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Examining manufacturer concentration metrics in consumer packaged goods

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dc.contributor.authorTanusondjaja, A.
dc.contributor.authorDunn, S.
dc.contributor.authorMiari, C.
dc.date.issued2021
dc.description.abstractThe research compares three different market concentration metrics (Concentration Ratio, Herfindahl–Hirschman Index, and Gini Coefficient) over the share of revenue (market share) and their application in consumer packaged goods markets. The metrics are further extended into measuring the share of the ownership of brands and stock-keeping units, to provide further insights into the nature of market competition. These metrics are reported across 16 categories between 2010 and 2014 from the United Kingdom. The Concentration Ratio results show an average market share of 88% going to the top 10 manufacturers, despite accounting for 19% of all manufacturers on average. Similarly, Gini Coefficients show large disparities in revenue shares across manufacturers (0.85), while the Herfindahl–Hirschman Index classifies most markets as being moderately concentrated. The research highlights the advantage of observing multiple metrics in measuring market concentration, as a single metric is unlikely to convey the nature of market competition. The results show Concentration Ratio for the top 4 or top 10 to be good proxies for Herfindahl–Hirschman Index, while the top 10% or top 20% market concentration can be used as proxies for Gini Coefficients due to their strong positive correlations. Rather than applying onerous Herfindahl–Hirschman Index and Gini Coefficient calculations and requiring the details for all competing entities as required, the result enables researchers and industry practitioners to diagnose the state of the competition by simply calculating the aggregate market share of the top N and the top N% manufacturers.
dc.identifier.citationInternational Journal of Market Research, 2021; 63(4):471-493
dc.identifier.doi10.1177/1470785320903978
dc.identifier.issn1470-7853
dc.identifier.issn2515-2173
dc.identifier.urihttps://hdl.handle.net/11541.2/141479
dc.language.isoen
dc.publisherSage
dc.rightsCopyright 2020 The Author(s)
dc.source.urihttps://doi.org/10.1177/1470785320903978
dc.subjectconsumer packaged goods
dc.subjectfast moving consumer goods
dc.subjectmarket competition
dc.subjectmarket concentration
dc.subjectportfolio management
dc.titleExamining manufacturer concentration metrics in consumer packaged goods
dc.title.alternativeExploring manufacturer concentration metrics in consumer packaged goods
dc.typeJournal article
pubs.publication-statusPublished
ror.fileinfo12194977580001831 13194977570001831 9916383802701831_Postprint_IJMR.doc.pdf
ror.mmsid9916383802701831

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