Design: An Underleveraged Business Tool
by Jaye Donaldson
Reprinted from the
Hartford Business Journal
Jaye Donaldson, President, The Donaldson Group
In the lean, mean new millenium, as products proliferate, new competitors emerge and consumers tighten their belts, most smart companies remain ever vigilant regarding new ways to cut costs, improve sales and increase their overall profitability. Surprisingly, however, even in such economic tough times, many companies overlook a cost-effective and relatively obvious business tool that can help improve their competitive edge. That business tool is design. Interestingly, according to management consultant and marketing guru Tom Peters, in today's marketplace, design may be "the one thing that differentiates parity products and services." Of course, some of today's leading companies recognized years ago the impact design had on their bottom line. Take Apple Computers, for example. Apple's corporate icon, an upbeat multi-colored rendition of the fruit, makes the company's advertising, packaging and products instantly identifiable and very consumer friendly. As a result, it sets Apple's products apart and helps keep Macs at the top of the best-selling product list.
Many well-known companies also recognized several decades ago that their corporate identity and the identities of their products and services could generate a high level of customer awareness that would help drive sales. For instance, Federal Express's use of high-impact design to promote an innovative service helped rapidly position it as the nation's preeminent mail courier. Today, FedEx's bright white trucks, with the company's name emblazoned in huge purple and orange letters, are hard to miss, whether they're meandering along a quiet country road or zipping down a crowded city street. Wherever you spot them, they convey the sense of a company that is fast, dependable and efficient. Procter and Gamble is yet another example of a corporation whose balance sheet has benefited from an understanding of how to leverage design. For over thirty years, P and G has used high-impact packaging and merchandising systems to encourage consumers to select their products.
Annual Reports Seen As Single Most Important Strategic Communications Tool
Smart companies also know how to leverage the design of their annual report in order to clearly differentiate themselves from the competition. Interestingly, a recent survey by Yankelovich Partners revealed corporate executives overwhelmingly view annual reports as a corporation's single most important strategic communications vehicle. An annual report is the cornerstone of a company's image to its customers, shareholders, industry analysts and the general public. The star role annual reports play in a corporation's communications strategy is illustrated by the fact that over a third of corporate CEO's and Presidents are actively involved in the evolution of their company's annual report. Companies like Time Warner and Disney do an outstanding job of using their annual reports to reinforce their positions as leaders in their respective industries.
An annual report's text and graphic imagery should visually paint a picture of a company and its personality, which can range from a powerful Fortune 500 player to a community-oriented local service business. Over the past several years, our package design and communications firm has designed annual reports for companies that span the business spectrum. Each report has its own distinctive look tailored to convey a particular company's personality and corporate message. And every one of them is custom designed to appeal to the company's primary audiences. For example, the annual reports we designed for Pitney Bowes Financial Services, Loctite Corporation and Shawmut Bank all convey a strong sense of each company's vision for the future. But because they are positioned to appeal to different audiences, they visually communicate a similar message in very distinct ways.
For example, P.B.F.S., a wholly owned subsidiary of Pitney Bowes, Inc., isn't required by the Securities and Exchange Commission to issue an annual financial statement. Consequently, the company uses its annual report as its lead marketing piece and uses vibrant colors, oversize type and bold photography to appeal to customers and prospects. In sharp contrast, the annual reports of Shawmut Bank and Loctite have the kind of strong, stately and sophisticated images appropriate for large corporations whose primary audiences are financially-oriented share holders and investors. In sharp contrast, the Bank of New Haven's annual report visually positions this financial institution as a geographic niche player dedicated to personalized service and the local community. The whimsical illustration of downtown New Haven on this publication's cover clearly differentiates the Bank of New Haven from its competitors, which range from "mega" banks to smaller regional players.
Design Can Contribute To A Company's Balance Sheet In More Direct Ways, Too
These are some of the more visible ways design can positively contribute to a company's balance sheet. But there are less obvious ways, too. Unexpected methods to cut production and inventory costs frequently emerge during a design program's first phase. For example, when Phillips Lock, Mexico's largest lock manufacturer, wanted to update its corporate identity and product packaging, an audit of their extensive packaging inventory revealed they needed to streamline their packaging stockpile to reduce high production costs. The company subsequently responded to our recommendations by reducing over 400 different package shapes and sizes to under a 100 standard formats that were far less expensive to produce.
After such structural packaging issues were resolved, the products' packaging was redesigned and given a high quality, branded look. To clearly differentiate each product, the packaging also was color coded and product descriptions were added. Today, the new packaging and corporate identity clearly set Phillips Lock and its products apart from the competition.
The marketing communications program we handled for Aetna demonstrates how a design program can cut costs while upgrading a company image. By enabling Aetna to slash in half the number of communications pieces it uses to promote its 401 K program in its offices across the country, we helped the company save hundreds of thousands of dollars in unnecessary printing and production costs.
We also partnered with Aetna to eliminate unnecessary materials and capitalize on those that were more effective from a communications perspective. Costly custom paper sizes were replaced with standard sizes that were much less expensive to produce. Additional money was saved via a production-value hierarchy that budgeted more money to the four-color printing of high-visibility materials like posters, and less money to the one- and two-color printing of everyday sales literature and technical background materials.
After cutting unnecessary costs from the printing and production budget, a high-impact communications system was implemented, which vastly improved the materials marketing impact and appeal. The net result: the promotion materials for Aetna's 401 K program are now far more effective and far less expensive to produce.
Research Guide To Cost Cutting, Sharpening Competitive Edge
In the case of Stanley Hardware, the company was able to cut its costs while sharpening its visual image. We began by conducting an audit of a cross section of retail outlets, where we solicited input from store owners and sales representatives regarding the drawbacks of Stanley's retail merchandising display system as well as any potential marketing opportunities. Addressing the concerns of these two groups was essential because Stanley's primary customers are dealers. The audit revealed Stanley had an overly complicated merchandising system that didn't facilitate product selection because it was visually cluttered and confusing to consumers. It also showed that the merchandising system was a real headache for retailers to assemble and wasn't flexible enough to meet many of their needs.
After evaluating such findings, in partnership with Stanley we created a display system comprised of fewer parts that worked more efficiently. A production strategy and budgetary guidelines also were developed to ensure Stanley would get the most out of its production and printing budget.
All the display system's heavy components, including the wire used to fasten its many parts together and the composition board used to construct product bins, subsequently were replaced with light weight, state of the art materials. To reduce high production and shipping costs, the number of "header" cards, which identified every single product as well as individual product categories, were cut in half. The heavy usage of costly four-color photography also was reduced. Sales messages like, "Lock it Right," were added to the headers designating product categories, which now function as product billboards that draw consumers into individual product areas and stimulate impulse purchases
Today, the "Uni Rack Plus" merchandising display system promotes the image of Stanley Hardware's enduring quality with high-impact graphics that increase the products' visibility and facilitate product selection by consumers. The new merchandising system is far less expensive to produce and ship, and takes less time to assemble. Equally important, it has the kinds of flexible features that have helped the company's sales representatives sell Stanley Hardware to many new accounts. In addition to increasing the sales volume of the company's existing retail "real estate", the merchandising system has enabled Stanley to penetrate new markets. Perhaps most impressive, during the first year Stanley's "Uni Rack Plus" was available, it completely sold out.
Getting The Most Bang Out Of Your Marketing Budget
These are just some of the ways design can help companies cut costs and use their marketing budgets more efficiently. In economic tough times like these, it makes sense for companies to continually review whether they're getting the most bang from their marketing budget. An audit of their packaging, merchandising displays and communications materials frequently can help identify budgetary black holes as well as areas of marketing opportunity.
In today's marketplace where the consumer is king in an exponentially expanding universe of products and services, it's advisable for companies to regularly evaluate how effectively they're communicating with their audiences, via their corporate identity, consumer product packaging and marketing communications materials. In a highly competitive sales environment filled with what many consumers perceive to be parity products and services, design is a cost-effective and under-leveraged tool companies can use to improve their competitive edge.
