Blog Assignment 03: Hidden Potential

A few weeks ago during a bi-monthly Walmart stockpile, I was walking down the cereal aisle trying to commit to the one flavor of cereal I would be seeing exclusively for the next two months.  You see, I live alone and cereal boxes are, for lack of a better descriptor, huge.  In the last decade or so, cereal boxes have exploded in size in an attempt to feed the increasingly hungry average American family.

My process is a bit obsessive: I first do a quick walk-through of the aisle, my eyes grazing over the selection in the hopes that something will jump out and my subconscious will make the difficult decision for me.  Usually, this fails and I have to walk down the aisle once more and actually devote thought to my selection.  This last time, however, was different.  As I looked high up on the very top of the shelf (the point at which, if you are as short as I am, the fluorescent lights almost blind you like so many artificial suns) two newcomers to the cereal aisle caught my eye.

The first was this:

Malt-O-Meal, the company known – or rather, unknown – for producing cheap facsimiles of popular cereals (example: Honey Nut Cheerios become Honey Nut Scooters) and selling them in large, dog-food sized resealable plastic bags, had decided to start selling their knock-offs in boxes.  What struck me is that they explicitly stated the purpose of their new packaging to the consumer on the back of the box (shown above). 

“Malt-O-Meal brand cereal (the cereal in the bag) is hiding out inside this small box.

Maybe now, box cereal lovers might finally give Malt-O-Meal a try.”

While the wisdom of telling your consumers your marketing strategy outright can be debated, the underlying customer insight is spot on.  That box went straight into my cart for three reasons.  First, it was by far cheaper than buying Honey Nut Cheerios.  Secondly, the box was only six ounces rather than the traditional 12-ounce behemoth. 

Lastly, and more importantly, is that Malt-O-Meal is banking on how packaging affects consumers’ perceptions of quality.  From personal opinion, I would never buy a cereal that is sold in a bag for my own personal consumption.  (Which completely flies in the face of logic since all cereals are kept in a bag and the box is simply for show.)  The moment Malt-O-Meal decided to package their cereals in boxes rather than bags they were making a bet that it would active consumers’ preconditioned notions of cereal quality.  After all, the quality of ingredients remains the same; it is merely the package that is being transformed and that seems to be enough to increase trial and (inevitably) sales. 

I am very interested in how companies can use consumer insights to enact positive changes in the marketplace; of particular interest to me are the purchases made in the supermarket since they are those most often made on the part of the consumer.  A shift in packaging seems like such a simple change.  But the more I thought about it the more I began to ask myself what other hidden potential lies in the packaging of consumer goods and how can these changes impact the market?  How can companies that rank lower on consumers’ perceptions of quality use packaging as an advantage?  And more importantly, what opportunities lie for companies to positively change the way we consume without sacrificing their net sales?  

Which brings me second item I found in the cereal aisle that day:

Cap’N Crunch, a company with a much more salient brand name than Malt-O-Meal, is following suit with their packaging but for a different reason entirely.  Consumer perceptions of Cap’N Crunch’s quality are already fairly established but by marketing smaller boxes and selling them at a lower price point, they are capturing consumers (such as myself) who do not feel the need to buy traditionally larger boxes of cereal.  This specific box, for example, only contains 5.5 ounces of cereal and retails for exactly $1.00. 

The hidden potential of packaging is not limited just to cereals.  Other examples of this strategy easily available at the supermarket include:

·       Single-serve sized bags of Orville Redenbacher microwaveable popcorn

·       Half-cans of Coca-Cola sold in four-packs

·       Green Giant Just for One 40 calorie servings of frozen vegetables

·       Häagen-Dazs single serve ice cream cups

What caught my attention more about this box is what it claims at the top: 6 servings.  What immediately popped into my mind is how, by selling products in smaller packages, companies can impact the amount of food consumers are eating and wasting.  A great amount of research has been conducted that indicates that people use external cues to determine how much food to consume.  Brian Wansink’s book Mindless Eating: Why We Eat More Than We Think explores this topic and outlines his famous soup bowl experiment (“Bottomless Bowls: Why Visual Cues of Portion Size May Influence Intake,” Obesity Research 13:1 (January 2005): 93-100).  In the experiment the control group was ladled bowls of soup by a waiter while the experimental group ate from a bowl that (unknown to them) refilled itself through a hose mechanism under the table.  Those who could estimate how much they ate from external cues (the ladled bowls) ate an average of eight ounces of soup; however, this that could not estimate (refilling bowls) ate twice as much – an average of 16 ounces of soup. 

It therefore stands to reason that perhaps by buying food in smaller packages consumers can be influenced to eat less based on contextual cues of how much is available for their consumption.  This would ideally lead to healthier diets, less food waste, and an increase in welfare (money saved at the supermarket). 

However, smaller packaging is not without its faults.  The practice of smaller packaging has traditionally fallen into two camps of reasoning.  The first, as discussed above, is that companies see a need to package their products in smaller sizes to appeal to single-person households (whether for dietary purposes or for practicality of quantity). 

The second, more common, reason is to control for the rising costs of ingredients.  Rather than increase prices outright, some companies chose to decrease the amount sold per unit to reflect rising costs, a practice referred to as a weight-out strategy.  (This strategy, however, is not the same as a company purposely designing a new, smaller package for its product and introducing it as such, an important distinction to make when launching new products.)  While the average consumer rarely notices these changes on their own, they are quick to protest when they are reported on by the media.  An article from the Huffington Post (“Smaller Packaging Equals Hidden Eco Costs,” Huffington Post (June 17, 2008)) explains that smaller packaging invariably passes price increases along to the consumer by forcing them to pay the same amount for less product.  Furthermore, smaller packaging means more inventory, which means more packaging, which comes with hidden eco-costs. 

If done correctly, the hidden potential of packaging can enact real, positive change in the supermarket.  Companies, not just in packaged foods but also in beauty products and household goods, may begin to rethink their product lines in terms of size rather than just flavors.  My paper will focus on exploring these opportunities and developing a set of best practices for companies willing to develop smaller packaging.  Topics covered in my paper will include:

·       How packaging affects consumer perceptions of product quality

·       How the economics of smaller packaging can benefit both the company and the consumer

·       How companies can offset the eco-costs of smaller packaging

·       How smaller packaging can have dietary benefits to consumers