the same brand unless it satisfies their preference for protection, preservation, and convenience.

To be sure, some consumers do not seem concerned about packaging. Changing the "throwaway" mentality is a significant external constraint facing companies that have adopted recycling policies. Only if the problem of waste disposal persists and the trend towards ecologically safe packaging continues, will "green" packaging become a universal concern. Nevertheless, the savings from "green" packaging may be an important incentive in converting consumers provided they can be passed on to them. For example, at WEA Music of Canada Ltd., the phasing out of the plastic blister pack in the company's compact disc packaging is expected to result in a $0.75 savings to retailers.(12) This may convert some retailers to the cause of less-packaging-is-better.

For WEA and other companies, making environmentally-oriented efforts goes hand-in-hand with changing consumer perceptions. Unless the effort to go "green" is accompanied by promotional efforts to educate consumers, the strategy may have limited impact in the marketplace. Marketing intermediaries and consumers have to be encouraged to buy products with less packaging. They should also be informed about the dangers of the "throw-away" and "everything-is-disposable" mentality. Green Bay Packaging, for instance, is attempting to achieve this objective by producing videos that teach its customers how to recycle.(3) Similarly, a game recently introduced in the market called 'Pollution Solution' attempts to teach children about the environment and environmental harmony.

Responding to the Demands of Advocacy Groups and Governmental Agencies

Advocates of source-efficient and reduced packaging contend that source-reduction is the best way to tackle the waste disposal problem because it is preventative. Source waste is high on the EPA's and some states' agendas primarily because of landfill problems. Source reduction promises to cut down the amount of solid waste produced in connection with the manufacturing of goods. This may also mean a reduction in the use of toxic materials in the manufacturing process. An excellent example is the Downy Refill.

Some advocacy groups are already engaged in campaigns to tax unrecyclable packaging -- an idea which has become popular. If adopted as law, firms would have fewer packaging options. Potential taxes are thus likely to hasten the transition to "green" packaging. In Maine, for instance, legislators have banned juice boxes even though the innovation was cited as a major technical advancement only two years ago. The reasoning: the six layers of paper, plastic, and aluminum foil in each box are difficult to separate in recycling.(6)

There are two strategies available to manufacturers in dealing with advocacy groups. The first is to fight such groups. The second is to work with them. Fighting them can lead to continuing notoriety as an unconcerned or uncaring organization. Supporting them, however, could enhance a company's reputation. By taking advantage of media interest in new environmentally sound packaging, a company can reposition its products and reshape its image through publicity. In time, these actions may translate into sales revenues. For instance, Procter & Gamble has introduced refill pouches for four different household cleaners, resulting in small savings in materials costs. Other examples include packaging changes at fast-food restaurants such as McDonald' s.

Marketing "GREEN" Packaging to Marketing Intermediaries

The transition to environmentally safe packaging is best facilitated by soliciting intermediaries' support for recycling and reuse. This presents marketing intermediaries with opportunities as well as threats.

One way to overcome intermediaries' resistance to environmentally safe packaging is to aggressively advertise to consumers in support of waste reduction. The result of this "pull" strategy is that consumers become more aware and accepting of recycling, and the intermediaries find it in their interest to support it. By being one of the first to support waste reduction, a company may create awareness among consumers. The rewards from this strategy are potentially high. New markets will be created; old markets will change. In the meantime, manufacturers can cut down on the amount of packaging currently used or use recycled materials.

An equally effective way of creating support among marketing intermediaries is to create a coalition of suppliers and manufacturers to manage the waste reduction effort. Once both suppliers and channel intermediaries are involved in the effort, there will be less resistance to buying products that create less waste.

Summary

There are both social and selfish reasons for companies to embrace ecologically safe packaging to suit the evolving habits of consumers. If manufacturers and marketing intermediaries do not heed the changes in the marketplace, they are likely to lose market share to competitors who do. Changes may also prolong a product's life. Revamping the package of an established product can extend its life-cycle, because the product is staying current with society's needs. A revolutionary change or new feature such as biodegradability will give the product a competitive advantage.

As consumers become more aware of the damage to the environment, they are changing their buying habits. The coalitions formed by consumer groups and governmental agencies are beginning to take actions that will increase the public's awareness of environmental issues. Further, changes in product packaging are becoming necessary due to the scarcity of landfills. There is considerable pressure to reduce waste at the source, and "green" packaging is looked upon as a preventive measure.

To succeed, source-reduction efforts must be accomplished with little or no sacrifice in terms of product use and purchase convenience. To marketing intermediaries, it must result in little or no sacrifice in storage, shelf-life, and cost. Price reduction may be a plus but it is not a prerequisite to brand switching; advertising is. Unless consumers are aware of the advantages of "green" packaging, manufacturers' efforts to introduce such products are likely to be frustrated. The first task, therefore, is stimulating demand for "green" packaging. Some additional approaches include the following: working with EPA and other agencies to force compliance; establishing a consumer hot-line for packaging ideas; forming a manufacturers'/packagers' coalition to develop new standards; offering large sizes in products and refills, concentrates, etc.; advertising product features which will improve environmental safety or will cut down on pollution; encouraging consumers to buy economy size packaging and refills instead of new products; and providing information about waste reduction on the package itself.

References

1. Allen, Frank Edward, "Governors Group to Urge 200 Firms to Cut Waste by Using Less Packaging," Wall Street Journal, (March 15, 1991), pp. C16.

2. "Buying What's Right: Packaging and the American Consumer's Freedom of Choice," Packaging, (April 1991), pp. 35.

3. Eisenhart, Tom, "Marketers Beware ... Consumers Care," Business Marketing, (November 1990), p. 24.

4. Greenberg, Eric F., "Are Packages Telling 'Little Green Lies'?" Packaging Digest, (March 1991), p. 24-25.

5. Hanson, Donald W. "New Challenges for Packaging in the 90's," Drug and Cosmetic Industry, (February 1991), pp. 26, 28.

6. "Juice Boxes Take Environmental Fall," U.S. Distribution Journal, (November 15, 1990), p. 11.

7. "Let's Not Waste a Solid Opportunity," Packaging Digest, (November 1990), p. 10.

8. McMath, Robert, "Packaging Trends 1990," Ad Week's Marketing Week Special Addition, (September 17, 1990), p. 192.

9. Roeppel, Dan, "P & G's 'Environmental Lobby' Hits the Halls of Congress," Ad Week's Marketing Week, (November 27, 1989), p. 53.

10. Selke, Susan E.M., Packaging and the Environment: Alternatives, Trends, and Solutions. Lancaster, PA: Technomic Publishing Co., 1990.

11. Taylor, Cathy, "Green Packaging Sells Products," Ad Weeks Eastern Edition, (August 13, 1990), p. 33.

12. Underwood, Nora and David Todd, "Crackdown on Waste: The Packaging Industry Aims for a New Target," MacLean's, (May 14, 1990), pp. 54-55.

Table 1

Packaging Decisions: Constraints

Internal Constraints

Attitude Towards Change

* Management's unwillingness to change or to risk traditional business ties with suppliers, distributors, retailers and customers.

* Desire to maintain status quo in materials used and designs adopted.

Additional Costs Incurred

* Costs of package redesign and expertise needed.

* Availability and cost of new materials and new equipment.

* Manufacturing and marketing changes necessary with new package.

* Loss of promotional space if package is reduced.

External Constraints

Competitive Actions and Reactions with respect to package design

* Preemptive packaging redesign may lead to higher costs and customer resistance.

* Design changes could lead to a competitive disadvantage at the retail level.

Customer Perceptions and Resistance to changes in design

* Familiarity with and convenience of existing packages may lead to resistance to design changes.

Suppliers and Intermediaries

* Resistance by packaging and material suppliers, especially if changes result in additional expenses in research and development.

* Marketing intermediaries unwilling to accept new design if inventory management costs increase.

Infrastructure for Recycling

* Marketing intermediaries or local governments inability or unwillingness to set up infrastructure for recycling.

* Demand for recycled materials may be limited.

Public Reaction

* Diminished landfill capacity and increasing social and legal pressure to adopt source-efficient packages.

Dr. Kassaye, who specializes in consumer behavior and international marketing, has published several articles in marketing journals and also consults on strategic marketing. Dr. Verma researches and consults on new product development, marketing, and international business; cases he has written appear in over 20 textbooks.
COPYRIGHT 1992 Society for the Advancement of Management
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Kassaye, W. Wossen; Verma, Dharmendra
Publication:SAM Advanced Management Journal
Date:Sep 22, 1992
Words:4638
Previous Article:What do male/female perceptions of an international business career suggest about recruitment policies?
Next Article:Emerging growth companies and the at-risk employee: the viability of pre-employment honesty testing.
Topics:


Related Articles
A blueprint for green product development.
Optima.
OPTIMA.
Packaging certificate from the IOP. (Packaging Equipment).
Holiday packaging trends.
The power of packaging: flexibility, versatility, turnkey operations and machinery innovation are needed to succeed in hygiene product packaging.
Label Traxx now links to Green Bay Packaging.
Study examines future of flexible packaging in Europe.
Packaging power: capped & jarred: packaging suppliers must find ways to comply with new TSA requirements as well as demands for green packaging and...
Release liners: facing the challenges of today and tomorrow; The release liner industry enjoys steady growth, but must address rising manufacturing...

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters