Glossary
Our CPG glossary offers clear and concise definitions of essential industry terms. Perfect for newcomers and professionals alike to quickly understand the Consumer Packaged Goods landscape.
A
Advertising Allowance
Also referred to as marketing co-op allowance or promotional allowance, it is the dollar amount that
All Commodity Volume (ACV)
Total sales of a store without breaking down the products sold into different categories. It is
Assortment
The variety of products that a retailer offers for sale to meet the diverse preferences and
Average Items Carried (AIC)
Average number of items that a retailer has within a category, brand or segment.
Average Items Selling (AIS)
Average number of items that a retailer sells within a category, brand or segment.
Average Order Value (AOV)
An e-commerce metric that is calculated by dividing the total value of all orders over a
Average Price
Weighted average of actual price and promoted price for an item. It does not take into
Average Selling Price (ASP)
The price at which a product is usually sold. It is calculated for the product across
B
Base Price
Also referred to as non-promoted price, it is the average price of an item across all
Baseline Sales
Amount of organic sales for a product in a marketplace without any marketing effort.
Basket Size
The amount that a customer spends in a retail store in single transaction.
Blocking
Also called facing, zoning or fronting, a retail merchandizing concept where all products of the same
Brand Affinity
It is the level of positive association and emotional connection that consumers have with a particular
Brand Assessment
Evaluates a brand’s strengths, weaknessess and opportunities for brand development and repositioning.
Brand Development Index (BDI)
The index shows the level of brand’s performance within a specific market.
Brand Identity
Includes the visual elements of a brand such as the logo, design, color that helps the
Brand Loyalty
Refers to a consumer’s consistent preference for purchasing the same brand over competing ones, driven by
Brand positioning
Refers to the unique offering or key differentiations of the brand’s products for its customers.
Brand Refresh
When a brand improvises its existing image and communications while maintaining its core identity.
Bulk Stacking
Optimal way to story inventory in a vertical manner when there is large quantities or excess
Buy One Get One (BOGO)
A promotional offer that brands run both online and offline where a customer one item free
Buying Rate
It is the average quantity or value of a product purchased by a single household within
C
Category Buyer
The person is responsible for assisting the procurement manager and category team in implementing procurement and
Category Development Index (CDI)
The index shows the level of brand’s performance for a category within a specific market.
Category management
Involves grouping products into suitable categories and managing category performance. This involves inputs from both brand
Category Manager
The person is responsible for overseeing a specific category of products of a brand. They develop
Club
Also called a warehouse club, it is a membership-based retail outlet offering a wide selection of
Competitive Retailer Marketing Area (CRMA)
Refers to a specific geographic region in which a retailer operates, focusing on the presence and
Consumer Decision Tree (CDT)
A visual representation of products groups and segments, and the specific questions a shopper is asking
Consumer Packaged Goods (CPG)
Also referred to as Fast Moving Consumer Goods (FMCG), these products are sold quickly at relatively
Consumer Promotion
Also known as sales promotion, is a temporary marketing strategy aimed at boosting brand awareness and
Convenience
A small-format retail outlet that offers a limited selection of basic and immediate consumption items, such
Cost of Goods Sold (COGS)
Also referred to as cost per unit or cost of sales, it involves the direct expenses
Coupon
A document or digital code that grants the holder a discount or rebate on a purchase.
CPG manufacturing
In the Consumer Packaged Goods industry, the term “CPG company” typically denotes manufacturers within the sector.
Cross Merchandising
Also known as secondary product placement, it is a retail strategy that places complementary products together
Customer Loyalty
Emerges when customers consistently favor a brand over its competitors, leading to repeat purchases and a
D
Distributors’ Brand
A private label brand of a retailer.
Dollar
Refers to a retail outlet that specializes in selling a wide range of general merchandise and
Dollar Sales
Measures the total revenue generated from products sold at retail, calculated by multiplying the number of
E
Equivalized Unit Sales (EQ Sales)
Refers to the physical volume of product sold at retail, standardized into a common unit relevant
Everyday Low Price (EDLP)
A retail pricing strategy offering customers consistently low prices on products without requiring coupons, waiting for
Excess Inventory
Also referred to as surplus inventory, denotes the surplus stock held by a company beyond what
F
Field Marketing Representative
A professional responsible for actively promoting and increasing brand awareness by engaging in direct, face-to-face interactions
Forecast Accuracy
Forecast accuracy refers to the degree to which a forecast aligns with actual sales data, indicating
Forward Buying
Refers to the purchase of goods in quantities greater than immediately needed, with the intent to
Frequent Buyer Program
A customer loyalty scheme designed to incentivize repeat purchases by offering rewards based on the accumulation
G
Generic Brand
A consumer product without a widely recognized name or logo, often lacking extensive advertising compared to
Grocery
A retail establishment primarily focused on selling a broad assortment of food products, encompassing items such
Gross Margin
The difference between the revenue generated from sales and the cost of goods sold, expressed as
H
Heavy Buyers
Consumers who consistently spend significantly more than average within a specific product category, making them a
High-Low Pricing
A strategy where a company sets an initial high price for a product and later reduces
Horizontal Merchandizing
A retail display technique where products are arranged in a left-to-right manner along a horizontal plane.
Hyper Market
A large retail store that integrates both a department store and a grocery supermarket within a
I
Incremental Revenue
Represents the additional profit generated by a business as a result of increased sales volume. It
Incremental Sales
Refers to the additional units of a product sold to retailers or consumers directly attributed to
Inventory Holding Costs
Refers to the expenses incurred by a business for storing inventory over a certain period. This
Inventory Turnover Ratio
A financial metric that measures the rate at which a company sells and replaces its stock
J
Just in time inventory
An inventory management that is focused on optimizing inventory levels by receiving raw materials and components
K
Kitting
A logistical technique involving the assembly and packaging of various related items together as a single
L
Lifestage
Refers to one of the distinct phases within a retail business’s lifecycle, encompassing its birth, growth,
Loyalty program
A initiative by a company to incentivize repeat purchases and customer loyalty by offering rewards, discounts,
M
Manufacturer’s Suggested Retail Price (MSRP)
Often refered to as the list price or sticker price, it is the price recommended by
Markdown Pricing
A pricing strategy where retailers lower the prices of products to boost sales and manage inventory
Market Basket Analysis
A data mining tool used to identify patterns of items frequently purchased together by analyzing transaction
Market Share
Represents the portion of an industry’s total sales that is accounted for by a specific company
Mass Merchandizer
Also refered to as mass market retailer, it is a retail business that sells a wide
Merchandising
It includes the comprehensive strategies and practices retailers employ to promote and sell products to customers
Minimum Advertised Price (MAP)
A policy set by manufacturers dictating the lowest price at which retailers are allowed to advertise
N
O
On-Shelf Availability (OSA)
Refers to the presence of products in their designated location within a store, ensuring they are
Out of stock (OOS)
A situation occurs when a product that is supposed to be available for sale is completely
P
Purchase Frequency (PF)
Refers to the rate at which customers make purchases within a specific timeframe. It offers businesses
Product Detail Page (PDP)
A product detail page is a web page on an eCommerce website that provides information regarding
Product Listings
A product listing is an item’s entry in the broader catalog of an eCommerce website, designed
Promotion Effectiveness
Refers to the degree to which a promotional marketing campaign successfully achieves its intended objectives, such
Product Attributes
A descriptive facet of a product that helps to specify, classify, and differentiate it within a
Prestige Pricing
A pricing strategy where products are priced at a premium to signal superior quality and status,
Product Variants
A specific version of a ‘master’ product that is differentiated by one or more attributes, such
Q
R
Repeat Purchase Rate (RPR)
Also referred to as Repeat Customer Rate, it is a metric that measures the percentage of
Return on Investment (ROI)
Refers to the financial return generated from online business activities relative to the cost invested in
S
T
U
Unplanned Out-of-Stocks
Instances where a product is unexpectedly unavailable for purchase, often resulting in lost sales and dissatisfied
V
Velocity Analysis
A method of analyzing sales data to identify products with high sales velocity. Velocity analysis helps
Vertical Merchandizing
A retail display technique where products are arranged in a straight line from top to bottom,
W
Warehouse Management System (WMS)
Software designed to manage and optimize warehouse operations, including receiving, storing, picking, and shipping inventory. WMS
X
Y
Yield Management
A pricing strategy used to maximize revenue by varying prices based on demand and inventory levels.
Z
Zero-Based Budgeting (ZBB)
A budgeting approach where all expenses must be justified for each new budget period, rather than