Must-Know CPG definitions and Jargon: The Ultimate Guide

The Consumer Packaged Goods (CPG) industry is one of the largest sectors in North America. Valued at approximately $2 trillion dollars, it covers a massive array of products and working practices.

Most of the items you’ll see in grocery stores and wholesalers are consumer packaged goods. From food and beverages, to fashion, makeup, cleaning products and tobacco — there are many sectors and categories involved.

As will come as no surprise, competition for shelf space is fierce. The industry is constantly adapting and investing to match market conditions and consumer behaviors. A vast array of sector-specific jargon has consequently grown-up.

To help you navigate this fast-moving industry, we’ve created the ultimate guide to CPG jargon. Read on to discover definitions of all the CPG business terms you’ll ever need…

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A

Absolute Change (Abs Chg): The process of assessing the change to a number of variables across financial years.

Absolute Discount: The monetary difference between a product’s regular sale price and the lower promotional price.

Absolute-Minimum Pricing: The absolute lowest price a product can be sold for.

Advertising Allowance: The amount of money a manufacturer pays a retailer to advertise and promote a product or brand.

All Commodity Volume (ACV): A method of approximating a store’s size. Stores are rated on their total sales volume (i.e. the monetary worth of an entire store’s sales across all products).

All Commodity Volume Distribution Percentage (% ACV Distribution): A percentage gauging the extent of the distribution of a particular product or brand across stores.

All Commodity Volume Merchandising Percentage (% ACV Merchandising): A percentage measuring the extent of merchandising support for products or brands across stores.

All Outlet Combined (AOC): The total market for a product (or brand / product category), across all outlets including retail, direct and e-commerce.

Any Promotion: Also referred to as “any merchandising” — stores that allow various forms of promotion and merchandising. This could include (for instance) Display Only, Feature and Display, or Price Reduction Only.

Approved Product List (APL): The term for the inventory of products authorized by retailers.

Attribute: Also known as “product attributes” or “characteristics” – the unique aspects that set one product apart from the competition. Attributes include various features such as appearance, packaging, size, branding, color etc.

Authorized Item: Similar to an “approved product list” – a product that’s been approved by a retailer for merchandising and selling.

Average Items Carried (AIC): The average number of items a particular retailer stocks. It can be segmented by category, sector, brands etc. Alongside Average Items Selling, it helps measure Total Distribution Points.

Average Items Selling (AIS): The average number of items (often segmented by category or brand) a retailer actually sells. Alongside Average Items Carried, it helps measure Total Distribution Points.

Average Retail Price (ARP): The average amount spent by consumers on a single unit of a particular product. This is measured across all stores in a particular market.

A red barn door with the letter 'B' above it

B

Back Stock: The number of products available to restock in-store displays.

Backorder: When a product is currently out of stock but is being reordered.

Balanced Features: A merchandising term, when short-profit and long-profit products are presented together as a combination sale.

Banner: Either – the overall operating name of a retailer (i.e. the name that consumers would know a store by, such as Walmart), or – a form of in-store advertising to highlight particular brands or products.

Bar Code: A machine-readable code in the form of numbers and parallel lines printed on a product’s packaging. Primarily used for stock control, it contains a product’s Universal Product Code (UPC) and other identifying information.

Base Price: The basic cost of a product (usually calculated by dividing the overall cost by unit volume).

Base Sales: The amount of a product that’s sold (or projected to have sold) without any promotions.

Base Weighted Weeks (BWW): A measure of the quantity of promotional support a product has received. Unlike Cume Weighted Weeks, BWW reflects the relative significance of individual retail stores for sales of a product.

Basket Size: The amount spent by customers (often cross multiple products) in a single transaction.

Benchmark: A specified standard that any promotional or sales activity can be calculated against.

Bill Back: When a manufacturer is billed by a retailer or distributor after a promotion or performance (such as shipping) occurs.

Bin: A retailer that stores and sells loose or bulk products.

Brand Block: A promotional tactic used by retailers. All of a brand’s products are displayed in the same shelf location – creating a strong visual impact.

Brand Equity: A brand’s value determined by customer attitudes towards it.

Brand Manager: An individual with responsibility for managing overall marketing and communications for a specific brand.

Buy One Get One Free (BOGO): A promotion allowing consumers to buy one product and receive another (usually the cheaper item) free of charge.

Buy Online, Pick Up In-Store (BOPIS): Also “Click and Collect” or “Order and Pick-Up” – an e-commerce term where the customer will collect the item in-store, as opposed to getting it delivered.

Buying Committee: A professional group that assesses and manages promotions and the purchase of new products.

Buying Habits: A term describing consumers’ spending behaviors and preferences.

Buying Rate: Also known as “Item Sales per Item Buyer” or “Sales per Buyer” – a measurement (which can be in dollars, units or volume) of the average amount of a product purchased by an individual buyer or household over one year.

A bright green wall showing the letter 'C'

C

Cannibalization: When sales of one product are reduced as a consequence of increasing sales of another.

Case Code: The distinct machine-readable numerical code displayed on a product’s casing and pallets. Sometimes also known as a “Universal Product Code”.

Case Stack: A display technique used by retailers. Cases are stacked on top of each other, with consumers able to take products from the top cases.

Case Stack Deal: A promotional deal for retailers, enabling them to buy multiple cases of a single product.

Category Analysis: An evaluation of a particular category of products to determine strengths, weaknesses, opportunities, threats etc.

Category Management: The process of analyzing sales, product selection and promotional history with the aim of increasing sales of a particular product group.

Category Pricing: A pricing strategy set by retailers that sets the price consumers pay for products within a certain category.

Category Review: When a retailer evaluates their product categories (either en-masse or individually) with a view to assessing and improving performance.  

Center Store: The center or middle section of a large retailer. Most consumer packaged goods are placed here.

Channel of Distribution: The links ensuring a product is transported from grower to producers, manufacturers, wholesalers, retail stores and ultimately to consumers.

Characteristic: Also referred to as an “attribute” – the unique aspects and features that set one product apart from the competition.

Circular: A form of printed or email advertising highlighting current sales and promotions. It is usually sent directly to a large number of consumers.

Club Store: Retail chains that charge annual membership fees (such as Costco or BJ’s Wholesale), usually selling bulk items at cheaper or wholesale prices.

Co-Marketing: Also known as “Co-op advertising” – when a retailer and product manufacturer work together to create marketing and advertising campaigns.

Competitive Retailer Marketing Area (CRMA): The geographic area in which a retailer operates –used to compare a retailer’s performance against their competition.

Consumer Promotion: The various marketing and advertising tactics used to encourage product sales and brand awareness.

Convenience Channel: Also known as “C-Stores” – one of the most common retailers within the CPG industry. Convenience stores (such as gas stations) offer a smaller range of products to consumers. This often includes pantry items, alcohol and “on-the-go” snacks.

Cost of Goods Sold (COGS): The total costs involved with the manufacturing, selling, promoting and distributing of consumer packaged goods.

Coupon: A promotional offer (usually in printed form) allowing consumers to redeem a monetary discount at the point of sale.

Cross-merchandising: The practice of displaying related products (from separate categories) together to encourage additional purchases. For example, beer and nachos or pancakes and syrup.

Cume Weighted Weeks (CWW): Cume is short for “cumulative” whereby the reach and frequency of merchandising support is assessed over a given amount of time.

Cut In: When a retailer introduces a new product, necessitating a change to existing product shelf placements.

Cycle: The period an in-store promotion or event will run for (usually two weeks to one month).

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D

% Discount: The percentage amount that a promotional price falls below a standard retail price.

Deal Pack: A method of packaging several products together to emphasize consumer promotions.

Department Manager: The individual responsible for managing a particular store department. Jobs include ordering products, overseeing marketing, organizing price markdowns and sales reports.

Direct Buyer: A product buyer that purchases straight from manufacturers (as opposed to using a wholesaler).

Direct Store Delivery (DSD): When a manufacturer delivers products directly to retail stores as opposed to distribution centers.

Display: A temporary secondary location within a retail store, different from a product’s standard shelf location. This usually takes the form of an endcap or in-aisle display, in-situ for up to two months.

Display Execution: A quantification of consumer purchases made from a display whilst a promotion is running.

Distributor’s Brand: Privately labelled product brands created, owned and managed by retailers. 

Dollar Sales: The dollar amount generated by product retail sales.

Dollar Store: A retailer that typically (although not exclusively) sells their products for $1. 

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