The Sales Effect of Innovative Package Changes: Evidence from the U.S. CPG Industry

Abstract

Brands occasionally implement innovative packaging solutions for their existing products. While
such repackaging attempts could increase sales by offering novelty and enhanced consumer
benefits, they could also hurt sales by disrupting consumers’ purchase and usage habits. Given
directionally competing mechanisms, we examine the effect of such package changes on brand
sales by estimating a dynamic linear model using a sample from the U.S. consumer packaged
goods industry. We find that, on average, transitioning to an innovative package decreases brand
sales by 3.2%, and 70% of the brands in our sample experience sales losses following repackaging. However, the sales effects are highly heterogeneous. Specifically, (1) the novelty of a new package has an inverse U-shaped effect on sales, (2) offering consumer benefits through enhanced functional, visual, and sustainable design can offset the adverse effects of repackaging, with functional benefits being relatively more effective (3) premium (vs. budget) and high (vs. low)
market-share brands, and brands in competitive (vs. concentrated) product categories benefit more
from innovative packages. The findings aid brand managers in determining whether and under
what conditions launching an innovative package can effectively boost sales of their brands.
Additionally, the results support policymakers’ calls for sustainable and convenient packaging
solutions.

Keywords: new packages, repackaging, sustainability, consumer experience, distinctiveness, sales response, dynamic linear model, processing fluency