Consumer packaged goods (CPG) industries form a large sector of the domestic U.S. economy. Surprisingly, the national brands in these industries have market shares and quality perceptions that vary substantially across local U.S. geographic markets even when the brands have very similar product characteristics.
Although central to understanding competition in CPG industries and the conduct of manufacturers, the underpinnings of this phenomenon have not been studied in depth before. This research program contains three related studies aimed at studying the origins and stability of geographic variation in the performance of national CPG brands. This is done through a combination of descriptive and structural econometric modeling approaches using sales, price, and marketing data from supermarkets collected across 50 major U.S. cities. The program will provide measures of the effects of local branding on national competition.
The work will have implications beyond the immediate question of what accounts for the variation. For regulators, the local data suggest different degrees of monopoly power by manufacturers than suggested by national data. Also, a better understanding of "local branding" in CPG industries should help advance study of such processes in other industries also. Finally, the project will yield a resource for other researchers in the form of data-processing scripts to aggregate an extensive CPG database that will soon be widely available.
