An Evaluation of the Cost of Packaging and its Implications on the Profitability of a Manufacturing Organisation

 

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CHAPTER ONE

INTRODUCTION

• BACKGROUND OF THE STUDY

We live in a world of packaging our foods, our supplies and to a large extent our clothing. We use packaging in wide variety of forms, shapes and materials.

Packaging means all the activities in the product planning that involves designing and producing the container or wrapper for a product. The wrapper container is called the package. The exterior cover for a product packaging is often referred to as the silent salesman because it has the ability to persuade people to impulse buying. It calls for immediate attention to the product, stimulate demand and increase sales. It is often said that, packaging cost often exceed all other marketing tools that are used to move goods from the manufacturing to the consumers and also used to determine the price of goods and services.

It can be stressed also that, considering packaging as a marketing tool, emphasis is also given to vast and environment concerns that is involved in packaging. These acts were emphasized through cost analysis research conducted by Lemar and Dobler (1992) it has found out that while advertising only accounts for about two of the total cost, packaging materials were responsible for about twenty two percent in most manufacturing organizations.

In terms of environmental concerns, packaging makes up a third of the rubbish by weight, which we put in our dustbin.

The research project is aimed at evaluating the cost incurred in packaging and the effects, it has on the profitability of manufacturing organizations.

It further explains in details the benefit of packaging and its disadvantages on the society and the economy.

• STATEMENT OF THE PROBLEM

In recent years, packaging has been under almost constant barrage of criticisms of lack of attention devoted to packaging. Packaging has been accused of being misleading, expensive, littering and anticipating inflationary, offensive and even immoral.

No area in modern business that is so spread in its operation and so highly treated in writing as that of packaging. Existing literature is almost entirely confined to article and reprints of talks dealing largely with “how to do it” and “why it was successful”.

The major reason could be attributed to the tendency of classifying packaging as a production cost ad secondly, the practical functions which the pack performs, which tend to shied it from public scrutiny of the type directed at promotional expenditures whose practical virtues are less discernible.

At the moment, there is death of reliable information on packaging expenditure in manufacturing organizations in Nigeria. Most of the information related to packaging expenditure usually comes from foreign sources. In the light of this, the researcher attempts to undertake this study in order to find out the