Effect of Green Products on Brand Performance: Evidence from Organic Products in the Ready-to-Eat Cereal Category
(A2023-114269)

AUTHORS

KAI LESAGE, Grenoble Ecole de Management; Christophe Haon, Toulouse Business School; Shekhar Misra, Grenoble Ecole de Management

ABSTRACT

Green products like organic foods have been at the center of new product development for over a decade. However, whether adding organics to a product portfolio helps or hurts brand performance remains an unstudied question. The author has discovered that organic products positively affect overall brand performance by analyzing point-of-sale data in the ready-to-eat cereal category from 11,285 U.S. food retailers over 2018-2019. A brand’s market power enhances organics’ effect on brand performance while the price gap diminishes it. Further analyses show that the price gap between organic and conventional products is as critical to brand performance as to other products under the same parent brand. The findings suggest that marketing managers should holistically approach product line extension and pricing strategy while introducing new organic products. These insights will also help retailers optimize merchandising and private-label organic program development.