Provided by Smithers Pira

The distinction between mass-market and luxury products is becoming blurred, prompting luxury brands to turn to innovative technologies and strategies to attract customers to their high-end goods.

According to the new Smithers Pira report, The Future of Luxury Packaging to 2022, the luxury packaging market was valued at more than $13.77 billion in 2016, with global sales forecast to increase by 3.4 percent in 2017 to $14.25 billion. In volume terms, a growth rate of 2.6 percent was forecast for 2017, after which the world market is expected to increase by an annual average of 1.3 percent up to 2022.

The study pinpoints the main developments in technology that are expected to aid market growth over the next five years. The following developments are among the four principal drivers:

• Using packaging as a medium to present a product as premium
• Creating a consumer connection via personalized and customized print
• The growing importance of consumers in nontraditional markets
• Engaging with an online sales culture

Premiumization

Premiumization is a trend apparent in many sectors of the packaged goods industry. Brand owners are seeking to attract consumers by offering products positioned on an “everyday luxury” platform, and packaging is seen as a way of achieving this.

The food and drink industry has been one of the main pioneers of the trend toward more premium forms of packaging. One successful example from the UK food industry is the Gü range of desserts, which are marketed on an indulgence platform and whose black-colored packaging marks it as a premium product.

Appearance and aesthetics are major factors when designing packaging in this sector and in other fast-moving consumer goods (FMCGs) industries. Considerable attention is paid to areas such as color, images and graphics. Increasingly, brand owners are having to consider what packaging for their products looks like on screen as well as on the shelf, given the fact that more people are now purchasing goods via online channels.

Post-print embellishment

Premium-look packaging can be reached via various routes – design, material selection, post-print embellishment, retail store or shelf positioning – or, more often, a combination of several or all. Embellishment is one area of focus for brands and, as there is a general shift toward a cleaner, high-end look, there is a corresponding interest in innovative finishing options that can further differentiate a pack.

Designers are exploring the potential of new embossing, metal effect (both inks and foiling), glittering and tactile/haptic surfaces technologies. Luxury applications, with their higher price margins, demonstate the need to differentiate goods. This has lead to the arrival of “experience packaging.” The focus on the act of opening or unboxing as part of the enjoyment of the contents helps make this area a key testing ground for these enhanced effects prior to deployment in higher-volume applications.

Another option is laser cutting for finishing. It can be employed to cut a complex pattern into a pack, working from a CAD file. These are gaining popularity for boutique products including personal care, fragrances and jewelry. The principal substrate material is cartonboard.

As with several other post-print enhancement options, laser cutting is looking to integrate with the increasingly popular digital print systems that enable new options for consumer engagement through customization and personalization of packs.

Personalization and customization

Digital printers in many parts of the world increasingly benefit from the recent growth in demand for personalized gift products, a trend that carries strong implications for the luxury packaging industry. Personalized printed products are now being offered by many leading brands, with consumption peaking during gifting occasions, such as Christmas and Valentine’s Day. For example, the UK market for personalized gifts was valued at nearly $1.3 billion in 2015, with an average expenditure per consumer of almost $47.

Some more recent examples of this trend specifically within the luxury goods sector include:

• Chocolate – Companies competing at the upper end of the chocolate confectionery market now offer personalized products and packaging, most of which are targeted at the gifting market. For instance, in the UK, Thorntons now sells personalized chocolate boxes in the form of Alphabet Truffles, in which the chocolates can form messages, such as birthday wishes. Ireland-based firm Lily O’Brien’s offers consumers a choice of chocolate box packaging and the ability to upload photos or images to personalize the printed pack.
• Premium alcoholic drinks – A number of premium brands, particularly within the Scotch whisky sector – such as Glenfiddich, Glengoyne, Gordon & MacPhail – now offer personalized labels, mainly for gifting purposes, with individual messages.
• Jewelry – In this sector, personalized gift packaging is usually in the form of gift boxes or bags, although some companies have started to customize secondary packaging, such as tissue paper and ribbons. Keenpac’s jewelry boxes are created on a bespoke basis and come in a variety of shapes and sizes.

Ordering such gifts is increasingly easy for the consumer due to the proliferation of web-to-print ordering systems.

Coca-Cola’s Share a Coke campaigns featuring bottle labels carrying common individual forenames, remains the most well-known example of a major brand applying customization to create a more personal connection with its consumers. Coca-Cola has sold more than 150 million of its personalized bottles.

The print costs of such campaigns – using toner or, increasingly, inkjet presses – are declining, but remain significant. Luxury segments have and will continue to be a key area for this pioneering technology, as one that can accept the premium for such printing for special and seasonal editions more readily. The range of options available is now being supplemented by new printing equipment and finishing systems for new pack formats – flexible pouches and folding cartons – and high-grade substrates optimized for accepting digital print graphics.

Non-Western growth markets

As the market for luxury goods has become more international, the leading brands have commanded a wider geographical footprint. From a supply perspective, the luxury goods market is highly concentrated. It is estimated that the larger European brands currently account for up to 70 percent of global sales, which gives some indication of their long-standing strength and heritage across much of the world.

Sales of luxury goods in non-Western regions have benefited from factors such as the emergence of a more affluent urban consumer base and a greater number of youthful and Western-oriented consumers. Much of the growth in the global luxury goods market has come from China. According to recent analysis, global luxury sales would have contracted by around two percent (on average) between 2012 and 2015, had it not been for Chinese consumers.

Shopping for luxury goods while traveling is an increasingly common activity for the emergent middle class in China and elsewhere, with airport malls a focus for this trade. Some research shows shoppers at airport malls accounted for six percent of total worldwide expenditure on luxury goods in 2016, up from four percent the previous year.

Online sales and “showrooming”

Online channels are making a greater impact within the world market for luxury goods. Online sales of luxury goods are set to reach almost $42 billion by the end of the current decade, up by more than 95 percent from levels observed in 2014.

The growing importance of the online sector also has contributed to the “showrooming” trend, whereby consumers research products in-store, only to complete their purchases via online channels. This has been apparent in the luxury goods market, particularly since many of the world’s leading fashion houses have been relatively slow to adopt e-commerce. It was estimated in 2016 that up to 40 percent of luxury brands had little or no online sales capability. Consumers are becoming increasingly price conscious and are, therefore, attracted to the special offers and discounts typically offered by online retailers.

In-store shopping is expected to remain a mainstay of the luxury goods market, since most consumers still want to touch, feel and smell products prior to purchase. Traditional retailers already have responded to the growth of the online/mobile sector via tactics usually referred to as “reverse showrooming” – sometimes called “web-rooming” – whereby consumers research products online, and then complete their purchases in-store. The increasing popularity of “unboxing” videos on social media also places a new focus on materials and design, with “experience” packaging making this process part of the overall enjoyment of the product.

There has been a growth in “Click and Collect” schemes within the industry, with retailers offering improved convenience and knowledgeable staff to entice consumers. The coming years are therefore likely to see retailers of luxury goods operating across multichannel platforms, combining in-store, online and mobile purchase points.

These four trends are examined, analyzed and quantified in greater depth in the Smithers Pira report. Other major topics explored include:

• The growing need for anti-counterfeiting and brand protection,
• Wider use of intelligent and interactive packaging,
• Greater availability of haptic effects to give packaging a luxury feel, and
• Brand owner and consumer desire prompting the development of new sustainable and/or environmentally preferable packaging materials.

Smithers Pira is a worldwide authority on the packaging, paper and print industry supply chains. It provides world-leading expertise and market intelligence and offers a range of testing services supported by comprehensive facilities in the US and UK. “The Future of Luxury Packaging to 2022” presents an analysis of market trends in value and volume terms for luxury packaging during the period 2012-17 and market forecasts to 2022, including analysis by end-use sectors, material types and geographic markets. For more information, visit www.smitherspira.com.

by Phil Riebel, president, Two Sides North America, Inc.

From financial transactions to reading the news or a magazine, the world is moving rapidly toward an electronic interface. But is this actually what we want? A 2017 survey commissioned by Two Sides, “Print and Paper in a Digital World,” examined the preferences of US consumers for print vs. electronic over a wide range of communications.

US consumers want to retain choice of communications

First and foremost, the large majority of US consumers surveyed (90 percent) felt they should have the right to choose how they receive communications (printed or electronic) from financial organizations and other service providers. Most (82 percent) also do not want to be charged more for choosing a paper bill or statement, and 57 percent would consider switching to an alternative financial organization or service provider if they are forced to go paperless.

Contrary to popular belief, the issue of choice isn’t just confined to older age groups. As may be expected, 92 percent of US consumers aged 55+ agreed that they should have the right to choose paper or digital, but 88 percent of the 18- to 24-year-olds also agree. Furthermore, 49 percent of that same young age group would consider switching companies if they are forced to go paperless.

Print on paper is considered safer and more secure

Part of the consumer support for printed documentation may be due to the increase in data breaches in the financial, business and health care sectors. Survey results revealed that 79 percent of consumers keep hard copies of important documents filed at home, as they believe this is the safest and most secure way of storing their information. A similar number is increasingly concerned that personal information held electronically is at risk of being hacked, stolen, lost or damaged.

Having a printed copy – whether it be of a newspaper, an invoice or a health or financial record – is generally perceived to be a more secure and comprehensible way of receiving information than its digital counterpart.

The preference for print on paper also has a lot to do with convenience. Overall, 68 percent agree that it is easier to track their expenses and manage their finances when information is printed on paper.

“Go Paperless” – “Go Green” claims are not trusted

The need for printed documents runs counter to company claims that we must go paperless because it is better for the environment. People often print e-documents at home or at the office for ease of reading, storage, archiving, security and reminders. A 2016 survey of US consumers found that 52 percent of respondents print some of their bills at home or at the office.

Many customers (71 percent) are also not fooled by “go paperless”/”go green” claims used by corporations and agree that the switch from paper to digital is because the sender primarily wants to save money. The 2016 US consumer survey also showed that 48 percent feel misled by the claims and 57 percent question the validity of the environmental claims.

For books and magazines, print wins over digital

Overall, 62 percent of respondents prefer to read books in print vs. electronic devices. Surprisingly, the youngest age group (18 to 24 years) feels the same way about books, with 63 percent responding in favor of print. Both groups strongly agree (72 to 73 percent) that reading a printed book is more enjoyable than its digital counterpart. The preference for print also extends to reading magazines, with 73 percent agreeing that print is more enjoyable than digital. Even the youngest group’s response is 66 percent in favor of print.

News consumption habits are changing

News is increasingly being read on digital devices. Most respondents (74 percent) say they read news on a tablet, smartphone, laptop or desktop computer at least once per week. However, 63 percent of all respondents and just less than half of the younger age group (46 percent) also say they read a printed newspaper at least once a week.

Not surprisingly, only 35 percent of the 18- to 24-year-olds prefer to read newspapers in print (as opposed to electronic devices) while the overall response is 61 percent in favor of print. However, when asked if reading a printed or digital newspaper was more enjoyable, the responses were more positive for print: 56 percent for the younger age group and 65 percent for all respondents.

Trusting the news found on digital media has become increasingly difficult, as hoaxes and misleading information pop up on the internet and are then shared on social media. This is reflected in the survey, with 73 percent of respondents agreeing that fake news is a worrying trend. In total, 56 percent trust the news stories they read in printed newspapers and 64 percent stated they would be very concerned if printed newspapers were to disappear.

Print provides a deeper understanding

When asked if reading news in a printed newspaper provides a deeper understanding of the story than digital options, the majority of respondents agreed (71 percent), and this was very similar to the response of the 18 to 24 age group (68 percent).

Ads are more effective in print

The fact that we trust and understand printed media more than digital has direct implications for advertisers.

The majority of consumers (70 percent) indicate that they do not pay attention to most online ads, and 69 percent find them irrelevant. The youngest age group surveyed (18- to 24-year-olds) feels only slightly less strongly about online ads, with 65 percent saying they do not pay attention to them. Many in both age categories (66 percent) could not remember the last time they willingly clicked an online ad.

When advertising turns up in our inboxes, do we read it? Less than half the time, according to the survey: 49 percent of all consumers and 43 percent of the youngest age group say they read marketing emails at least once per week.

As with the news, trust is an issue in advertising. Well over half the respondents (59 percent) do not trust many online ads. About half (54 percent) pay more attention to messages and ads on printed leaflets and mail than messages and ads delivered by email. A similar number agree they would be more likely to take an action after seeing an ad in a printed newspaper or magazine than if they saw the same ad online.

What about printed ads that turn up in the mailboxes of our homes? Of all the consumers surveyed, 59 percent said they read leaflets, flyers and other unaddressed mail delivered to their home at least once per week. Slightly higher numbers of respondents (63 percent) read advertising mail (at least once a week) addressed to them and delivered to their home.

Is digital overload starting to set in?

The survey found that consumers, particularly in the younger age categories, are concerned about health issues associated with spending time looking at screens and show a desire to “unplug.” About half of those surveyed (53 percent) felt they spent too much time on electronic devices, and that number was highest (81 percent) in the 25- to 34-year-old group. While 53 percent of consumers were concerned the overuse of electronic devices could be damaging to their health (ex: eyestrain, sleep deprivation, headaches), the number rose to 65 to 75 percent for consumers under 44 years.

The Toluna survey commissioned by Two Sides points out that print on paper plays a strong role in our daily lives, whether it is reading recreationally, carrying out financial transactions, maintaining our personal financial records or responding to advertising. The push to digital communications by many companies suggests that there is a disconnect with what their customers, young and old, actually want.

The full survey report and key findings for the US are available at www.twosidesna.org/Survey2017. To obtain a printed version of the materials, please contact Two Sides North America at [email protected].

Phil Riebel is President of Two Sides North America, an independent non-profit organization created to promote the sustainability of print and paper. Two Sides is active globally in several countries and includes members from the entire print and paper value chain. For more information about Two Sides North America, visit www.twosidesna.org.

Endnotes

1. 1. Two Sides and Toluna, 2016. The Attractiveness and Sustainability of Print and Paper – The U.S. Consumer’s view. June 2016.

by Melissa Larson, contributing writer, PostPress

Pundits have been predicting the death of direct mail as a marketing tool for at least 20 years. It would be swiftly overtaken by targeted electronic blasts, online clickable links and a host of other e-tools, they said. Fancy the idea of mailing a printed piece to a physical address!

A statement on the website of the Data & Marketing Association (DMA) doesn’t exactly contradict that assessment, but it at least acknowledges a niche for direct mail:

“Direct mail continues to serve as a key driver in most omnichannel marketing plans,” said the statement. “It’s complemented well by online efforts and fills a much-needed niche. Where online is generally low-cost, low-impact, print is higher cost, higher impact. Where online marketing is passive, direct mail is active. Direct mailings are proactive and tactile – demanding that the recipient DO something with it. The better response rates make the return on the investment worthwhile for both retention and acquisition. However, the 2015 statistics are in and they’re telling us what we direct marketers predicted: 2015 direct mail volume was down while spend was up, most likely driven by postage increases.”

A more sobering statistic was offered by business intelligence website IBISWorld:

“During the five years to 2021, Direct Mail Advertising industry revenue is expected to remain nearly stagnant. Higher expected levels of consumer spending and rising corporate profit margins are anticipated to increase advertising expenditures, but outside competition should continue to hinder significant revenue growth and profit improvement.”

Direct mail: a necessary marketing concept but hardly a way to get rich. Yet, there are printers and marketers who are innovating and succeeding in direct mail. They’re doing it with a solid knowledge of what direct mail is – and what it isn’t – and a willingness to acquire the deeper knowledge of consumer attitudes and psychology that helps target likely campaigns. Of course, they’re also using the post-print tools and techniques available to them in order to drive up acquisition and retention.

Print is intrusive

Direct marketing creative consultant Alan Rosenspan, who has said of direct mail, “It’s intrusive – in the best possible way,” had this to say about the power of a direct mail piece:

“The first thing to remember is that direct mail is a tactile medium. Unlike email or TV commercials or billboards, it is the only form of advertising that your prospects actually hold in their hands. How it feels, how it looks, what kind of paper stock you use – all are important elements that effect response.”

He continued, “For example, a direct mail package announcing the opening of a beautiful new hotel should look very different than an appeal from a charity. The hotel would use expensive, coated stock that would feel expensive in your hands; the charity would usually use thin paper that looks like they need every penny they can raise.”

And size does matter, according to Rosenspan. “Size also is very important. We have found – in test after test – that the larger the size of the envelope, the more it sticks out from other direct mail, and the better it works. It also looks more important. Larger sizes, such as #12 envelopes and 9″x12″ envelopes, are particularly effective. They are more expensive to print and mail, but the improved response is almost always worth it.”

Color compels

Jeanette McMurtry, consultant and principal, e4marketing, urges marketers to delve into what she calls the “psychology of color” in order to understand how color in a direct mail piece attracts or repels prospects.

In a conversation with PostPress, McMurtry emphasized a spirit of experimentation in order to test out various colors – both for a direct mail piece and for an entire brand:

“Create a new ad campaign or brand iconology and produce it in various colors,” she said. “Send it to your customers and ask them which color caught their attention first and what words or thoughts first came to mind. Prospects see brand value differently through different colored lenses.”

According to McMurtry, taking some time to study what colors really mean to consumers – conscious and unconscious minds is time well-spent, regardless of your industry or if you’re B-to-B or B-to-C. “The wrong colors could project the wrong values, and that could be totally wrong for your bottom line,” she explained.

McMurtry also stressed the importance of doing the brand homework first. “Clever words, offers and compelling content will fall short of reaching your goals if your first impression is not a powerful statement about your brand’s values and experiences. Pay attention to the colors you use and the colors that attract your consumers. Soon, you will discover that you change behavior simply by changing colors,” she said.

Beyond color, McMurtry takes note of the power of such postpress techniques as foil and embossing and the ability of these techniques to yield, for example, upscale, exclusive-looking invitations, etc. “When something like that arrives in my mailbox, it makes me think I’ve been chosen for something exclusive. That makes me feel good,” said McMurtry.

Direct mail also may benefit from what it is not – it is not email, said McMurtry. “Digital overload is always a concern, in that it can lead to consumers tuning out. In contrast, we still open our mail.”

Folding effects

Graphic arts and finishing supplier MCD, Madison, Wisconsin, (www.MCD.net) offers high-impact options including foil stamping, embossing/debossing, specialty UV coatings, diecutting, gluing and folding and inserting, according to Vice President of Sales Sean Hurley. According to statements on MCD’s website, direct mail campaigns have quicker and higher response rates than digital alone. Brands that combine direct mail and digital channels can expect a double-digit uplift in conversion.

One very striking recent project for MCD involves a telescoping direct mail brochure for carmaker BMW. “The BMW telescoping slider is designed so we can automate the gluing and folding. It is entirely automatically assembled,” said Hurley.

“This design was patented and developed by MCD, Inc. It features a diecut hook tab and lock to pull each slide forward. The body of the slider is wrapped around each insert slide piece. We produce one-pull sliders up to four-pull sliders, depending on the amount of print area needed,” he added.

“The best direct mail campaigns often are unique and interactive,” said Hurley. “Perceived value and enhanced brand awareness contribute to success, and if customers see an increase in response with an enhanced direct mail piece vs. standard direct mail, it justifies the rate of investment to the buyer”

Where does Hurley see the influence of direct mail going within the next three to five years? He listed the following:

• more personalization,
• campaigns targeted to individuals and
• utilization of specialty enhancements and distinctive marketing techniques to increase response rates.

Rosenspan agrees on targeting, personalization and segmenting: “As they say, one size never fits all – and the same direct mail package can’t possibly appeal to every person. The more you break up your list, into groups of similar industries or like-minded individuals, the more successful you will be. Many companies build a response model of dozens of variables that will produce the best average response. But, they may be ignoring important segments of that model that may respond much better to a more personalized approach.”

Whether direct mail is used on its own, in tandem with electronic marketing or as part of a spectrum-wide campaign, brand owners need to be up-to-date on all available direct mail enhancements.

“Companies will begin turning back to direct mail as the limitations (and poor response) of electronic media become more pronounced,” concluded Rosenspan. “Hopefully, they will begin to understand that sending out email may be faster and cheaper, but it just doesn’t have the impact of a well-crafted direct mail package.”

“I also believe more companies will understand that all marketing decisions should be based on the value of a customer. If a customer might be worth thousands of dollars to you, isn’t it worth investing more to acquire them?” he asked.

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Post Office Promotes “Irresistible Mail”

When you stop to think about it, the US Postal Service has quite a large stake in the success of direct mail marketing programs.

The postal service has sponsored the Irresistible Mail Award to, as it says, “showcase the most innovative and creative work in direct mail advertising.” The postal service is encouraging those who have managed, designed or printed an outstanding campaign in the last 12 months to enter. The program offers four quarterly awards and a Grand Champion who will be recognized at the annual National Postal Forum.

Criteria for the awards track closely with the techniques marketers commonly use. The entry description says, “Innovative pieces may include features on the following list or something even more revolutionarys,” including:

• items with unique shapes (2D or 3D), sizes, textures or colors designed to be noticed in the mailbox
• design and messaging on the outside of the envelope/self-mailer designed to increase open rates (e.g., transparent envelopes)
• digital interactivity (ability to link from mail piece to digital experience through QR codes, AR, URLs, PURLs, NFC, etc.)
• video in print
• physical interactivity (ability to manipulate the mail piece through folding, etc.)
• multisensory engagement through olfactory (scent); texture of the envelope, paper or ink; specialized inks (water-, heat-, light-sensitive or conductive inks) or personalization (greeting, content).

The contest rules, the submission form and past winners can be found at www.irresistiblemail.com/award.