A Price Point Pack (PPP) is essentially a retail package that is targeted at being sold for a specific retail price as against being designed to contain a standard weight or volume of product or a given number of product units.
There are a number of reasons why a PPP is used. The more important of these are as follows:
– The pack is designed to sell a small portion or a single-use portion of the product at an affordable price.
– The pack is meant for convenience and easy disposal as a single-dose application for “on-the-go”, travel or one-time use situations.
– It is especially useful for selling expensive products to less affluent buyers who cannot afford a large financial outlay at one go.
– It is used extensively in situations where a specific retail price is perceived by potential buyers as a “reasonable” outlay and/or constitutes a psychological price barrier. If costs go up, product quantity is reduced but the pack still sells for the same price.
– It is used to sell products at prices that are round figures and can be paid for in standard currency units without the inconvenience of transacting and carrying small change. For example, in India — where the PPP is widely used — getting and disposing currency units less than one rupee is a nuisance; indeed, shopkeepers in many places will not even accept change less than one rupee.
The PPP has been a resounding success in many developing and underdeveloped countries because most people have limited disposable incomes and cannot afford to pay large sums of money for larger and relatively expensive SKU’s. Even though they actually end up paying much higher prices per unit quantity of product than they would while purchasing larger SKU’s, they do so quite happily because their prime consideration is the amount of money they have to fork out at one time.
The PPP is primarily an Indian packaging concept that has had outstanding success not only in selling products but in creating whole new market segments of incredible size that would otherwise not even have come into being. Today, in some product markets like Shampoo, the PPP sachet accounts for something like 65% – 70% of total sales; with some manufacturers like CavinKare (manufacturers of CHIK, NYLE and MEERA) it is reportedly as much as 75%. For many years, the high prices of shampoo were a serious barrier to their market penetration and usage but the introduction of the PPP format triggered explosive growth by bringing into the consumer net hordes of people who could otherwise not afford the product. This pricing and packaging concept has now been expanded to include a wide variety of other comparatively “expensive” FMCG products like chocolates, confectionery, instant coffee, creamers, OTC medicines, detergents, soft drink mixes, biscuits, mouth fresheners, sauces, ketchup and even toothpaste. The PPP has also created several new market segments purely for it’s convenience and “on-the-go” utility.
Paisa Pack 60 years ago
Interestingly, the first PPP ever introduced was some 60 years ago! Brooke Bond and then Lipton, the leading tea companies in India launched what was called the “Paisa Pack” which was a paper envelope that contained tea worth one paisa (then 1/64th of the Indian Rupee) which could make 1 or 2 cups of the beverage. It was meant to meet the requirements of casual daily-wage workers who earned something like a rupee or less a day and needed to buy small affordable quantities of provisions from their daily earnings to feed themselves and their families. (The tea companies themselves employed large numbers of such casual daily-wage workers). Not only was it eminently successful, it went on to become the world’s largest-selling retail pack in terms of numbers sold. However, other FMCG companies did not really latch on to the immense potential of the PPP until the spectacular success of the Pan Masala and Gutka/Zarda PPP’s in the late 1980’s in India.
The Pan Masala PPP could possibly be described as one of the most unique and successful packaging concepts ever developed. It was pioneered by an Indian packaging company called Flex Industries. Indians chew a lot of betel leaf preparations which include flavourants and additives called Pan Masala (a non-tobacco product) and Gutka or Zarda (products based on chewing tobacco). Pan Masala and Gutka were also used by themselves as mouth fresheners and as confectionery. These used to be conventionally packed in tinplate cans and they were very expensive products. Each 250 gms. can of Pan Masala typically cost Rs. 50, which was a large sum of money to pay out at one time.
Flex developed a small sachet containing 5 gms. of Pan Masala priced at Rs. 2 per pack. The sachet was made from a 6 colour reverse gravure-printed 12 micron BOPET film/adhesive/12 micron metallised BOPET film/coextruded HDPE-LDPE film laminate (this was later changed to an 8 colour printed BOPET/metallised BOPP film/coex PE film laminate for better moisture barrier and counterfeit protection).
Although the cost per gm. of Pan Masala in the sachet worked out to twice that of the can, it was a resounding success. The consumption of Pan Masala and Gutka spiralled upwards at an exponential rate and created new markets worth billions of rupees. Flex also developed an inexpensive packaging machine that could turn out these sachets and this led to the development of a market for an enormous number of machines and several thousand metric tonnes of top-of-the line flexible laminates per annum. Flex then extended the concept to liquid Shampoo packaging with the development of a suitable laminate and machine system that led to the launch of sachets priced at one and two rupees each. (More recently, even a 0.50p sachet has been launched). This sachet packed enough shampoo for a single application and was highly affordable.
Today, the PPP concept is used in India to package and sell many products (some of these are listed above). The concept has also been widely adopted in many other developing and underdeveloped countries where consumers have limited disposable incomes. World leaders in Shampoos like Procter & Gamble and Unilever now market sachets extensively even in highly developed countries.
Apart from making available cheap and viable portions of expensive products, the PPP has also been used for an interesting marketing exercise. In the mid-1960’s, it was used by Colgate-Palmolive in the Philippines to get more people to use toothpaste. In those days, only some 25% of people there used toothpaste on a regular daily basis because it was expensive. Colgate launched a small sachet of toothpaste at a subsidised price to get people to try out the product, appreciate its benefits and develop the habit of using it regularly. The only objective was to extend the use of toothpaste to a much larger percentage of the population and, in this, it was a great success. They found that people even bought and used it only once or twice a week to start with. A portion of toothpaste was consumed and the aluminium foil laminate used in the pouch was capable of being folded over so that the remaining product could be used after a few days without drying up because of the excellent dead-fold properties of the foil (this was before the appearance of sachets with spouts and closures). This same pack was later tried out by Colgate in test markets in India as well where, again, only some 25% of people used toothpaste regularly at that time but it did not make as much of an impact.
The PPP is a unique packaging and marketing innovation that went totally against conventional wisdom (which dictated that packaging should actually move to SKU’s containing larger quantities of product if packaging costs per unit weight or volume of product needed to be brought down). India can be justifiably proud of being the pioneer in taking a radically different approach and coming up with an immensely successful and path-breaking concept.