Is Category Expansion a Realistic Long-Term Objective for Established Brands?

How often do established CPG categories expand following a period of stationarity? To what extent can the levers under manufacturer control bring about persistent growth in total category value? The authors explore these questions in order to test the commonly held assertion that brand leaders in established markets can grow sales by expanding total category demand. Findings from a study of US household panel data describing the purchasing of nearly 500 small and large categories by 60,000 households over a nine-year period are presented. The observations focus on the growth impact of three sales levers, category penetration, purchase volume per buyer, and price per volume paid, in various strategic windows ranging from one to nine years. The results demonstrate that category penetration increase is the most likely lever for category growth. The association between over-time revenue increase and growth in buying household numbers is far stronger than that between unit price increases or category usage. While this clearly indicates a promising strategic direction for brand management, results also carry a health warning: categories are relatively volatile in the short term, but highly stable over time, therefore while the direction is clear the path is very narrow indeed

Marketing research faces two challenges and a world of opportunity with long-term panel data

There have been frequent calls in the literature for a more comprehensive understanding of marketing impact on long-term firm performance (Dawes, Meyer-Waarden, & Driesener, 2015; Hanssens & Pauwels, 2016; Lodish & Mela, 2007; Webster & Lusch, 2013). Retail scanner data has been the principal source of empirical evidence in this strategic domain, but it cannot explain the behavioural shifts that underpin sales dynamics. Now that far larger extended household panels are available, there is, for the first time, a valuable behavioural lens with which to observe long-term brand and category buying. In this paper we outline theoretical and methodological challenges to this new type of panel research. The first concerns an approach to extending established marketing theory to long-run repeat buying; the second relates to the inherent constraints of long-term panels. We present a new research agenda to progress explanatory theories of long-run brand building and category growth in this new but largely untapped resource

A rising tide lifts all boats: the role of share and category changes in managing organic sales growth

The strategic objective of marketing activities is to drive business growth by promoting the firm’s products. Beyond merger and acquisition, organic growth can be targeted from two sources: Market Share Gain and Category Growth. Market share is often the focus for corporate objectives and used as a success measure. This research explores the relative impact of these two elements on firm growth across product category and addresses whether market share should be the main focus for all organisations. The study covers 39 consumer packaged goods’ categories from the UK and US, across 189 manufacturers over three to five years of data, post-2010. We show that firm growth through market share gain is likely to benefit small firms, and large firms’ growth is likely to be driven by category growth. The results provide empirical support in the area of business growth and how marketing plays a crucial role in this pursuit

Investigating Undercurrents of Stationarity and Growth With Long-Term Panel Data

There have been frequent calls in the literature for a more comprehensive understanding of marketing impact on long-term firm performance. Retail scanner data has been the principal source of empirical evidence in this strategic domain, but it cannot explain the behavioural shifts that underpin the sales dynamics it reports. With the availability of far larger and extended household panels, it is now possible to observe the effects of accumulating penetration on brand and category buying over many years. This type of data nevertheless presents theoretical and methodological challenges to researchers. In this article, we discuss an approach to extending established marketing theory to long-run repeat buying and then outline the inherent constraints of long-term panels. We illustrate these challenges using one-, five- and 10-year panel datasets and present a research agenda to progress explanatory theories of long-run brand building and category growth in this new but so far mostly untapped resource

How markets grow. The factors associated with category expansion.

We advance knowledge of category growth in developed markets, identifying the factors under manufacturer control that are consistently associated with change in category sales level. The analysis is based on scanner data from four developed markets, 20 packaged goods categories, over 6-8 years. We find that of all factors, change in price per volume has the strongest association with change in category sales, followed by change in the number of SKUs. The intensity of price promotions in the category has no relationship with category sales increase. Category maturity, in terms of relative quarterly penetration, is an important defining condition; below 50%, category sales grow through volume increases. Above that threshold, growth is driven by increases in price, but we find that introducing new SKUs is a common method for manufacturers to increase price per unit at maturity. Brand premiumisation therefore holds the key to growth in equilibrium markets