Tuesday, February 13, 2007 · Number 2

FEATURE: 'Made in America' Is Hot With China's 'Chuppies'

UPS Survey Reveals Insights on Marketing to Chinese Consumers

What do blue jeans, DVDs, moisturizer, and athletic shoes have in common? They are among the American products that Chinese consumers desire most, according to a UPS survey of 1,200 middle-class consumers in six Chinese cities.

The second annual UPS survey of Chinese urban consumers—often referred to as "Chuppies"—reaffirms their demand for high-quality U.S. products and unearths more detailed insight into their buying preferences and demographic differences. UPS, which flies to more points in China than any other U.S. airline, commissioned the survey to help its customers do business in the world's fastest-growing market.

"The survey highlights the need for small-to-mid-sized businesses to be prepared and focused on exactly what it is they want to accomplish by entering China," said Kevin M. McConnell, senior partner of the law firm O'Connell and Co., which handles foreign direct investment and general business matters in China. "They need to set themselves apart from their competition and from the large multi-nationals and market to a very specific niche."

The most sought-after products in this year's survey were American videos/DVDs, music or books and consumer electronics - which also were the top categories in the 2005 survey. For those Chinese consumers interested in purchasing products in the following categories, some specific findings include:

• More than three-quarters (76%) of urban Chinese consumers say that they would like to buy American DVDs in the coming year (up from 71% in 2005), and 60% say they would like to buy American CDs (up from 51%).
• Moisturizer is the most attractive American beauty product to Chinese consumers, with 73% saying that they are likely to purchase it in the coming year.
• More than 70% of consumers say they want to buy American athletic shoes and 64% say they want to buy blue jeans, up substantially from 2005 numbers.
• The most desired American home appliance is a washer-dryer, with almost one-third of consumers saying that they were most likely to purchase one in the coming year.

When considering imported products, 85% of Chinese consumers say that quality is a critical factor in their purchasing decision. "I think quality is very important," said Jennifer Cheng, 33, of Beijing. "It is especially important for high-tech products such as laptops or mobile phones."

Not a mass market

Much like the United States, China is a melting pot of demographic distinctions and the survey reveals varying purchasing preferences by age group, gender and location. For example, younger consumers are more open to buying U.S. products in general than their older counterparts. Younger consumers also say that they buy imported products to enhance their image and status, with laptop computers, video/digital recording systems and coffee makers among the most attractive American products to them.

"Older consumers grew up during much harder times and their life experience is analogous to the Great Depression generation in the United States," said Sam Flemming, CEO and founder of CIC Data, a China-based Internet market intelligence service. "Younger consumers have grown up with more money and are used to being bombarded with marketing messages. This means they are less inclined to 'penny pinch,' have more disposable income and are more informed about products and services."

Thinking inside the box

Some interesting information emerges from the survey to help businesses market to Chinese consumers. For example, more consumers (56%) want to hear messages about quality ingredients or workmanship in advertising about American products. This number increases to 65% when it comes to advertising fashion and apparel. Young consumers prefer celebrity endorsements in advertising, whereas older consumers would rather see professional endorsements.

In terms of packaging, the survey found that younger, high-income consumers prefer American or Western-style packaging, especially for beauty products. And 37 percent of consumers say that they prefer blue packaging for American products - nearly double the next color choice (white at 19%).

More opportunities to reach Chinese consumers likely will emerge as their use of credit cards and frequency of online shopping increases. The survey reveals that more than half of urban Chinese consumers use credit or debit cards for shopping, and 84% of those with credit cards expect their usage to increase or remain the same in the coming year.

"China presents tremendous opportunity for U.S. businesses, and not just as a manufacturing base," said David Abney, president, UPS International. "China is one of the fastest growing markets for U.S. exports. Our hope is that the survey findings will help U.S. businesses consider what opportunities may exist for their products in China."

UPS offers a range of services to help businesses deliver to China. Last year, the company became the first carrier in the industry to acquire direct control of its operations in China. This year, the company expanded its international express service to 22 more business locations in China, bringing total number of cities served in the country to 330. Those cities account for roughly 85% of China's international trade. Most recently, UPS opened two retail centers in Shanghai, giving customers there greater shipping convenience.

For full survey results and other information about doing business in China click here. Also check out past UPS surveys here.

FORUM: Multiple Logo Designs Are a Risky Ploy

Last year, Kellogg's brand managers decided to have four different logo designs for its POPS cereal—Gaming, Hip Hop, Snow, and Skate. We asked a panel of package design experts whether this was a good branding strategy in this case, or if this strategy might work in any other categories. Our panel for this edition is Rob Wallace, Richard Bird, Ted Mininni, Tom Newmaster, and Bill Goodwin.

Rob Wallace, managing partner of Wallace Church Inc., New York City

The age of mass customization is well upon us. There are now over 19,000 different ways to customize your Starbucks. So why not customize brand identity? This strategy should only be explored when the brand's core mnemonics are deeply ingrained.

In this case, I'd venture that the core POPS loyalist immediately recognizes the brand as yellow first and bold red letters second. Retaining these core equities, the fonts can change as long as they are bold and red.

While I applaud the strategy, I am troubled by the execution. If you are going to do something as radical as this, then have the logos truly speak to different consumer profiles, evoking unique and relevant emotions. These logos do little to elevate the POPS experience.

Richard Bird, President of R.BIRD & Company, White Plains, NY

A key condition for success here is how and where a product is sold. Retail grocers are not likely to allocate extra space to fragment the customer targets for what was previously one facing on a shelf. In online selling and private label retail, presentation order on shelf is controlled and personalization of the offering is the name of the game.

Targeting of cultural segments can be risky business, too, if not done well. When designers' interpretations of targeted "pop culture" stylings lack detail and integrity of expression (perhaps limited by a narrowly specified brand language), the result is transparent and a very thin marketing gimmick at best.

In order for personalization in this way to be successful, in any category, it must be a believable platform. Wheaties boxes have been personalized for decades, yet such an expression has always been a foundation of its marketing as the "Breakfast of Champions."

Ted Mininni, president of Design Force Inc., Marlton, NJ

This multi-logo strategy must be rooted in strong ethnographic research in order to succeed. There are appropriate scenarios in which slight modifications make sense in package design—this translates to branding and packaging for multiple segments. One caveat: It is extremely important to make sure the overall brand identity is left intact and remains dominant in this situation.

Kellogg's has identified urban youth, teens, and tweens as its market for POPS and has made slight variations to the branding and packaging of the product for these segments. In this case, the Kellogg's branding and "field of POPS" remain consistent, yet Kellogg's has made it fun for its consumers to choose the typography they like. Very cool.

Besides food products, this approach could work in categories such as personal care products or the toy market—toys that can also be considered as playthings or collectibles can effectively be segmented through this packaging approach.

Tom Newmaster, partner at William Fox Munroe Inc., Shillington, PA

I've always personally liked packaging in a series or collectors edition. This type of strategy seems to work best, regardless of category, with licensed characters, athletes, or historic events or places.

What can also enhance this strategy is if the package is worth saving, like a tin canister, or is otherwise reusable in some way. Sometimes the brand gets lost, but that's what makes POPS interesting. They made the box all yellow (with actual pops) and very strategically placed the stylized brand logo low on the box, giving the logo lots of air.

Kellogg's stayed consistent with their brand colors and kept the new logos within a common shape. This allowed for variety and consistency on shelf. If you look at what they named each box, they were all very specifically targeted. Or were they just "testing the waters" for a smart update or redesign (hmm?). Overall, I liked it because it was consistent, visually functional, retro, and cool.

Bill Goodwin, president & CEO of Goodwin, Media, PA

I think this is a really bad idea. Since it had to be verbally explained on the box, it is bad from the get-go. The message it sends is: the brand as it looks now is wrong; we are not relevant as a brand; we could not make up our mind who we are; and we do not care what you think. The whole thing smacks of desperation.

Media brands are afforded greater opportunities to apply this strategy—think MTV and Google. But food, as any packaged product, is different. And while a youth brand like POPS has a wide range of opportunities—this just falls short.

A better execution would have been to come up with a reason or theme for the campaign, such as "POPS=pop culture," "POPS=pop music," etc. An even better idea would have been a contest to design your own POPS box. Or a box with no logo and just a huge canvas of POPS—now that would be gutsy and impactful!

NEW DESIGN: Tstix Tea Package Brews Teas With No Strings Attached

If you like your tea, but don't like fishing or dangling a string with a teabag over a hot cup of water, hoping you will find a place to hide your used soggy teabag, then you are in luck. The new Tstix® tea packages come as a long slender foil laminate tube, with over 1100 micro-perforation holes in their sides designed in a diamond pattern. Tstix is both a teabag and teaspoon in one—no strings, tags, or mess afterwards.

The Tstix package was launched in Paris at the Salon d'Emballage on the booth of Schwarze-Automation (the manufacturers of the equipment). Tstix® are very easy to use. It's just like holding a spoon, but instead of letting your teabag sit passively in hot water, you actively stir your way to the tea color you like. It might be the world's fastest hot cup of tea.

The Tstix company is not a tea or coffee company, but a licensing company, specializing in micro-perforation technology. It has been granted Patents and Design Registrations over the Tstix invention and design in a number of countries, with other patents pending. "A lot of companies can make holes, but very, very few can achieve the precision accuracy we have across a printing web—with around 1200 holes of less than 0.5 mm in size in every Tstix made," says Geoff Stuart, who is in charge of international licensing for Tstix.

NEW DESIGN: NASCAR Puts New Face on Sun Block Packages

NASCAR fans are bringing their Race Face to the track in increasing numbers. Race Face is a new NASCAR-branded skin conditioner and sun block that is sold in a tottle—a combination tube and bottle. A lanyard is attached to the elliptically shaped, two-ounce container to keep it accessible and to distinguish it from other sun blocks, according to Terri Sheppard, the TricorBraun packaging consultant that worked with Agility Sports LLC, manufacturer of Race Face.

"The elliptical shape allows the container to rest comfortably against the customer's chest," Sheppard said. The sunscreen is also sold in an eight-ounce container and is available in SPF 15 and SPF 30 levels of sun protection. The containers are made from extrusion blow molded, high-density polyethylene.

NEW PRODUCT: DMI StretchCard Packaging Offers Consumer-Friendly, Environmental Alternative

Consumer products companies and warehouse clubs that are seeking smart options to replace difficult-to-open packages are showing increasing interest in the StretchCard Package from DMI, a leading contract packaging company headquartered in Wharton, NJ. DMI is the worldwide leader in StretchCard packaging with the capability to produce up to two million units per week.

The basis of the stretchcard is a transparent film (which can be eco-friendly, corn-based PLA film) that is stretched over the item or items allowing for almost complete product visibility at the point of purchase. On either side of the film is cardstock that is used to display the product name, marketing messages, ingredients, discount coupons or anything that the manufacturer wants the consumer to see or read. Options such as perfing, die-cutting, color and size selection, packaging designs, type of film utilized, the shape (or number) of products to be packaged, etc., provide the manufacturer with a wide array of choices.

StretchCard packaging delivers a number of important benefits, including: Eco-Friendly Construction; Messaging; Security; Integration; Reliability; Cross-Promotion; Customization; Image. Additional benefits along with videos and animations of StretchCard production can be found at www.stretchcarding.com.

NEW PRODUCT: TricorBraun Introduces New Ultra Clear Tubes

Clarified Propylene has reached a new level of transparency in tubes that rivals the clarity of other PET rigid packages. The tubes are manufactured in a two-step process by Weener Plastic Packaging Group and offer a high-gloss surface that supports enhanced decoration.

"The new Clarified Propylene tubes offer excellent high-gloss clarity, along with superior barrier properties, in addition to being competitively priced," according to Jim Moseley, executive vice president of TricorBraun. TricorBraun is one of the nation's leading suppliers of rigid packaging, with its primary focus on personal care; cosmetics; healthcare; food and wine; as well as industrial and household chemicals.

WHITE PAPER: R.BIRD Patterns "Crunch" Report

If you're a brand manager, marketing professional, or package designer in the early stages of a package design initiative, it's essential to be aware of context. "Patterns" is a series of published reports that provide professional observations about package design practices within specific product categories. Armed with digital cameras and note pads, R.BIRD designers visit retail environments and observe product packaging in its natural habitat, purchase a selection of examples, and bring them back to the R.BIRD office for closer study. To view the latest Patterns, titled "Crunch," click here.

ANNOUNCEMENTS:

PPC Appoints Terry Serie to Head Industry Information and Public Affairs

Industry veteran Terry L. Serie has been selected by the Paperboard Packaging Council (PPC) for the new post of vice president of industry information and public affairs. In making the appointment, PPC chairman William J. Biedenharn stated: "We are very pleased to announce the selection of Terry Serie as our newest officer. He brings with him a wealth of industry knowledge and a record of success in building both data and public affairs programs. Terry comes at just the right time because we are in process of updating strategy and PPC's goals for industry information and performance benchmarking programs."

At PPC, Serie will be responsible for its dashboard of management data, including: "Trends: Industry Outlook and Market Data Report"; the "Market Flash" on monthly sales backlogs, carton production, and inventory flows; the annual ratio and productivity study, the "Performance Report for Management"; and various industry research, such as the "Customer Satisfaction Survey" and "Total Cost Model." In addition, he will coordinate work of committees on Industry Information, Government Affairs, and Sustainability Initiatives and the association's Financial Executives Institute.

GPI Clear Choice Awards Entry Deadline Is March 30th

Glass packaging today promotes a "pure," "premium," and "sustainable" product. Choosing glass for a food, beverage, or cosmetic product sends a message about providing environmentally and socially responsible packaging to customers. Glass also offers great freedom in creating a package design that offers great shelf impact and increases brand loyalty. As a glass package designer, here is your chance to receive industry-wide recognition as a leader in the world of glass packaging.

Who: Product manufacturers and entries submitted on their behalf.

What: Glass products launched after April 2005 and manufactured in North America.

When: Entries must be postmarked no later than March 30, 2007.

Why: Tell us why your entry deserves to win. Please mail us a filled sample of each entry. Products may be entered in more than one category. There is no fee for entering. All entries are judged on aesthetics, creativity, marketability, form, and functionality.

How: Fill out the online entry form here.

ICMAD CITY Awards Entries Due April 20th

The fourth annual ICMAD's Cosmetic Innovator of The Year Awards is calling for entries. These awards are unique in that they honor ICMAD members' innovative achievements. The due date for entries is April 20th, and the awards will be presented at ICMAD's 34th Annual Meeting in New York City on June 14th. Entry details are at www.icmad.org. Entry form here.

Product Ventures Welcomes Three New Members to Leadership Team - Edmund Farmer, Matthew Phillips, and Gail Ritacco.

Edmund Farmer, director of design, leads cross-functional teams to create and develop innovative design solutions. Previously, Edmund provided key support on worldwide initiatives for such firms as Fitch and IDEO and served as director of product development for Verilux Inc., where he was head of design and development, and worked daily with Asia to oversee all facets of product development. He attended Art Center college of Design in Pasadena, holds a BFA with honors from Kendall College of Art and Design, and is a contributing member of the Design Management Institute.

Matthew Phillips, director, development and technology, is a hybrid designer and engineer, who has worked for top corporations and product development firms such as HumanFactors/Industrial Design, Pitney Bowes, and Reebok International where he was responsible for the engineering, development, and manufacturing of the Reebok insta-pump technology and the Reebok step aerobics bench. In 2006, as principal product architect and designer for Pitney Bowes, he won both the Appliance Design Magazine Gold Award and the International IF Industrial Design Award.

Gail Ritacco, vice president, market insights, leads an in-house staff of market insight professionals through the consumer-driven approach to product innovation for which Product Ventures is known. Gail brings over 20 years of strategic insights experience and entrepreneurial energy to her role. At Dannon, Gail led the market research team and a broad array of custom and syndicated research. She honed her skills in quantitative analysis at Guideline and brought those skills to other corporate giants such as Unilever, Clairol, Playtex, and Revlon.