Packaging Costs

well, i have been quite mentally prepared that all these "packaging" will inadvetantly taken up a big portion of the cost anyway. sometimes a neccessity even. we also pay a big portion to the sales people; they always earn big bucks anway, and what do they do? they are neither the producer or consumer of the product, which means in terms of "contribution to the actual purchase" their input is invisible, and still they earn big bucks, where does all that come from. so we have to pay for it. yet this is neccessary or we might not even have the opportunity to obtain the product.

another thing is, if the packaging is prettier, more presentable, arent we more likely to buy it then when it looks crappy? people are willing to pay for apperances sometimes so if all these products are not nicely packaged, you'll assume the contents are just as bad, even though the two can be of same quality.

if the "external costs" arent that high, i'd be wondering if they were breeding slaves to do the manufacturing work. LOL. (and even so, im not sure how much they would bring down the costs, knowing that we humans are rarely well-paid) im not earning much in my work but i know the company charged a lot more for the work i contributed to the clients. :p

I once explained to my Daughter the costs involved in packaging, transporting and marketting...'NOTHING'... but, 'nothing' packed in 1" cube packs.

There's the packing of the cubes..then into boxes of say 100, labelling? Instructions? Shipping. Distributors, retailers all want their cut.

Del

Your query is very logical, but unfortunately, logic has very little to do with anything that is publicly accepted or demanded. It's a matter of 'educating' the public, and that takes time, and more so, it takes someone or some group motivated enough to do the educating. Allow me to jump off-topic for a moment to give an example.

When I was a kid, littering in the US was rampant and taken pretty much for granted. It meant nothing for folks driving down the road to chuck something out the window. I can remember my stepfather throwing empty brown beer bottles out the car window (says a lot, I know), saying with each toss, "another redskin bites the dust." Jump forward a few decades and the occurrence of car-tosses of litter has practically vanished. Why? Education.

For those who may remember, there began, I think in the 60's, a series of public service ads convincing people not to litter. One I remember is the American Indian standing by the roadside as someone tossed some garbage, you see the tear in his eye, an the simple message was to stop littering. Other ads, targeted at kids, featured an owl saying, "give a hoot, don't pollute". In time the ads worked, and in a generation, the general habit of thoughtless littering stopped.

Okay, back on topic.

Generally, the products we buy are sold based on what is called 'point of purchase' (or POP), and the packaging is specifically geared to make one product look more attractive than another. From supermarkets, to mass-merchant electronic stores, they are all mostly 'unaided-sales-floors' where no person is working hard to convince you to buy this or that, but the packaging has to do the job ... all with no regard to the 'green' impact of the packaging, or the cost of the packaging. Indeed, the packaging cost is often considered a part of the advertising expense.

Another issue, again, are the merchants and the floor planning. Most merchants allocate only certain sized shelves, and only a limited amount, so the packaging is designed to optimize that space. I have been involves in projects where the final size of the packaging was so important, that the product inside was dramatically changed just to meet the final POP packaging requirements.

POP packs even have such demands as to be a large percentage of the final product cost. Cosmetic items are often the worst, but consider items like the IPod ... the packaging expense for an IPod is huge compared to other similar products, all because the quality-image is paramount. I have one client who constantly refers to what he calls the 'out of the box experience', stating (rightfully so) that what the customer takes home and unpacks is as valuable an experience as the final product, because it evokes an image to the customer that 'this company cares so much, they even go that extra step to pack in with style'.

Okay, one more example that doesn't exactly focus on packaging, but there is a relevance ... the products I manufacture are prone to feature several accessories. I have had even had final products whose accessories were of a higher cost than the product itself. BUT, statistically, this industry knows that over 90% of purchasers don't even use those accessories and throw them away! Still, none of the clients are willing to stop packing them for fear that the less than 10% who may use them will be offended and buy someone else's product.

Brands are not willing to save a little money, nor save a little of the environment to change ... at least not yet ... because consumers are still too bent on packaging as a part of their buying decision. It will take time and a large change in mind set to see a real change.

BUT, there is one idea that could work, and might be driven by retailers, if they can be convinced to change their processes just a little. If stores were to create displays, rather than shelves of inventory, consumers could still 'shop' in their traditional ways, but be sold a less expensive, and less attractive package. Manufactures could ship in master cartons of less expensive single packs that the consumer actually takes home, and the retailer doesn't have to keep 'restocking' shelves. Sounds logical, and could work, but the same problems apply ... it's going to take time, or at least an influential retailer to make a move.

I could go on boring everyone about how consumer packaging differs here in China, and how efficient it is, or tell more about how other nations have tried to effect the whole process of packaging and recycling, but that will wait for another time.

Your's is a good post, friend. We can all hope that socially we will evolve and see the value to our wallets and the environment of the stuff we buy and how it is packaged.

Take care.

Thank you for your reply.

"Manufactures could ship in master cartons of less expensive single packs that the consumer actually takes home, and the retailer doesn't have to keep 'restocking' shelves. Sounds logical, and could work, but the same problems apply ... it's going to take time, or at least an influential retailer to make a move."

I believe that the more frugal groups among consumers already do this to some degree. I live about 60 miles from a major Amish community in Ohio and my wife and I frequently drive to some of their country stores to shop. Indeed, their grocers often buy in bulk and repackage in smaller quantities to lower the costs to the consumer. I dont mind receiving the products in lightweight plastic bags with twist ties for seals as long as the prices are significantly cheaper. (ie: I am not impressed by packages, rather the product in then).

I guess a part of this issue may go to safety concerns with packages, since the Tylenol scare of years back and the move to keep weirdos from poisoning the rest of us. In the Amish community, they are more trusting of their suppliers and customers.

Apart from government, no one puts pressure on manufacturers, except other manufacturers. For evidence...just look at the "fall-off" of Home Depot, and the pricing capitulation by WalMart...in the end, manufacturers have it their way; and are ultimately in the best position to have it their way.

The notion of manufacturers lowering or forcing the lowering of package costs presupposes that manufacturers do not already endeavor to minimize package costs; that is not now nor has it ever been the case. And the idea of reducing "impacts" of packaging is also not a new thing...having gone on now for not less than 40 years or more. It is by and large commodity price and marketing conditions that dictate the types and costs of packaging.

Without saying (this disregarding...that "package price" component is probably not unknown or unfathomable to most buyers) what the purpose or objective behind such information being provided to end-use purchasers would be (other than adding to product price), the question also presupposes that the price paid for a product reflects (must needs align with) the costs of production and sale of the product; when instead, it is more essentially a product's utility which establishes the baseline for product pricing (plus a smattering for "good will"). Hence, if (for example) technology advance enables a product's utility to be provided at a significantly lower cost, the end-user price for that utility still will not diminish.

?

!

Hi CowAnon,

I must concur with the '?' ... are you possibly confusing 'manufacturers' with 'brands'? I agree the brands control the final product definition, including packaging, but as a manufacturer, we rarely have the opportunity to do more than 'suggest'. Product definitions are offered and FOB targets are given, often mutually exclusive form one another. Our task is to come as close to both as possible. Almost never can we dictate what the final product will be, including the final packaging.

The largest struggle is between the brands and the mass-merchants, because the mass-merchants dangle the 'largest carrot'. They have immense power to set product definitions and cost restraints, and they often win. Their 'dictates' usually flow down the food-chain, through the brand to us.

Let's chat more to see if we are or are not on the same page.

Take care.