Research: Action Standards

Setting appropriate action standards is critical to justifying investments in new packaging systems. If action standards are set too tightly or inappropriately, they may end up dooming innovative packaging systems to failure. Promising concepts may be thrown away because they never "meet the standard."

What Can You Expect?

Setting Action Standards for New Packaging Systems

By Scott Young

Setting appropriate "action standards" is one of the most challenging and important aspects of a packaging research study. If action standards are set quite loosely or not at all, they fail to guide the analysis of findings. It can become easy to get "lost in the numbers" and focus on data that is interesting or statistically significant as opposed to what is actually important to a brand's success. As a result, findings can become very open to interpretation-and possibly become subject to internal agendas or politics.

If action standards are set too tightly or inappropriately, they end up dooming new design systems to failure by setting unrealistic goals. As a result, promising concepts may be thrown away-and packaging may fail to evolve and remain contemporary-because new design systems never "meet the standard."

There can be no single formula for setting action standards across the wide range of brand situations and design objectives. However, based on experience, we can offer five guidelines as a starting point for approaching this process.

1. Start with the design brief and the brand's current situation

First and foremost, action standards should be tied directly to the brand's underlying marketing and design objectives: Once we understand the specific objectives of a design effort, it is relatively easy to identify key metrics or measures relevant to different objectives. These metrics then become the foundation for the success criteria while all other measures become secondary or red flag measures.

The primary design objectives should be as precise and realistic as possible. Specifically, it is important to consider a brand's current strengths-and thus to recognize areas where there may not be opportunities for significant improvement. For example, if a brand has dominant shelf positioning with many shelf facings and near-universal shelf visibility, an action standard of improving shelf visibility is probably not realistic. Conversely, for smaller brands with fewer facings, a new packaging system should be expected to enhance the brand's ability to break through shelf clutter.

When setting action standards, it is important to consider a brand's current strengths-and to recognize areas where there may not be opportunities for improvement. A brand like Colgate has near-universal shelf visibility in its current packaging, so an action standard of improving shelf visibility is probably not realistic. A more appropriate goal would be to maintain the shelf visibility of the brand franchise while enhancing the visibility of a specific key product, and ensuring shopability.

2. Set action standards relative to current packaging, and think in terms of risk and opportunity

When testing new/proposed packaging systems for established products, the most relevant and accurate benchmark is always the brand's current packaging. This test/control approach is truly an apples-to-apples comparison, assuming that other factors are held constant across the research cells. It is also a fair comparison, as we have found that current packaging does not have inherent or consistent advantages except on measures of product findability or shopability from shelf (which are impacted by familiarity).

When developing action standards for a proposed design system, it is important to set different expectations for a brand's loyal users as opposed to its other audiences. Among loyal brand users, there are typically strong levels of satisfaction with current packaging. Thus, it may not be realistic or necessary to expect significant gains from a new design system. Instead, the primary focus should be to minimize the risk of confusing or alienating these brand users (i.e., by performing at parity and avoiding "red flags").

Among other audiences, the current packaging is obviously not driving purchase. Thus, it is reasonable to expect/demand that a proposed design system will create opportunity by leading these shoppers to reassess the brand. When measuring performance, we also have to consider which measures or dimensions are most likely to be impacted by a packaging change. From experience with well-established brands, we've found that new packaging design systems are:

• More likely to significantly impact shelf visibility, packaging attributes/descriptors (modern, easy to read, etc.), implied brand personality (fun, youthful, etc.) and product expectations (effective, safe, appetizing, etc.).
• Less likely to significantly impact underlying brand imagery or equity (trust, quality, etc.) and overall purchase interest.

Of course, we've certainly seen instances in which misguided packaging changes have driven declines across nearly all metrics, including purchase interest. Thus, a primary research objective is to ensure that a brand has not walked away from its equity and created confusion in the minds of loyal users.

3. Be wary of direct competitive comparisons, and focus instead on the "competitive gap"

Because packaging typically lives on shelf-and often in consumers' hands-directly next to competition, it is valuable to outperform competitive packaging on key measures. However, all cross-brand comparisons must take into consideration differences in shelf positioning and competitive standing.

If a competitive brand has many more shelf facings, it is simply not realistic to set winning on shelf visibility as an action standard. Instead, it is more realistic to set objectives and measure performance in terms of closing the competitive gap in shelf visibility versus competition.

Similarly, if a brand has many more loyal users than the competition in a research sample, it will most likely be stronger across many equity or imagery measures and on persuasion metrics, regardless of packaging design. Again, it is more relevant to think and measure in terms of maintaining or increasing a brand's competitive advantage rather than winning on an absolute basis.

Overall, while it is valuable to view competitive data as a basis of comparison, it is questionable and potentially misleading to set action standards directly relative to competition. If "winning" vs. competition is set as a success criterion, it is most valid to do so on very specific packaging descriptors, personality attributes, or product expectations.

4. Use absolute performance and norms as red flag measures

When testing the packaging of a new product, historical performance norms have an important role in the development of action standards. Given the absence of current packaging to compare-and the bias inherent in comparing a new product to established competitive brands-it is important to set absolute performance goals related to key dimensions such as shelf visibility, appeal, communication, and persuasion.

When changing the packaging of an established brand, absolute performance measures and norms are arguably a third level of analysis, due to the presence of current packaging and directly competitive packaging as more relevant bases of comparison. However, absolute performance measures are important on some dimensions, particularly as a doublechecking measure that may indicate a potential problem:

For example, product findability on shelf is typically a red flag exercise. It is not necessarily important for a new design system to win relative to current packaging or competitive packaging. Instead, the goal should be to avoid creating high levels of confusion or frustration at the shelf. Similarly, if negative packaging descriptors (dull, generic, outdated, etc.) or "bottom-two-box" levels (of appeal, imagery or persuasion) are relatively high, this also serves to identify a potential concern.

When testing the packaging of a new product, historical performance "norms" have a more important role in the development of action standards. For example, based on normative data, a reasonable set of objectives for a new product may be to score high on Noting on Shelf (Shelf Visibility), Top Box - Appeal, Top Box - Personal Relevance, and Top Box - Purchase Interest. However, as with competitive comparisons, these figures should be balanced with an understanding of the new product's shelf placement and its positioning.

For new products, it is also particularly important that packaging convey the proposition and its unique selling proposition, or point-of-difference, quickly and clearly. This communication should be measured on both an open-ended basis with probes and closed-ended basis with agree/disagree scales. While the open-ends often provide valuable insight, the numerical ratings typically provide a more valid basis for setting action standards, as they are not subject to coding or interpretation.

5. Think broadly about measuring persuasion and potential return-on-investment

In most cases, the ultimate goal of a packaging change is to drive sales. However, it is typically a mistake to "mandate" (as an action standard) that a new packaging system drive a significant improvement in a single persuasion "number" or metric. Specifically, we've found that it is difficult for a new packaging system to drive increased purchase interest (as measured by a traditional 5-point scale), particularly for very well-established brands with many users (such as Crayola, Hershey's, Kraft, etc.).

Given this reality, it is best to measure persuasion in multiple ways, through both behavioral exercises (shopping and/or purchase allocation exercises from shelf) and attitudinal measures (claimed purchase interest upon extended viewing). This multi-faceted approach provides a more complete picture (as to potential sales impact)-and we've found that behavioral measures (from shelf) are typically more sensitive/predictive than attitudinal questioning. In terms of action standards, a realistic goal is to see a gain on at least one persuasion metric (behavioral or attitudinal)-most likely among non-users or a representative sample- without seeing a significant decline on other measures.

At PRS, we've also found it valuable to utilize a more comprehensive index, which incorporates direct persuasion measures-and other dimensions (shelf visibility, appeal, imagery, value, etc.) that have been shown to link directly to sales. For example, a realistic action standard may be to generate a 5% improvement in overall cumulative performance relative to current packaging, as measured by the PRS Performance Index.

Using action standards effectively and diagnostically

If winning versus competition is set as a success criterion, it is most valid to do so on specific packaging descriptors and personality attributes or on product expectations. Broader imagery measures of quality, value, and trust and overall persuasion measures are more likely to be driven by incoming brand equity rather than packaging.

While setting realistic and relevant action standards is important, it is even more critical to apply and utilize these standards appropriately. The action standards should guide the analysis of a packaging study by reminding us of the underlying objectives-and by highlighting what measures are important, as opposed to what is merely interesting or statistically significant. However, these objectives should not be used solely as a "scorecard" to determine "winners" and "losers." In other words, if a design system does not meet a particular action standard, but shows strengths in other areas, the response should be to understand why-and to guide potential design refinements-rather than to simply reject the design concept.

In packaging studies, there are often trade-offs associated with new design systems. For example, a packaging system that drives up shelf visibility may involve a sacrifice on another dimension, such as appeal or communication. However, a comprehensive research program will pinpoint specific shortcomings-and identify the design elements that are likely to be driving these limitations. From there, design professionals can often develop effective solutions.

Thus, the best strategy is to set action standards to guide study analysis and interpretation, but then to use the research diagnostically to guide design refinements to address any shortcomings. This will help ensure that action standards are not used to "kill" potentially viable ideas, but instead are used to help promote and ensure packaging excellence.

Scott Young is president of Perception Research Services (www.prsresearch.com), a company that conducts over 600 studies each year to help marketers "win at retail." For further information, please contact Scott at syoung@prsresearch.com or 201-346-1600.