Companies know that consumers judge a product by its package. But the image of a product is not the only consideration---the effects of packaging on the supply chain and accounting department should also be measured. Marketing departments weigh several aspects when deciding package a product.
Image
Packaging sets the tone of the product. Artists carefully consider the image used on their CD because they see it as representing their identity. Products are the same way. Packaging should convey the personality of a product. Companies use certain colors and shapes to entice their targeted demographics. Products targeted toward young girls are cased in bright colors, often pink and purple, using hearts, swirls and other designs. When consumers decide which product to purchase, the packaging of a product could influence the decision.
Preservation
Perishable products, like food, must have appropriate packaging to keep the product fresh. The company must consider keep some foods crunchy and other foods moist. These constraints require specialized packaging. In some cases, packaging affects the safety of the food. For example, the Food and Drug Administration provides an extensive guideline for companies considering recycled plastics for packaging.
Price
Choice of packaging dictates price and profit margins. For example, some iced teas are in aluminum cans, some in plastic bottles and others in glass. Each of these packaging choices affects the cost of production. The company that sells tea in glass bottles instead of plastic likely pays more per unit, but the attractiveness of the glass bottle might sway some consumers. Companies should recognize cost when analyzing packaging. Knowthis.com states that in the cosmetics industry, packaging accounts for 40 percent of the selling price per product.
Shipping
The product is shipped by truck, rail, air or ship. These distribution methods can determine how an item should be packaged. If the product is being distributed by truck, for example, the packaging should protect the product from different temperatures. Companies also must consider how much packaging should encase the item. For example, adding extra bubble wrap might allow fewer units to fit on the truck, resulting in extra shipping costs. But using less bubble wrap might mean more units are destroyed en route. The company must evaluate cost factors such as these to determined how a product should be shipped.
Environment
Some packaging is better for the environment than others. Many plastics are not biodegradable, meaning that once discarded, they cannot be decomposed by the earth. Using eco-friendly material, like recycled cardboard or BPA-free plastic, might be more expensive. But should the government legislate against the use of harmful plastics in packaging, the company's initial eco-friendly decision will save costs in the long run by avoiding legal fees and switching costs.
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