Pharmaceutical and Medical Packaging News
Magazine
PMPN Article Index
Originally Published November 1999
PHARMACEUTICAL
Using Packaging to Promote Private-Label Drugs
In order to promote the quality of their products, private-label marketers should devise their own packaging instead of copying that of the brand-name OTC drugs.
by Greg Erickson
American consumers these days are reveling in an economic boom and having fun with their money. Coupon clipping and penny pinching have taken a backseat to splurging. So why are off-price private-label pharmaceuticals and nutritional supplements enjoying such continued success? It could be that new attention paid to innovative packaging design by private-label marketers is portraying these products as more aesthetically attractive than the big brands. There's a long way to go, however, before private-label marketers once and for all leave behind their copycat packaging.
GROWING NICHE
Research by Information Resources Inc. (IRI) for the Private Label Manufacturers Association (PLMA; New York City) shows that unit market share of private-label products sold in drugstores grew from 12.9% in 1997 to 13.4% in 1998. IRI sees the trend likely to continue upward this year as well. A few industry participants attribute such growth to a coming of age among private-label marketers in the hotly competitive field of packaging design.
Photo by Roni Ramos. Products courtesy of Innovative Folding Carton.
The proliferation of private-label offerings seems to have been driven in part by the rush of prescription drug manufacturers to bring OTC versions of the drugs to market as quickly as possible. A spokesperson for PLMA says, "This movement reached its peak three or four years ago, led by products like Tagamet and Rogaine, nicotine patches, and the yeast treatments. When the hair-growth products came on-line as OTC, private-label varieties of them hit the shelf almost simultaneously. Some manufacturers are able to compete as branded OTC products while also supplying product to private-label distributors." What spurs continued introduction of formerly prescription-only drugs to the private-label OTC marketplace? Says PLMA, "It depends on if a retailer looks at his needs and the product and thinks it would be successful. If he does, he'll ask for it." Then it's a matter of a package designer working with a product manufacturer or a distributor, or, increasingly, the retailer, to develop a container.
PROMOTING THROUGH PACKAGING
Robert Churchill, CEO at Hadtke Associates (New York City), specializes in strategic packaging design. "Packaging is a tactic that fits into an overall strategic plan," he says. "Private-label companies are becoming a lot more sophisticated in what they're doing with packaging. You can't rely on price as a competitive advantage anymore—you have to build in value."
Value—or perceived value—goes up with improvements in packaging, according to Paul Richardson, president of Private Label Research Associates (PLRA; Chicago). Richardson's company conducts market research in the private-label field, with a focus on brand-image measurement. "It has been shown that sales and brand image are a function of packaging," he says. "Taking the same intrinsic product and putting it in a better package raises its perceived value in the eyes of the consumer."
Vincent Kover, vice president of sales for Innovative Folding Carton (South Plainfield, NJ), concurs. "In addition to its normal functionality, packaging has really become a marketing tool, and its influence within the private-label industry will continue to be a dominant factor. More and more private-label manufacturers are trying to mirror the brand names in terms of quality of products and enhanced packaging. We anticipate the trend of OTC carton enhancements to continue as manufacturers consistently strive for better shelf presence."
It only stands to reason, then, that a marketer should plan to put his or her product in as alluring a package as profitability will allow. In a couple of market segments—cosmetics and fragrances—money for packaging seems to be no object. But in OTC pharmaceuticals and nutritional supplements, cost is an issue. Phil Fitzell, editor and publisher of the private label Exclusive Brands Magazine Sourcebook (New York City), says category managers in stores today are directing the whole flow of national-brand and private-label products and are exerting tight control over costs. "Category managers are digging down and getting data on each product stocked through what's called activity-based costing." All other things being equal, a product in a rudimentary package could be expected to wholesale for less than one in a flamboyant package. This has an impact. "The store-brand business is always looking to cut costs," Fitzell says. On the other hand, he says, "There's a lot of pride in the name given to the private-label brand because it's often the store's name. In the pharmaceutical area, you've seen that store's name become more and more prevalent. So the copycat syndrome is pulling back."
COPYCAT PACKAGING
The word copycat is used repeatedly by observers of and suppliers to the private-label business. Lisa Palvino, director of marketing at Diamond Packaging (Rochester, NY), observes, "There's still a lot of copycat packaging going on. Private-label manufacturers continue to try to use a look that's similar overall to the national brands so that when you see the private-label brand you automatically make a connection. From the standpoint of the consumer, it's a matter of playing off the national brand's design."
Jim Delise, vice president of Minigraphics (Long Island, NY), a printer specializing in pharmaceutical packaging, says, "Most of my customers are manufacturers of name-brand products who are doing their own private-label line as well. Their store-brand labels are distinguishable from their national brands. But I still have customers that copycat. This doesn't affect my business. But my personal opinion is that, although mimicry is the best form of flattery, to have someone copy exactly what you've done is unethical. As a consumer, I would be pretty ticked off because I would think I was getting one thing and I'd be getting another. It would make me feel cheated."
Yet the copying goes on. What can be done? Hadtke Associates's Churchill helps national-brand drug companies develop brand identity and packaging. His answer: "What we're looking for is a way of patenting packages or parts of the delivery system to make it harder for private-label companies to knock them off. There's not a lot you can do."
Giving private-label distributors and retailers the benefit of the doubt, it could be said that copycatting would stop if coming up with a unique package design were not so risky. Says Fitzell, "There are many cases where the consumer is oriented toward a certain shape or color, and subconsciously they buy their drugs that way. Drug manufacturers and [category managers] have to recognize that and follow it." There's the financial impediment, too, but in some market segments, that could be decreasing.
BUILDING AN IMAGE
In private-label nutritional supplements, where container runs can be extremely small, the redesign of a label or even just a tiny alteration to it was once prohibitively expensive in relation to sales. Des Laffan, general manager at label converter Pharmalabel (Greensboro, NC), says that the emergence of digital printing (no plates, no printing press) is about to establish a new paradigm. "You can go as elaborate as you want, and it won't cost you nearly as much as traditional printing. People who buy small units will benefit most. I can tell my smaller customers to go nuts with their design." At what point does traditional flexographic or lithographic printing become comparable on a cost basis with digital? Laffan says, "The break-even point hasn't been determined. But it might be at 5000 to 10,000 pieces, depending on how elaborate the design is. Setup time is nonexistent on the digital side. That's what helps keep costs down."
Jeff Robinson, market development leader of packaging at Flexcon (Spencer, MA), says that pressure-sensitive film enables private-label companies to craft a unique, high-end look at an affordable cost. "For private-label products, there's usually not a lot of advertising behind them. They often have to catch the shopper's attention without the benefit of a national advertising campaign."
In fact, there are examples of private-label products leapfrogging the national brands in package fabrication. Brian Gavin, vice president of Gavin Manufacturing Corp. (Ronkonkoma, NY), describes his company's niche as providing pharmaceutical cartons, with its main thrust being the private-label market. "We continue to use 16-point solid bleached sulfate paperboard, while some of the national brands are using inferior board. This helps sell my clients' products."
Store-brand identities can be built with colorful cartons. Photo courtesy of Gavin Manufacturing Corp.
However, the importance of the carton in OTC private-label drug applications could be waning, says Hollis Cobb, special projects manager at carton converter and label printer J. R. Cole Industries (Charlotte, NC). "Some drug manufacturers are dropping the carton altogether and going to a booklet-type label that provides multiple panels for selling copy and regulatory information. The ability of our presses to handle multiple webs enables us to produce expanded-content labels with additional copy panels to market products properly."
The fold-out label version marketed by The Challenge Printing Co. (Wallington, NJ) is called ReSeala Tab. Margaret Polt, marketing manager for Challenge, says, "By using such a label, manufacturers can offer consumers more information with a unique, convenient label design."
PRIVATE-LABEL PRESCRIPTION DRUGS
The power of the package extends beyond OTC: "The move into increasingly sophisticated packaging includes manufacturers of private-label prescription drugs, too," says Renard Jackson, executive vice president of sales and marketing at contract packager Packaging Coordinators (Philadelphia). "They're trying to maximize shelf space in the pharmacy. They do things like put a few tablets in a blister card and put the card in a large carton. I believe they're doing this to catch the eye of the pharmacist. In a world of me-too products, you can sway a pharmacist from several generically packaged products to one in a package that stands out."
And catching the eye—whether it's that of a druggist or a supermarket shopper—is what packaging design should be all about.
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