Chapter 5

Value Creation in PSS Design

Through Product and Packaging
Innovation Processes

Annika Olsson1 and Andreas C. Larsson2

1
Division of Packaging Logistics, Lund University, 2Division of Functional Product
Development, Luleå University of Technology

Abstract Consumer packaging has become increasingly important as a value-

adding element, since packages shape the consumer's experience of the product
during use, as well as accelerating the purchase decision. From a Product/Service-
System (PSS) perspective, the strategic benefits of viewing packaging as a central
value carrier are evident. To consumers, the product and its packaging are often
perceived as closely integrated and consumers' initial impression of the quality
and value of a product is sometimes determined by their judgment of the package.
Therefore, the product, the package and its integrated benefits and features can be
regarded as one product/package/service system. However, product developers
tend to over-emphasize the value of the functional properties related to the 'core
product', overlooking the differentiating benefits that might come from the inte-
gration of product and packaging innovation processes. The move towards devel-
oping integrated product/service offerings, rather than traditional artefact based
products, implies that the role of packaging needs to be reconsidered in light of,
e.g., total life-cycle provisions and environmentally sustainable offerings. This
chapter reviews previous research on the integration between product and packag-
ing development, and highlights some important challenges and opportunities re-
lated to improved value creation in the product/service system paradigm.
Keywords Integrated product packaging, Packaging development, Service addi-
tion, Value creation, Product/package/service system, Value communication
94 A. Olsson and A.C. Larsson

5.1 Introduction

Consumer packaging is becoming increasingly important as a value-adding ele-

ment, since packages can shape the consumer’s experience with the product dur-
ing use, and have the potential to accelerate purchase decisions. In light of a prod-
uct/service system perspective, there are evident strategic benefits of viewing
packaging as a central value carrier throughout the life-cycle of the product or ser-
vice.
From a consumer perspective, the product and its packaging are often per-
ceived as closely integrated and the consumers’ initial impression of the quality
and value of a product is sometimes determined by their perception of the pack-
age. Packages are often called the “silent salesman”, addressing the role packaging
has when consumers purchase a product. In service literature, this moment is
called the first moment of truth (Löfgren 2005). Customer satisfaction, however,
does not only reflect the first moment of truth. The consumer experience with the
product/package use after purchase is equally or even more important for cus-
tomer satisfaction. This, the second moment of truth, when the consumer uses,
consumes and/or disposes the product and the package, is therefore as important to
understand at the development of user-oriented packaging systems, as the first
moment of truth. Therefore, the product, the package and its integrated benefits
and features in the entire consumption process from purchase to disposal, can be
regarded as one product/package/service system.

5.2 The Packaging System

According to the definition of the European Parliament and Council Directive

94/62/EC, packaging is defined as follows:
Packaging shall mean all products made of any materials of any nature to be used for the
containment, protection, handling, delivery and presentation of goods, from raw materials
to processed goods, from the producer to the user or the consumer. “Non-returnable”
items used for the same purposes shall also be considered to constitute packaging.

The product and its packaging need to be regarded as a system, since almost all
products have packages that bridge the product with the supply chain environ-
ment. The packaging system may be classified as primary packaging reflecting the
consumer package, and classified as secondary or tertiary packaging for the retail
and transport level (see Fig. 5.1). The classification reflects the levels of usage and
these definitions should be used together with the consideration of packaging as an
integrated system (Olsson et al. 2004).
An integrated product/packaging system adds value to consumers in, for exam-
ple, communication and usability aspects, but it also adds value to other actors in
the supply chain in terms of efficiency aspects in handling, distribution and trans-