Consumer Packaged Goods Industry Research Articles

Final paper of What are the Beneficial Effects of Big Data on the Front-End Information and Efficiency, Performance of the Company in the CPG Industry

This research paper is to find out the benefits of data analysis on the front-end information and internal efficiency of the consumer-packaged goods (CPG) industry. Combining various scholarly types of sources, our research first figures out the steps before analyzing the data, then discusses the advantages of extensive data analysis on both external and internal performance of a CPG company, and finally points out some potential limitations to extensive data analysis on economic grounds.

One for all or all for one: Does the category captain play favourites

AbstractIn the consumer packaged goods industry, category captain is the company (e.g., Pepsi) that retailers (e.g., Kroger) designate as the leader of an entire product category (e.g., carbonated beverages) and collaborate with to manage the product category through the process of category management. Much uncertainty exists about the consequences of category management. We use a unique data set on the ready‐to‐eat cereals category in which the retailer designated a category captain. In this paper, we find that category captain does not have more to gain in terms of market shares than other products within the ready‐to‐eat cereals category, alleviating antitrust concerns related to category management. In addition, we find that category captain increases the market share of products that are more price competitive, not necessarily that of its own products, which points to a category captain focusing on growing the category's market as it is incentivized to do so.

Navigating the tides of an emerging global cannabis industry: the Aphria-Tilray merger decision

Theoretical basis The case builds upon the theoretical literature in strategy and decision-making under uncertain, complex and ambiguous situations inherent in nascent industries (Eggers and Moeen, 2019). It also bases its analysis of the central decision in the case, the merger between Aphria Inc. and Tilray, on the pertinent literature on mergers and acquisitions (DePamphilis, 2015). DePamphilis (2015). Mergers, acquisitions, and other restructuring activities: An integrated approach to process, tools, cases, and solutions. 8th ed. Academic press, San Diego, CA. Eggers and Moeen (2019). Entry Strategy for Nascent Industries: Introduction to a Virtual Special Issue. Strategic Management Journal. 42 (2), pp. 1–15. Learning outcomes Assessing/reassessing sources of competitive advantage and recognizing how changes in policy and technologies and globalization can change industry dynamics. Identifying the challenges that companies face when developing strategy in nascent and emerging industries and the related (sub)sectors. Analyzing a merger and deciding if it is warranted, financially and strategically. Applying industry analysis to understand dynamic forces impacting an industry, the attractiveness of an industry and how industry structures affect a company’s strategy. Case overview/synopsis The global cannabis industry emerged after Canada, selected states in the US and some other countries across the world started to legalize recreational and/or medical cannabis. Similar to any industry in its nascent stages, the industry structure was undefined, product definitions and categories were unclear and competitive landscape was evolving. It was key for decision makers such as Irwin Simon, the CEO of Aphria Inc., to devise a strategy that would enable the firm to navigate the tides of the nascent industry. Simon had a background in consumer packaged goods industry and was a proponent of gaining market power through industry consolidation moves such as mergers and acquisitions. In 2020, encounters with Tilray’s CEO presented Simon with a merger opportunity with potentials for complementarities and cost savings. The challenge for Simon was to convince the Aphria’s shareholders that the potential gains from this move outweighs its challenges. Complexity academic level Strategy courses (undergraduate and graduate level) • During a session on nascent industry analysis, to illustrate how companies decide whether to enter a market, how to grow and position themselves. • During a session on mergers and acquisitions, to illustrate how a company can use such strategies to gain market power and pursue consolidation. International business courses (undergraduate and graduate level) • During a session on navigating the tides of an industry that is in its nascent stage, both at the individual country level and at the global level. Cannabis industry courses (undergraduate level) • During a session on the national and global prospects of the industry from an investment, entrepreneurial or policy-making perspective. • During a session on mergers and industry consolidation strategies.

Marketing's and Operations' Roles in Product Recall Prevention: Antecedents and Consequences

This study centers on the roles of marketing and operations capabilities in preventing future recalls. However, prior literature identifies operations capability as critical for recall prevention, the current research highlights the equivalent importance of marketing capability. Furthermore, rather than limiting marketing's role to damage control efforts after a recall, this study identifies its potential for preventing future recall incidents. With research conducted in the consumer packaged goods industry, the authors determine that firms that improve their marketing and operations capabilities after a recall lower their likelihood of future recalls. A proposed motivation‐based model for post‐recall marketing and operations capability improvement predicts that recalling public firms, by default, do not invest in capability improvements. The test of the propositions, with a sample of 276 product recalls using joint estimation, reveals that stock market penalties for recalls, combined with analyst following and independent boards, push recalling firms to make capability improvements. However, well‐reputed firms and those whose competitors recently engaged in recalls push back against investors' demands.

Does increased water efficiency improve financial performance? The important role of operational efficiency

PurposeThe purpose of this study is to examine the relationships between changes in water efficiency, profit and risk for firms in the global Consumer Packaged Goods industry. This study also aims to consider the moderating effect of operational efficiency on those relationships.Design/methodology/approachUsing a sample of 155 firms with annual corporate social performance and financial performance data from Bloomberg for the years 2010–2019, this study employs first-differencing panel regression models to obtain our results.FindingsThis study finds strong evidence that operational efficiency moderates the relationships between water efficiency, profit and risk. For operationally efficient firms, increasing water efficiency increases profit and reduces risk. But for firms that are not operationally efficient, this study finds the opposite effects. These findings suggest a threshold level of operational efficiency that firms should achieve before they can reap financial benefits from increases in water efficiency.Originality/valueDespite the increasing importance of water efficiency as a measure of corporate social performance, its effects on financial performance are not well studied. The relationship between operational efficiency and water efficiency has also not been examined. This work provides empirical evidence to better understand these important relationships. The major implication for managers is that operational efficiency is a foundational capability that should be developed before focusing on efforts to improve water efficiency. For operationally efficient firms, improvements in water efficiency can be an important mechanism to increase profitability and reduce risk.

Supply chain design and analysis: An empirical research related Vietnam’s consumer packaged goods (CPG) industry

This paper intends to empirically establish the supply chain design dimensions that influence the ability of retailers in Vietnam’s consumer packaged goods (CPG) industry to perform effectively with resilience. It further examines the extent of supply chain design dimensions impacting the variance on resilience in this industry. The study surveyed managers and supervisors of major Vietnam supermarkets within the CPG industry and employed univariate and multivariate methods to analyze the data collected. The paper established that technology advancement, economic influence, environmental changes, desired supply chain outcomes, and transport networks are the supply chain design dimensions with the most impact on the capability of the retail industry to perform efficiently and effectively with resilience. Furthermore, the paper revealed that transport networks, as an integral part of retail industry, impact the most on the variance of resilience for product availability. The findings imply that, despite the susceptibility to external and internal disruptions, performance and operations with resilience resonate with proper investments in technology, the available capacity under turbulent economic behavior, and a transport network for better customer experience. The paper further acknowledges the disruptive environmental changes, desired supply chain outcomes, and the need for a supply chain design for resilience in the retail industry.

Consolidation on Aisle Five: Effects of Mergers in Consumer Packaged Goods

We study the effects of mergers in the consumer packaged goods industry, a sector that comprises approximately one-tenth of GDP in the United States. We match data on all recorded mergers between 2006 and 2017 with retail scanner data. In comparison to prior work, which focuses on case studies of large mergers, our approach allows us to estimate the effect of a typical merger. Most mergers we study are highly asymmetric (a large firm acquires a much smaller firm) and rarely challenged. By studying these mergers, we provide new evidence on the effects of mergers on prices, quantities, product availability, and exit. On average, mergers lead to a short-run price effect at the target of 1% and declines in total revenue of 7%. These average effects hide substantial heterogeneity across different groups of mergers. Our results highlight the importance of effects not captured in the canonical model, such as effects on consumer surplus through changes in product availability, and through inefficient firms' capital being repurposed by more productive acquirors.

Accounting for Product Impact in the Consumer-Packaged Foods Industry

We apply the product impact measurement framework of the Impact-Weighted Accounts Initiative (IWAI) in two competitor companies within the consumer-packaged goods industry. We design a methodology that allows us to calculate monetary impact estimates on customer health, access and affordability of products and recyclability, among other factors. Our results indicate substantial differences in the impact that competitors have through their products. These differences demonstrate how impact measures reflect business strategy choices and inform decision-making on industry-specific areas, including food reformulation and product placement.

The size-rank relationship for market shares of consumer packaged goods

ABSTRACT This study examines the relationship between market share and its rank for a comprehensive set of product categories and subcategories in the U.S consumer packaged goods industry. Based on prior research, we expect that the slope of the market share-rank relationship will be more consistent with the Zipf distribution at the higher levels of aggregation (category-level versus subcategory-level shares). Two alternative model formulations were examined: the size-rank power law and an exponential alternative used in prior research. Model parameters were estimated across categories (and subcategories) using random coefficients for both the slopes and intercepts. The overall slopes for both samples were significantly higher than −1, the slope consistent with the Zipf distribution. However, as expected, we also found that the slope associated with data from the higher level of aggregation (category level) is flatter than that from the lower level of aggregation (subcategory level). We discuss implications of these results for future research on the size-rank relationship.

Product performance implications of framing white space in advertising

Purpose The purpose of this paper is to investigate the impact of framing white space around a product image (e.g. silver polish) and its intended effect image (e.g. tarnish-free, shiny silverware) in an ad on the performance perceptions of the advertised product. Design/methodology/approach Four experimentally designed studies demonstrate a positive impact of framing the white space around the product and effect images. A total of 270 MTurk participants provided data for these studies through online surveys. Findings Findings across four different product categories reveal that when the white space surrounding the product and effect images in an ad is enclosed by a frame, consumers perceive product performance to be significantly higher than when there is no white space framing. This effect is mediated by enhanced perceived fit between the two images based on the white space framing. Research limitations/implications The current findings contribute to multiple marketing research streams including the use of white space and frames in visual promotions, as well as the literature on product performance, perceived fit, stylistic manipulations (such as the framing of white space in this case) and advertising communication. Practical implications The use of product and effect visuals in advertising to convey product performance is one of the most widely used tactics in the consumer packaged goods industry. Managers and creative directors can leverage the current findings to improve consumer product performance perceptions by using a simple, stylistic manipulation (which does not alter the core ad elements but only the production aspects) of framing the white space around the product and effect images in their product ads. Originality/value To date, there is only a small body of research examining the role of white space and visual frames on marketing-related outcomes. However, none of that looks at white space framing. The current work is the first to examine how localization of white space around the product and effect images improves consumer perceptions about the advertised product’s performance.

Leading With Vision and Values: An Interview With Richard Peddie, Former President and CEO of Maple Leaf Sports & Entertainment

Richard Peddie is the former president and CEO of Maple Leaf Sports & Entertainment (MLSE), the parent company of the Toronto Maple Leafs, Toronto Raptors, and Toronto Football Club, among other assets. In this interview, Peddie reflects on his career, which started in the consumer packaged goods industry and concluded with leading one of the most successful sport organizations in the world. While emphasizing the importance of leadership skills, he advocates meritocracy, and the application of vision and values and strategic planning to increase enterprise value. Sport management students, scholars, and practitioners can benefit from the experiences and insights that Peddie openly shares in this interview.

New product success in the consumer packaged goods industry: A shopper marketing approach

Marketing activities that influence shoppers along the various stages of their path-to-purchase are gaining attention from both manufacturers and retailers. Using a dataset with detailed information on 105 new products (NPs) launched in the U.K. by 44 leading brands and sold across 13 major retail banners, we provide strong support for the prominent role of both upper- and lower-funnel marketing actions that influence consumers before (upper) or during (lower) their shopping trip. We show which of these shopper-marketing instruments have the largest effect on NP performance at a retailer, and whether and how their effect is moderated by the retailer's store context. When it comes to NP success, the lifeblood of CPG companies, the lower-funnel marketing actions targeting shoppers directly at the point-of-purchase predominantly decide your fate. Thus, manufacturers should work ever harder to collaborate with retailers and push the store-specific shopper-marketing instruments in a favorable direction through information sharing and tailoring of their marketing program to individual retailers. Indeed, not all news is bleak for brand manufacturers. We identify five pieces of good news that brand manufacturers can use to their advantage.

Measuring the Lifetime Value of a Customer in the Consumer Packaged Goods Industry

In this study, the authors propose a flexible framework to assess customer lifetime value (CLV) in the consumer packaged goods (CPG) context. They address the substantive and modeling challenges that arise in this setting, namely, (1) multiple discreteness, (2) brand switching, and (3) budget-constrained consumption. Using a Bayesian estimation, the authors are also able to infer the consumer's latent budgetary constraint using only transaction information, thus enabling managers to understand the customer's budgetary constraint without having to survey or depend on aggregate measures of budget constraints. Using the proposed framework, CPG manufacturers can assess CLV at the focal brand level as well as at the category level, a departure from CLV literature, which has mostly been firm centric. The authors implement the proposed model on panel data in the carbonated beverages category and showcase the benefits of the proposed model over simpler heuristics and conventional CLV approaches. Finally, they conduct two policy simulations describing the role of the budget constraint on CLV, as well as the asymmetric effects of pricing in this setting, and develop managerial insights in this context.

The Importance of Trade Promotion Versus Advertising in the Consumer Packaged Goods industry*

This study investigates the effects of marketing expenditures on firm performance in the very active and competitive consumer packaged goods industry. Even though the marketing expenditures run into billions of dollars annually, the practices themselves are very debatable. Currently, empirical literature in this field is limited because direct data is not available to the public. This research advances the literature in important ways. Not only has it used the actual dollar value of marketing expenditures, but also it has divided the marketing spending into two categories, trade promotions as push strategy and advertising as pull strategy. This study also employs the quantile regression method, which is suitable in analyzing the heterogeneity in the consumer packaged goods industry. The results show that marketing expenditures, such as trade promotions and advertising, are positively related to net sales in the consumer packaged goods industry.

Open air markets: uniquenesses about African marketing channels

Purpose – The purpose of this paper is to offer a state of the art description of open air markets (OAM), a little-known phenomenon that is indispensable in Africa’s consumer packaged goods industry. Design/methodology/approach – A qualitative methodology comprising in-depth semi-structured interviews and direct observation was employed. Findings – Analysis of data from Nigeria, Africa’s largest economy and most populous country, reveals that channel members have roles that are different from that of their Western counterparts. For example, distributors often do not distribute and principals are expected to actively sell on behalf of their distributors to empty the latter’s warehouse. Also, while many end-users in developing countries expect credit sales and opportunity to bargain, extant literature does not include these demands in the formal list of service output demands. Another major finding is the surprising order underlying OAM. It is the bedrock of commercial activities: for most consumer packaged goods manufacturers, sales through OAM account for over 90 percent of revenue. Research limitations/implications – The focus on one industry and country limits the generalizability of the above findings. Practical implications – Africa is the next growth frontier. Tapping into this growth requires a deep understanding and appreciation of the important role played by its unique marketing channels. Originality/value – Given the dearth of documented knowledge about marketing channels in emerging markets, this study addresses an important gap. Its findings could inform theory development and encourage more research on marketing channels in developing countries.

Can Brand Equity Explain Excess Behavioral Loyalty?

Despite the well-known predictive power of Dirichlet model on customer loyalty, deviations of share of category requirement (SCR) predicted by Dirichlet model from actual SCR have been repeatedly reported. It has been shown that these deviations can be systematically explained by some factors such as brand’s market share, product positioning strategy, purchase volume and retail marketing mix strategies. Presuming that brand equity would be additional sources of these deviations, current study assesses the incremental predictive power of brand equity by using over 4,000 brand-level observations for the consumer packaged goods industry in the U.S. Our model estimations indicate that brands that exhibit higher brand equity enjoy excess loyalty, with the primary driver being volume premium, rather than price premium. Overall, our findings support the notion that idiosyncratic brand properties can explain excess behavioral loyalty, a notion that is in stark contrast with the Dirichlet view of the world: brand equity does not exist.

Can Brand Equity Explain Excess Behavioral Loyalty?

Despite the well-known predictive power of Dirichlet model on customer loyalty, deviations of share of category requirement (SCR) predicted by Dirichlet model from actual SCR have been repeatedly reported. It has been shown that these deviations can be systematically explained by some factors such as brand’s market share, product positioning strategy, purchase volume and retail marketing mix strategies. Presuming that brand equity would be additional sources of these deviations, current study assesses the incremental predictive power of brand equity by using over 4,000 brand-level observations for the consumer packaged goods industry in the U.S. Our model estimations indicate that brands that exhibit higher brand equity enjoy excess loyalty, with the primary driver being volume premium, rather than price premium. Overall, our findings support the notion that idiosyncratic brand properties can explain excess behavioral loyalty, a notion that is in stark contrast with the Dirichlet view of the world: brand equity does not exist.

Supply chain integration and innovation in a global environment: case studies of best business practices

The two companies showcased in supply chain integration include Mondolez International, which operates within the consumer packaged goods industry; and Braskem, a global company headquartered in Brazil and an industry leader in creating thermoplastic resins. Thermoplastic resin is a polymer that is a main ingredient in plastics. Both companies operate globally and both companies use their supply chain methods to attempt to gain a competitive advantage within their industry. We will take a look into the quality controls that are employed within their supply chains and look at different techniques that they use to uphold their quality standards. The methods that will be mentioned are through the use of Six Sigma Methodology and processes and lean manufacturing, which are both used by many Fortune 500 global companies. The impact of implementing a SCM program from a financial perspective was reviewed.

Wedded Bliss or Tainted Love? Stock Market Reactions to the Introduction of Cobranded Products

We examine whether cobranding—the practice of using two established brand names on the same product—increases the market value of parent firms. Using data from the consumer packaged goods industry, we document that the average stock market reaction to the announcement of cobranded new products is approximately +1.0%. We hypothesize that this reaction is significantly higher than it would have been if these same products were single branded, and we find evidence consistent with this hypothesis. We also examine the determinants of this stock market reaction. We find that the consistency between the two brand images, the innovativeness of the product, and the exclusivity of the cobranding relationship significantly increase the market reaction to cobranding announcements. Our findings provide important managerial guidelines for enhancing firm value through cobranding partnerships.

The Dichotomy between Marketing and Design

Purpose, value and impact of the paper: This research intends to articulate attitudes and ways of design employment between two disciplines: marketing (business) and design. The research investigates brand development in consumer packaged goods (CPG) which has been criticised for maintaining the status quo in brand development. Research question 1) What are the different attitudes to employing designerly approaches between marketing and design? 2) How can an organisation enhance the value of designerly approaches in a business context? Methodology This paper focuses on delineating the findings of semi-structured qualitative interviews with ten participants: five from CPG industry and five from design consultancies specialising in CPG brand development. This is series of interviews was analysed by a thematic analysis method using codes determined and arising from previous online-survey research and by analysing visual materials elicited during interviews. Main results In conclusion, both marketing and design acknowledge that design envisions opportunities for CPG to some degree, though the ways of exploiting design show differences in terms of collaboration and organisational endorsement. From the interview analysis, specifically, the application of designerly methods ? visualisation and prototyping ? is limited to the design team or designers. Moreover, regarding collaboration with consumers and other stakeholders, design (or designers) is deemed to take part in developing tangibles, and marketing (or marketers) has difficulty in integrating the diverse phases in CPG brand development Implications This paper will suggest the implied steps needed to bridge the gap between the two different disciplines in order to integrate designerly approaches into the organisation via collaborative ways of running projects.