Innovation in Private Label
By Don Armagnac*

The intersection of knowledge, leadership, and process.

Every month Private Label magazine presents innovative, new packaging concepts. Each one is accompanied by its associated market success story and each reinforces the impact that packaging has at the point of purchase.

For many private label brand owners, increases in market share are directly attributable to packaging that catches the consumer’s eye and differentiates the product on the shelf.

The anchor of most, if not all, private label business models is to produce one product, but package it many ways-thus driving both margin and revenue growth.

The dependency in this model is your ability to continually refresh your product presentation with packaging concepts that meet consumer requirements. For the private label sector, successful innovation may very well be defined as the ability to take exiting products into new consumer arenas that are ripe for growth. Since you are not changing the product, the differentiator becomes the package itself.

For example, few can deny the overwhelming success that Nestlé enjoyed when it repackaged chocolate milk-NesQuick-from a gable top carton to the round bottle that we all know today. The shape met multiple consumer requirements, including the ability to fit into an automobile cup holder. Entirely new groups of customers were added via the change in packaging; sales multiplied, people were promoted, and the rest is history.

Innovation comes in many flavors, but research has shown that frequently innovation occurs in corporate America at the intersection of knowledge, leadership, and process.

Knowledge—What does the customer want or need? Leveraging customer insights to find out how to meet their needs should be a core competency. Nestlé’s researchers interviewing customers early in the more outside convenience stores found the clue to innovation.

This combined with their domain expertise and “what if?” thinking contributed to their breakthrough.
Leadership—A culture of innovation fosters an environment where change and new ideas are considered good, if not the norm. Easily said, but leadership must provide the direction for innovation by ensuring that creativity is aligned with the company’s mission, goals, and competencies.

Simply put-ideas have to lead to profitable growth. Building individual competencies and having the entire organization listening for customer clues are also dependent on consistent leadership.

Process—Offers a means of tracking the progress of innovation from the concept to evaluation to the consumer. Process is frequently viewed as the “enemy” of innovation-the point where creativity meets engineering and finance. If you are still operating in the paradigm of process equals endless amounts of paperwork, phone calls, travel for meetings, phone calls to update status, guess work financials-you need to update your thinking.

Help has arrived in the form of electronic applications that allow marketing organizations to access all of the benefits of digital business models.

Many of you may be thinking, “I have a process today-it works! Why change?” Think of the developments of new packaging and marketing collateral without Apple Macintoshes on your team members’ desks. Can you remember how the work got done pre-Mac?

New applications that support creative processes can have an equally profound effect on your creative and development cycle. In fact, users are reporting 50% reduction in cycle time for the creative process: with the use of collaborative and workflow applications that link customers, design houses, marketing organizations, prepress companies, converting plants and other internal/external contributors.

Creative teams are finding that they are spending a lot less time tracking and reporting on projects and devoting more time to innovation and creativity.

Digital repositories that can easily be accessed from anywhere in the world will also promote the repurposing of graphics and help reduce costs.

These new applications support the creative process but they do not specifically support innovation; rather they give the creative leaders and their team the tools that reduce the time spent on non-creative work. These applications free up time better spent on innovative work and communication with customers.