Packaging in a market economy: The economic and commercial role of packaging communication

Abstract

This report examines the role of packaging communication and its economic and commercial effects.It considers how on-pack branding and packaging for fast moving consumer goods (FMCGs) perform key functions in a market economy, from a consumer perspective (such as providing information, confidence, choice, satisfaction, and reduced search costs) and from an economic and competition perspective (in respect of its role in differentiation and segmentation while supporting rivalry, commercialisation and innovation).The study shows how these functions provide important economic effects by supporting economic growth and promoting well-functioning markets.Packaging has many roles beyond protection, preservation and presentation.Notably, packaging offers brand owners the possibility to communicate with consumers through distinctive designs and on-pack communication in the form of logos, graphics, images, colours, messages, and product information.This represents an important medium for marketing communication and an important battleground for the intense rivalry evident in most FMCG markets where brands compete for the attention of consumers.Such competition is both immediate in nature, i.e. how existing packaged products compete with each other, as well as dynamic in the sense of the process by which new products enter the market and existing ones adapt and improve through innovation and new product development.Both aspects of competition are vitally important to a well-functioning market and for economic progress for the public good.

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