Analysis on the packaging

industry for the luxury sector

B2B Marketing - Spring Electives

28/06/2015

Carlos Vargas - Maarten Sisselaar - Mariana Knoedt - Nehmen Nehme

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Contents

Special Thanks to M. Eric Blanche................................................................................................. 3

1. General view of the market ......................................................................................................... 4

1.1 B2B marketing in the Luxury industry ................................................................................. 4

1.2 Packaging in the Luxury industry ......................................................................................... 5

2. B2B dynamics in this market: ..................................................................................................... 9

2.1 Profile of Mr. Eric Blanche ................................................................................................... 9

DS Inovir ................................................................................................................................. 9

PAK 2000 ................................................................................................................................ 9

2.2 Business to Business dynamics: reality and opportunities .................................................. 10

Primary Packaging:................................................................................................................ 12

Secondary Packaging: ............................................................................................................ 13

3. Trends and Recommendations .................................................................................................. 14

3.1 Trends .................................................................................................................................. 14

The ecological and sustainable concern ................................................................................ 15

3.2 From Product to Services to Solutions ................................................................................ 15

3.3 Recommendations ............................................................................................................... 17

How to use technological innovations to maximize the input? ............................................. 17

How to give the packaging a second life? ............................................................................. 17

How can the secondary packaging increase the value of the luxury product? ...................... 18

The 4Ps Revisited .................................................................................................................. 18

So what? ................................................................................................................................ 18

4. Conclusion ................................................................................................................................ 19

5. References ................................................................................................................................. 20

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Special Thanks to M. Eric Blanche

First of all, we would like to express our gratitude to Mr. Eric Blanche. He devoted his time to

helping us understand the packaging business for the luxury market. Due to his experience and

insights we were enabled to further explore and analyze this market from a B2B marketing

perspective.

We hope that our paper not only provides an analysis of the current situation but also sheds some

light on how Mr. Blanche and his company can move forward. More specifically, we’ve made an

effort to include some suggestions on how to stand out in this competitive market. Creating

additional value might lead to opportunities to move from a product-oriented to a services and

solution oriented approach.

After a general overview of the role of packaging in the luxury market this paper looks at the

Business to Business dynamics; current state, opportunities and the distinction between primary

and secondary packaging. The second half of the paper is future oriented and takes trends into

account before moving to recommendations on how to move from products to services.

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1. General view of the market

1.1 B2B marketing in the Luxury industry

Since opinions in this matter widely differ there is no one clear definition of luxury. But to shed

some light on the meaning we explore a few variations:

Traditionally the word luxury applies to tangible goods, suggesting superior materials and designs

sold in an upscale retail environment – Bain & Co

Exclusivity, premium prices, image and status which combine to make them more desirable for

reasons other than function – T. Jackson

Other people would refer to “expensive rare objects with an image of good taste” or to “categories

and famous brands held in the world as symbols of luxury”. In the end the definition is personal

and can be explored in terms of absolute meaning, relative meaning and a purely individual

meaning (Kapferer, 2010).

With regard to this paper it is useful to also look at luxury from an economist’s point of view. This

view differentiates luxury products and services from non-luxury through the substantial price

premium that is related to non-functional benefits. For example, a Givenchy IPhone cover might

provide the same protection to your phone when compared with a non-branded alternative from

the supermarket however the price of the Givenchy version might be tenfold.

Premium versus luxury

Luxury products and brands are not to be confused with premium. Premium (Nespresso, Victoria

Secret) brands might have better quality, selective distribution and emotional value but they do not

have the role in society that luxury does. Luxury has the unique capability to provide social

elevation. Luxury brands have something magic that support the upward social mobility of

consumers (see below).

Business to business (B2B) concerns businesses that sell goods or services to another business as

opposed to a business selling something to a consumer. A B2B relationship differs from a B2C

Fig.1: Upward social mobility of consumers. Kapferer 2013

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relationship in many ways; one dimension concerns the extent to which B2B buyers are more

professional and demanding towards their suppliers. The demand additional value at a competitive

price. In some cases this means that buyers engage in relationships with their buyers rather than

simply agreeing on a transaction.

Therefore, in a luxury market it makes sense (from a B2B marketing perspective) to analyze your

customers’ brands. Depending on whether the brand can be classified as luxury or premium they

will look for suppliers that with different assets and characteristics. The challenge of the supplier

is to create a successful B2B marketing strategy in the sense that it matches the buyer’s specific

needs.

Types of luxury

Within the luxury domain there are again various ways to classify brands and business models.

Kapferer delved into the notion of luxury from a consumer perspective. He distinguishes four types

of luxury:

Types What defines luxury? Examples

Bespoke, authentic Beauty of an object

Excellence of the products Rolls-Royce, Cartier, Hermes

Modern, creative Creativity

Sensuality of the product Gucci, Boss, Gaultier

Conformist, recognition

seeking

Magic

International reputation Vuitton, Porsche, Dunhill

Flashy, standing out Very few purchasers

Belonging to a minority Chivas, Mercedes

This exemplary classification serves to show that consumer expectations and related brand equity

have an impact on their respective business models. From a B2B marketing perspective it’s worth

it to delve into both the buyers’ business models and the subsequent needs of end consumers.

1.2 Packaging in the Luxury industry

Traditionally, the development of packaging is seen as an integral part of the development of a

new process. Often though, the packaging is outsourced profiting from the expertise and

economies of scale amongst other things. The requirements of the buyer of packaging depends on

the industry and could be related to design, shelf-life, quality assurance, logistics, legal, regulatory,

graphic design and the environment. In addition to the actual packaging requirements a buyer can

evaluate a suppliers’ performance based on speed of delivery, design expertise and many other

process criteria. These process criteria can for example ultimately help a buyer to decrease it’s

time to market.

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Role of packaging in luxury

In the luxury industry packaging plays a specific role. More than in other industries the packaging

of luxury goods is often seen as part of the experience, or as some say: “packaging sells”.

Packaging can for example play a crucial role in showcasing a product (jewelry), in protecting a

product (designer eyewear) and building the products brand (Tiffany’s blue box and bag).

Thus, most luxury companies look at packaging as a way to enhances and supports the value and

(scope) of their products or services. If the purchase of a product is supposed to create an exclusive

and uplifting experience than the packaging is expected to contribute to this experience. Moreover,

packaging luxury products should stand out from non-luxury and contribute to the story telling

that these companies excel at. Finally, the packaging can even outlast the products itself. This can

be the case for wine bottles and fragrance bottles as they are sometimes kept and treasured by

consumers.

Another example, where the packaging is part of a ritual; when ordering from an exclusive online

fashion platform such as net-a-porter the branded packaging and ribbons are part of the experience.

Hermes will always refer to their brands heritage by using the color orange in all products, labels

and packaging. The jeweler Tiffany has even managed to have a color (Tiffany blue) named after

their packaging, not their product.

Fig.2: Examples of Packaging

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Primary and secondary packaging

It is important to distinguish between primary and secondary packaging:

Primary packaging refers to the industrial level packaging that goes with the product. For example,

the bottle containing perfume. Secondary packaging refers to the packaging done in the retail stage,

for example, the branded bag to carry a purchase or a canvas ‘dust bag’ covering a leather bag.

The box containing a timepiece is a special case. As you will never imagine selling a timepiece

without the support base it is considered to be in between the primary and secondary packaging.

Market developments

Basically, since luxury is about excellence, heritage, unique experiences every detail counts. This

is why packaging will never be underestimated in this industry. In terms of business opportunities,

the global recovery and strong growth in emerging markets are generating new opportunities for

luxury brands. And as the market is further diversifying (e.g. masstige) the potential for the

packaging industry that caters to the industry’s needs is promising too. (Euromonitor. 2011)

Looking for ways to profit from these opportunities the luxury packaging industry - as part of the

retail experience – specialized packaging for the luxury took off in Europe in the 60’s. Today, the

key players in the industry are: Amcor Ltd., Crown Holdings Inc., International Paper Co.,

MeadWestvaco Corp. and Owens-Illinois Inc. Other big players in the market are: Ardagh Group,

Aropack, Bag & Pack, BC Boncar, Benson Group, Ch. Dahlinger, Classypac, Cosmopak, Curtis

Packaging, Design Packaging, Dupont, Duran Dogan, Fleet Luxury, HH Deluxe Packaging, Ijen,

Interconti Systems, Italesse, Jonathan Virginia, K-1 Packaging, Keenpac, M&H Plastics, MW

Luxury Packaging, Pak 2000, Pendragon Pack, Prestipack, Smurfit Kappa Group, Suttons Wrap,

Treadstone, Vivant, Witty Pack and Wrapology. (ASD Reports, 2015)

Currently the trend is that demand for sustainable packaging materials is increasing. Consumers

and companies are getting more consciousness about the environment and therefore packaging

with eco-friendly materials is on the rise. Simultaneously the demand for glass packaging is

declining. The heavy weight and the brittleness of the material are drivers of this trend. Meanwhile,

aesthetics still play a large role and are thus considered one of the big drivers. The industry players

invest in innovative packaging to cater to the needs of their buyers. (ASD Reports, 2015)

The packaging goods industry is considered as a highly competitive market. After consolidation a

select group of global players dominate the market and create entry barriers due to their scale.

Also, the relationships between buyers and sellers can be seen as a barrier to entry.

PRIMARY PACKAGING SECONDARY PACKAGING

Part of the product; Added in the industry level. Not part of the product; Added in the retail level.

Examples:

Bottle of perfume

Bottle of wine & spirits

Examples:

Paper bags and boxes

Ribbon and other accessories

*Box and support for watches

Fig.3: Primary and Secondary Packaging

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Meanwhile, the purchasing departments of luxury companies still tend to treat packaging as a cost

center. The pressure on price that results from this dynamic is not to be underestimated. In practice

buyers will not only threaten but indeed choose to move to another price level if the price is

considered too high. This means that in many cases the expertise, relationship and or innovations

of suppliers do not outweigh the need for low priced packaging. More detail is provided in 2.2.

(Interview E. Blanche, 2015)

Creating opportunities

Currently packaging companies are still treated as cost centers. This leads to risk since buyers can

and will change suppliers as long as they are not able to create new and unique selling points and

create additional and superior value. Superior value is (here) defined as tangible benefits that are

sustainable.

One way for companies to create additional value is to try and move from products to solutions.

The risk involved when doing this is related to the speed of diffusion and sustainability. While

doing this a company can create one-off advantages and lasting advantages. These advantages can

then be either tangible or intangible, see below. In order to create true solutions luxury packaging

players have to push themselves and create these advantages. On-going advantages are preferred

over One shot and Tangible Advantages over Intangible.

Type of customer advantage Tangible

(easy to quantify)

Intangible

(difficult to quantify)

On-going Time to market

Cost (of production)

CO2 emission

Cost of logistics

One shot Risk Optimisation

Consolidation

Source: Dalsace, 2015

In this paper various opportunities will be discussed. However, this is known to be a difficult and

time consuming process. First of all the learning curve is long due to complex organizational

processes that need to adapted, because the company needs to learn how to find and secure the

“good” contracts (related to pricing and contracting). Secondly, this process usually implies high

fixed costs, due to the need for large customers and the fact that the most eager customers ofter

are amongst the riskiest. (Dalsace, 2015)

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2. B2B dynamics in this market:

2.1 Profile of Mr. Eric Blanche

In order to better understand the dynamics of the business-to-business relationships in the packing

for the luxury market, we analyze the experience of Mr. Eric Blanche, who has more than 20 years

of experience in fine packaging for high end products, developing primary and retail packaging

projects for perfume, fashion and luxury brands in France and abroad. Today, Mr. Blanche is the

Development Director of DS Inovir in Europe and also Président HEC Alumni Luxe & Creation.

As part of the profile of Mr. Blanche, we resume the business description of DS Inovir and Pak

2000, packaging company for which he worked from 2000 until 2013.

DS Inovir: the company delivers product-packaging innovation and excellence to major brands

worldwide. As an international packaging service corporation, with offices and factories in Europe,

North America and Asia, DS Inovir delivers all types of retail and promotional shopping bags,

boxes, presentation cases, pouches, ribbons, labels, and other packaging accessories.

According to DS Inovir public information, luxury and specialty packaging is one of the seven

touch points of a brand1, being with the product, the only ones who actually go to the home of the

customer. DS Inovir proposition is to deliver return on investment (ROI) to their clients through a

complete service characterized as flexible and secure. There are three main points particularly

interesting about DS Inovir offer in their website:

DS Inovir offers a complete packaging development –alpha-to-omega packaging creation

service– from which it results a melted product with a branded packaging.

DS Inovir offers a fee based packaging development, through which the customer receives

a lifetime turnkey packaging management experience from DS Inovir managers.

DS Inovir offers the service of organization and supervision of worldwide logistics and

distribution for their customers, either including the product or through a fee basis tied to

a packaging project management.

PAK 2000: is a “leading provider of prestige bags and boxes for a wide variety of industries,

including the cosmetic, fragrance, personal care, luxury, and fashion sectors.” The company

manages two specific lines of packaging concepts: value-added luxury packaging and security

packaging, through which they not only offer functional, durable and elegant packaging, but also

a wide range of materials and types of prints to personalize and customize. According to their

website, PAK 2000 emphasis in the idea of how luxury companies are not only in the business of

providing consumers with excellent products, but also to offer esteem, as part of a lifestyle choice.

In this sense, the company says:

“For many, being able to be proud of a purchase is just as important as the quality of the

product. Providing a complete customer experience is part and parcel of luxury branding.

Our solutions are designed to maximize not only a company's ability to market their brand

post-purchase, but also to provide the consumer purchasing the product with suitable outer

packaging that increases esteem.”

1 According to DS Inovir website, the seven touch points of a brand are reputation, media, product, store environment, displays, services and packaging

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As part of their offer, PAK 2000 talks about a full range of support to their customers through

services and processes that include brand coaching, project management, quality control, customer

services and worldwide tailored logistics. Their methodology is resumed as:

A key point of their public information includes environmental concern, offering bags that can be

reused, as well as 100% biodegradable. The company has several industry certifications that

concern sustainability as:

2.2 Business to Business dynamics: reality and opportunities

The company public profiles seemed to be aligned to the theory of business to business marketing,

but as part of the study, we had the possibility to talk to Mr. Blanche, who gave us a real perspective

about what is happening in the luxury packaging industry nowadays. According to him, luxury

companies still use as purchase technique for packaging the old, transactional approach, aiming

for the best possible quality at the lowest possible cost and maintaining a relationship with

suppliers mainly through their purchase team, as illustrated in Figure 6.

Particularly, the suppliers have low understanding of how the customers buy in all levels (rational,

organizational and political) and consequently have low power to influence their buyer decision.

Furthermore, most of the times, the relationship across the value chain is anti-industrial. The

pressure is originated by the retailers and it is back-propagated to the suppliers:

Fig.4: PAK 2000 Solutions methodology

Fig.5: PAK 2000 Environment Certifications

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Retailers/distributors pressure the luxury companies to receive samples of the products

before placing an order (space/shelf, SKU, quantity, etc.)

In the luxury companies, marketing, finance and retail teams pressure the purchasing area

to find the best quality at the lowest cost, which ends up with a purchase team that looks at

packaging under a cost/pricing perspective

The purchasing team asks different suppliers for possible prices. Given the pressure from

retailers and distributors, luxury companies have decided to start narrowing their pool of

suppliers and actually using the same treatment as distributors do with them: in order to

keep you in the short list of packaging suppliers, you need to give them samples before

even placing an order

To complete the scenario, according to Mr. Blanche, the environmental impact of the packaging

industry is changing the business, especially the secondary packaging, which is seen as a waste.

This factor makes the industry sensitive to any environmental new policies and consumers

behavior related to this topic.

It is important to mention that in the specific case of perfumes, the approach follows the new model

or the relational one. Because the bottle is considered as part of the product, the suppliers must be

in contact with marketing and branding people, as well as top management, in order to develop a

bottle 100% aligned with the product and the brand story-telling.

As an illustrative exercise to assess the opportunities the luxury packaging companies can have

in terms of business-to-business marketing given their customer-buyer relationships, we decided

to use the framework given in class to evaluate the potential for them to evolve towards a more

relational approach and if it would be worthy to do so.2

2 This is just an illustrative exercise given the time and resources constraints. The analysis is primarily based on the interpretation of the authors from the conversation with Mr. Blanche.

Fig.6: Customer – Supplier relationship

Customer (luxury companies)

Suppliers (packaging companies)

OLD MODEL: ONE POINT OF CONTACT NEW MODEL: MULTIPLE POINTS OF CONTACT

Customer (luxury companies)

Suppliers (packaging companies)

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From the luxury companies (customer’s) perspective:

Aspects of value creation Sense towards

relational

approach

Primary

Packaging

Secondary

Packaging

Market Offering

Complexity of the prod. process 7 5

Need of tactic know-how (art) – vs codified knowledge

(science)

7 7

Degree of customization 7 7

Supply market conditions

# of alternative suppliers 4 1

Demand fluctuation 2 2

Technogical uncertainty 2 2

The customer’s perspective

Role of the offering on the downstream market 7 7

Purchasing power 4 2

Degree of differentiation 6 5

Partnering Potential (average) 5.1 4.2 *1: high likelihood of transactional approach / 7: high likelihood of relational approach

Plotting the results in the “Partnering potential vs Reality” matrix:

We can observe that primary and secondary packaging are in very different positions:

Primary Packaging:

They are placed in the cluster “Pie expansion”, meaning they have a high potential of partnering

and their customers know that. They must strength the multiple-contact relationship they already

have with the luxury companies and keep making new proposals.

R

E

A

L

I

T

Y

Partnering Potential

Relational potential

over-estimated

(“Rose-colored

glasses”)

Primary Packaging

Secondary Packaging

Relational potential

under-estimated

(“Necessary

enlighten”)

“Pure market”

“Test the water”

“Pie expansion”

Fig.7: Partnering potential vs Reality

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An interesting fact here is that other primary packaging could be in the same position as perfumes.

This could also represent an opportunity for the wine & spirits and beauty industries, for example,

to develop different solutions and to have a different relationship with their customers.

Secondary Packaging:

The secondary packaging is currently in a situation where the relational approach potential is

under-estimated by their customers. We can see three important steps in this case:

1. Reassess the partnering potential grade obtained (4.2) and make sure this is not a case of

pure market. If this is pure market, there is low potential of partnering and it will be a cost-

based relationship. There is not much they can do.

2. If the reassessment confirms the under-estimated relational approach, the company will

have to show the customers the opportunities they are missing. This could be done by a

pilot project with a good customer, so they would have a successful case of new

relationship to support the following contracts.

3. If they succeed to match potential and reality, they would fall in the “Test the water”

position of the graph. In this position, it is important to invest on the aspects that indicated

high potential to a relational approach (the ones graded with 7 in the table) and try to move

to the same area as the primary packaging – “The pie expansion”. We believe there is a big

opportunity to better explore how the packaging suppliers can bring more value to their

customers if they are involved in the creation of the packaging and development of the end

customer experience in the retail.

It is important to say that moves 2 and 3 require significant amount of investment from the

packaging companies, both in terms of time and money.

Another important note concerns timepieces and jewelry. As already mentioned, they are in-

between the primary and secondary packaging and there is for sure a potential to develop a better

relationship with their customers and have a more interesting position in the market.

As Mr. Blanche indicates, the packaging plays a key role in the theater game of consumption of

luxury – they create emotion and they seduce the end customers. Definitely it makes sense for the

packaging companies to have a much more strategic role in this sense. On the other hand, it is

important to realize that creating the story telling is part of the core business of luxury companies

and they are very jealous about sharing this activity with others.

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3. Trends and Recommendations In this section, we start first by discussing the main trend impacting the packaging in the luxury

industry. Then, taking this trend as a starting point, we use an “ideal world” approach to change

the status quo for the packaging industry from products to services to solutions. And finally we

close on a couple of recommendations summarizing our team’s discussions.

3.1 Trends

First, as shared during our interview with M. Blanche, the main trend in the industry and the main

opportunity comes from the shift, in the past five to seven years, to the green and sustainable

aspects in the luxury industry.

We have researched some illustrations of such a trend, and found a long list of cases. Some of

them come to us from GUCCI (Kering Group):

“In June 2010 Gucci launched a completely new range of packaging, created by Frida Giannnini,

which is 100% recyclable. In all of our stores worldwide this packaging will offer a bold new

image of luxury that is sensitive to the environment and in keeping with the Gucci heritage of

quality and excellence.”

And from Stella McCartney (Kering Group):

“When Stella McCartney first went into business and chose to operate using sustainable

production, others might have thought she was strange, since the luxury industry has not

historically thought of its environmental impact. Choosing to operate an apparel and accessories

label without leather is an uncommon decision.”

But also from the Sustainable Luxury Working Group and from external reports such as the 2014

Greenpeace report (studying eight fashion and luxury brands: Dior, Dolce & Gabbana, Giorgio

Armani, Hermès, Louis Vuitton, Marc Jacobs, Trussardi and Versace.)

Fig.8: Gucci – “New packaging is 100% better for the world”

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The ecological and sustainable concern

Some of the top managers in the luxury industry are looking at packaging as an environmental

issue and this makes the industry sensitive to the new environmental policies. Moreover,

consumers are now more educated and some of them see packaging as a waste.

Work has started on building papers that are certified, on ways to introduce practices of reuse of

packaging. Mr. Blanche mentioned the example of Hong Kong government’s recent regulation,

whereby all shopping bags, which are not certified recyclable, must be paid (at a premium) by the

end customer.

Competitiveness criteria should be moving towards:

The Green aspect (Certified Origin of Materials, Sustainable forests)

Labor conditions at the suppliers

Recyclability becomes essential; less plastic as the packaging becomes non-recyclable

Mr. Blanche also shared an interesting example in the case of Cartier. The following can be found

at Richemont website: “For packaging activities, Cartier engaged a specialist firm to carry out

complete life cycle analyses for two of its iconic packaging products: the Cartier red bag and the

Cartier red gift boxes” The reasons behind such effort are the aforementioned environmental

concerns; Cartier wants a more ecological version of its products. However, when 100% recyclable

materials are used, it becomes an industrial and technical challenge to provide the exact same

emblematic texture and color (texture and color consistency issues).

3.2 From Product to Services to Solutions

Taking this trend as a starting point, we use an “ideal world” approach to challenge the status quo

and propose a move from products to services (and maybe to solutions).

First question to ask: how to turn the commoditization threat detailed in the previous sections into

an opportunity?

In a 2x2 matrix, there are three methods to break through to the other side of commoditization.

These three options are summarized in the following extract from the academic lectures:

Fig.9: Selling Services (B2B elective Lecture)

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In order to break the commoditization threat successfully, the product needs to evolve into a value-

added product, and this is done through product innovation on one side and through services on

the other side.

According to inputs from Mr. Blanche, the packaging makes up to 5% (depending on the product)

of the costs of the final product. So, how can we maximize this input and how can we increase the

perceived benefits of the customers’ customers?

One of the ideas came from the distribution channels. Traditionally the delivery is made to the

warehouse of the luxury company, but Mr. Blanche has started to notice that some of the major

North American suppliers are starting to deliver to the retail shops of high end customers.

And the question becomes: what other customer processes can be transformed into services? The

answer might be in transforming such processes into a full design consultancy or a green impact

consultancy.

From this discussion we realize that in this industry, the move to services is still at its early stages

(not to say absent). And this transforms the next step, solutions, into a dream that is hard to guess

with today’s inputs.

However, M. Blanche shared with us one success story in this direction. This case was done with

ST Dupont (probably for a Limited Edition). The supplier worked with different decision people

at ST Dupont to realize a packaging that had the same look and feel as the product inside. The

supplier took the risk of the design challenges and costs. The industrial challenge per se brought a

number of innovations to the product. The result was a marketing success, but, due to several other

reasons, the relationship did not evolve further into a more integrated buyer/seller relationship.

Coming back to our B2B Marketing approach, we know the mandatory five steps to implement a

services and a solution approach. We believe that most suppliers are stuck in the first and/or the

second step of the process:

Understanding customer processes

Targeting priority

customers

Managing salesforceevolution

Developing value

documenters

Industrializing service

operations

Fig.10: Maximizing the Input and the Perceived Benefits (B2B elective Lecture)

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3.3 Recommendations

And finally we close with a couple of recommendations summarizing our team’s discussions.

These recommendations are based on the previous analysis and on some open questions that we

tried to tackle.

How to use technological innovations to maximize the input?

The most important characteristics of luxury packaging are a result of the high quality material in

use. However, they are also a combination of nice finishes and innovative shapes.

Knowing that, in the luxury industry, putting a timepiece on the wrist was considered as a

technological innovation (Cartier’s Santos Dumont first pilot watch), one can imagine that,

combining the 21st century high tech know-how with the luxury brands will result in infinity of

possibilities.

For example, in order to increase the end customer satisfaction, and to provide him/her with a

personalized experience, we thought about the interactions with 3D Printing, and how the supplier

of packaging can become a service provider to his customer. This point is detailed in the next

questions.

How to give the packaging a second life?

One of the aspects where the packaging industry might re-invent itself, meet the environmental

challenges and re-introduce the sense of artisan-ship is through giving a second life to the

packaging.

The easiest examples come to us from the Wine industry. Wine bottles can be re-used as candles

as shown in the link, and people spend their time finding many other uses that a bottle of luxury

spirits might have, one of such examples is illustrated in the photo here below.

Fig.11: Second Life for Packaging

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Another example comes from Hermès, and more precisely Le Monde d’Hermès. The brand has

introduced an app that accompanies the magazine and allows the reader to re-use the covers and

make nice 3D origami. We can agree that it’s a short lived second life, but at least, it’s a start that

can generalize into more innovative ideas.

Finally, we are currently considering a more holistic approach whereby the various packaging

(boxes, bags, bottles etc) used by a brand can be returned to the luxury house and a craftsman

would transform the collection into an end customer product per se.

How can the secondary packaging increase the value of the luxury product?

The luxury product is already an overvalued product as the price is not correlated with the costs.

The value of the dream and the value of the experience are added to the costs (among other things).

However, let’s imagine the following scenario:

- The packaging supplier introduces an innovative design of the bag or the box

- The end customer adds his personalized touch on a specific set of items

- The delivery of the final package is done within 24hours to the point of sale where the end

customer wants to pick-up his/her luxury product

In such an imaginary scenario, we can see the added value that the supplier could bring to the

luxury brand.

The 4Ps Revisited

In aligning People from the industry with the Planet welfare and the stakeholders’ Profits, the

packaging in the luxury industry still has a role to play

- in increasing the end customer satisfaction by providing him/her with a personalized

experience,

- in increasing the brand’s value in the mind of the Generation Y through a sustainable and

ecological approach,

- and in increasing the size of the pie by re-inventing new ways for craftsmanship and

ingenious designs

So what?

Faced with such dilemmas and potential, the main challenges remain in terms of how to introduce

true solutions in packaging, regarding the recycling/green propositions and project management/

fee based contract services, to the luxury houses.

From our perspective, it will be key to implement this transformation from products to solutions

with the framework developed by Reinartz and Ulaga3, in which they suggest to take the time and

do a progressive transformation.

“Successful firms begin slowly, identifying and charging for simple services they already

perform and using those to build enthusiasm for adding more complex ones.” (Reinartz

and Ulaga, p.92)

3 How to sell services more profitably. Harvard Business Review. May 2008

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4. Conclusion According to the analysis, the packaging companies for the luxury industry should emphasize to

their customers about:

The packaging role in the end-customer experience when buying a luxury good (it is an

inevitable tool, but it can add real value and it is actually underestimated)

The environmental issues related to packaging (need of innovation not only in materials

but also in how the packaging can be reused / recycled)

Additionally, the packaging industry needs to look the situation from a macro perspective and

understand where are the pains of their customers that they can help address. There is a wide range

of potential investments that packaging companies could do in order to implement true solutions

in their offer, as direct delivery of packaging in the boutiques instead of the warehouse. Other

possibility could be an initiative to hire and train experienced professionals in marketing for luxury

houses, who will be in charge of working directly as consultants of luxury packaging. For all those

potential initiatives it will be key to industrialize the back office of the packaging company, which

includes to build flexible service platforms, to constantly monitor the cost of processes and to

exploit process innovations from new technologies.4

4 Reinartz and Ulaga. How to sell services more profitably. Harvard Business Review. May 2008. p.94

20

5. References

Interview with Mr. Eric Blanche Tuesday June 23, 2015 in Paris.

http://www.gucci.com/uk/worldofgucci/mosaic/think_and_act/the_environment

http://www.luxurydaily.com/sustainability-in-luxury-fashion-should-be-a-no-brainer-stella-

mccartney/

http://www.greenpeace.org/international/Global/international/publications/toxics/2014/A-

Fashionable-Lie.pdf

https://www.richemont.com/corporate-social-responsibility/case-studies.html#CaseStudy21

http://www.bsr.org/en/collaboration/groups/sustainable-luxury-working-group

http://www.lesraffineurs.com/du-temps-libre/8-bougies-rewined-cepage-des-vins.html

http://www.networx.com/article/ways-to-reuse-wine-bottles

http://www.hometalk.com/1748743/ideas-on-how-to-recycle-wine-bottles

http://www.luxurydaily.com/hermes-creates-origami-app-to-accompany-print-

magazine/?utm_referrer=https%3A%2F%2Fm.facebook.com&utm_referrer=direct%2Fnot%20p

rovided

http://www.cartier.com/collections/watches/mens-watches/santos-de-cartier.html

Reinartz and Ulaga. How to sell services more profitably. Harvard Business Review. May 2008