The whole package

Nice things often come in nice packages. Or is it that nice packages make what’s inside nicer?

Today we’ll explore the effects of packages on perceptions of their contents.

The expectation gap

One case where packages matter is in online shopping.

When shopping in person, the point at which a person decides to buy a product (or not) happens in the store. But in online shopping, there are two decision points. First, a person decides whether to order a product from an online store. Second, the person receives the product and decides whether to keep it or return it.

The difference between the value customers expected from a product and the value they see in it after it arrives is called the expectation gap. And its effects aren’t trivial.

Image source. Expectation vs. reality when online shopping. Yep.

 

Return rates are much higher for online purchases than for items bought in physical stores. And, of course, returns cost companies money. Some stores, like Amazon, have even gone to the extreme of banning customers after they make too many returns (how many is too many? Amazon won’t say).

One way to minimize the expectation gap is to provide extra information, like demos of a product, when a customer is placing an order to set more realistic expectations for its arrival.

But the fateful moment when someone opens a package and see the product inside is another point at which the expectation gap could be narrowed. How? By raising the perceived value of the received product. It’s one of the last chances a company has to improve a customer’s perception and prevent a return. 

 

Nicer outside, nicer inside

A nice package can set an expectation that what’s inside is nice, too. And this expectation can lead the package opener to look for evidence that the product inside is good quality and provides them value, minimizing the gap between expectation and (perceived, always perceived) reality.

Let’s look at a study that illustrates this idea. 

Participants, who were 60 MBA students, thought they were in a study about the ease of opening packages. The task was simple. They opened a package with a bamboo bowl inside and reported on their experience.

The bamboo bowl was an ambiguously nice object. It had no brand name. And, while it cost the researchers $25, online prices for similar bowls ranged from $15 to $200 (side note: if you are paying $200 for a bamboo bowl, you might want to ask yourself why). 

The study design was what my grad school advisor called a “kitchen sink”. In a kitchen sink study, you devise two conditions that vary in all the ways you think might cause a predicted effect on the outcome (i.e., you throw everything but the kitchen sink at the problem). If you find the predicted effect, you design follow-up experiments to cleanly test which factors, or combinations of factors, cause the predicted effect and which ones don’t matter.

Here, the everything-but-the-kitchen-sink was the niceness of the package. 

In a standard packaging condition, the bowl was packed in Styrofoam sheets and placed in a plain brown cardboard box sealed with normal shiny packing tape. 

In the kitchen sink “superior packaging” condition, every aspect of the packaging was nicer. The bowl was wrapped in white stretch film and sealed with gold stickers, then wrapped again in large, some might even say luxurious, bubble wrap, and placed in a white box sealed with matching white tape.

The materials came from a large-scale packaging company, so it was possible to estimate their actual costs. The standard packaging cost $2.18 per bowl, and the superior packaging $2.37 per bowl–around 9% more for the superior packaging.

 

Image source. An ambiguously nice bamboo bowl was wrapped in standard or superior packaging.

  

After opening the bowl that had been wrapped in either the standard or superior packaging, participants were asked about their experience.

First, they were asked the maximum they’d be willing to pay for the bowl and what they thought the retailer charged for the bowl. They also rated how they felt while unboxing – to what extent they experienced feelings of joy, excitement, and trust, among others. Finally, they guessed how likely the bowl was to have come from brand-name stores like Crate & Barrel and Pottery Barn and from mass merchandisers like Amazon and Target. 

Nicer packaging made for a nicer experience. People felt more positive when opening the superior package. 

And nicer packaging made people think the contents were nicer. People were willing to pay more for the bowl in the superior packaging -- $27.77 vs. $21.30 for the bowl wrapped in standard packaging. People also believed that bowl in superior packaging would be sold for more by the retailer -- $40.41 for the bowl in superior packaging vs. $33.83 for the bowl in standard packaging. 

Speaking of retailers, people who received the bowl in superior packaging thought it was more likely that the bowl came from Crate & Barrel and Pottery Barn than those who received a bowl in standard packaging.

In sum, packaging had a big effect! The better packaging cost only 19 cents more but resulted in a better experience and people being willing to pay $6.47 more for the same item. 

 

Restraining returns

If packaging can make us think an item is nicer, can it also help us forgive its imperfections?

A three-part study tested the effect of packaging on returns.

One examined people’s return intentions when faced with a slightly defective product. Participants imagined buying a sports jersey. They then saw a 30 second stop-motion video showing the package containing the jersey get opened. Once the video zoomed in on the jersey, they were in for a surprise. The jersey had a little stain on it. 

The packages that participants saw in the video differed in a few ways. There were variables that made the package “nicer”. One was the color of the box (typical brown or more-special and full-of-positive-associations blue). Another was whether the package included a little extra gift for the recipient.

After watching the video, participants reported how likely they would be to return the package with the slightly imperfect jersey. To encourage honesty, every participant had a chance to win the package exactly as shown and, if they won, could send back the jersey for a new one if they wished.

Image source. A jersey packed in a blue box with a little extra gift. 

 

A blue package and a little gift both independently lessened people’s intentions to return the imperfect jersey.  

But would the same effect hold for real return behaviors? To find out, a second experiment tested return behaviors in the wild. 

Participants came into the lab to rate their preference for chocolate bars. At the end of the session, they received a voucher for their favorite flavor of chocolate. 

When they came to redeem the coupon, a mix-up was orchestrated. Drat, they got the wrong chocolate flavor! However, while everyone got the “wrong” flavor of chocolate, the packaging of the chocolates varied. Some participants got the chocolate in a plain brown envelope, and some in a blue envelope. Some participants got a little extra gift (gummy bears) in the envelope, and some didn’t.

Each envelope contained a note saying that chocolate could be exchanged, and researchers tracked the returns.

As a baseline, people who received the wrong chocolate in a brown envelope with no gift ended up exchanging it 43% of the time. But a colorful package and a gift both helped reduce exchanges. Those who got the wrong chocolate in a blue envelope with a little gift inside only made an exchange 24% of the time. 

Finally, in a field study, the researchers looked at return rates of products on Taobao, one of the largest retail sites in China.

The researchers pulled out a random set of 400 retailers from the site in categories with high return rates—clothes and digital products. They used photos from customers, customer comments, and product demos to determine the packaging used by the retailer. They coded two factors: whether the outside of the package was plain brown or colored, and whether the package included an extra gift or not. In the end, they were able to code what kind of packages were used by 108 of the 400 retails.  

They used these factors, among others, to predict retailers’ return rates using public information published on each retailer’s page. 

Both influenced return rates: retailers who used colorful packages and who included gifts in their packages had lower return rates from customers.

This phenomenon is something I can relate to after a recent experience. I ordered a pretty pair of earrings from Etsy that turned out to be too big to fit in my ears. As in the prong of the earring was too thick. I couldn’t wear them. 

But they came wrapped very thoughtfully and with a handwritten thank-you note from the maker. Even though they are unusable, I kept them. It just felt too bad to return them!

 

When do nice packages work? And not?

Do nice packages always enhance what’s inside? It turns out that, no.

recent study found that two distinctions that matter are whether a product comes from a value or luxury retailer and whether the purpose of the product is functional or experiential. Let’s go through each distinction and what effect it has on the power of nice packaging.

Value brands deliver value, luxury brands deliver quality and pleasure. So, might nice packaging be more of an expectation for luxury products, lessening its effects? 

In the study, participants imagined having ordered a cosmetic product from an online retailer. Some were told they bought the product from a value retailer (Cosmetics4Less), and some that they had bought the product from a luxury retailer (PremiumCosmetics).

The package the product came in varied. Some participants saw a plain cardboard shipping box, some saw a fancy box that was dark blue with gold detailing. 

Everyone reported on how much they would enjoy the delivery experience and how loyal they would feel to the retailer. A nice package increased the enjoyment and loyalty people would have a for a value retailer. But it had no effect for the luxury retailer. It’s just part of what people might expect from the experience.

A similar distinction was found for products that are bought for their function (in this case: insect repellent candles) compared to products bought for the experience they provide (in this case: scented candles). A nice package enhanced people’s enjoyment and loyalty when the product was functional but not experiential. 

Putting packaging to work

Summing up what we saw above, a nice package can enhance the value people see in its contents. It can even help us forgive a product’s imperfections.

There are some cases where putting more attention to packaging might have a particularly strong effect: when products are utilitarian, rather than experiential, and when they’re a “good value,” rather than luxury products.  

A nice outside can help us see the good inside.

Many of us seem to know this instinctively. An interesting example is in gift packaging. When people are choosing gifts for picky gift recipients, they are willing to spend more money to “dress up” their gifts with items like gift wrapping, ribbons, and a card.

Of course, adding some types of packaging, like stretch wrap, plastic ribbons, or bubble wrap creates waste. But there are creative ways people can make packages nicer without adding waste, like using bright soy ink to print the box, or using plantable containers that grow into mint or lavender. 

A lot of what makes a container “nice” is the extra care it shows. That’s something Etsy encourages sellers to do with ideas like wrapping paper, a handwritten card, or a little hand-made gift. It certainly worked on me!

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