Consumer Goods Cases 2026: The Promotion Arithmetic

What a consumer goods case interview is really asking

Almost every consumer goods prompt reduces to one of three questions. Should we promote, should we launch, or why did the margin move. All three run on the same identity, and it has three terms rather than two.

Revenue equals units sold, times the average price actually realized, adjusted for the share of those units that sit in high margin lines. Candidates collapse the second and third terms into one number called price, and from that moment the case cannot be solved. An average price can rise while every list price stays where it was.

The cost side has a term the textbook profit tree leaves out. Between gross revenue and net revenue sit listing fees, slotting allowances, promotional funding and retailer rebates. That block is usually called trade spend. It is large, it is negotiated once a year, and it does not behave like a variable cost. A case that treats it as a percentage of sales will get the promotion question wrong in the same direction every time.

So the opening move is two clarifying questions. Ask whether the revenue figure given is gross or net of trade spend. Then ask whether the volume figure is shipments to the retailer or sales to the shopper. Those two answers are not interchangeable, and a quarter of inventory sitting in a distribution center is the difference between them.

Kearney puts promotional planning at the level of a named practice case type. Its own case page says, checked 29 September 2026 at kearney.com, that "This sample promotional planning case study will help you prepare for your upcoming case interview." The same page instructs candidates to "avoid forcing your solution to fit a standard framework." Those two statements together describe the exercise well. The topic is known in advance and the structure still has to be built from the numbers in front of you.

The three terms behind one revenue line in a CPG case

Take a single brand sold to grocery retailers. The list price is $6.00 a unit and the cost of goods is $4.20, so the unit contribution is $1.80. That contribution is 30 percent of the list price.

Now suppose the brand has two lines instead of one. A core line at $6.00 with $4.20 of cost, and a premium line at $9.00 with $5.85 of cost. Unit contribution on the premium line is $3.15.

In the first quarter the brand ships 8 million core units and 2 million premium units. Revenue is 8 million at $6.00 plus 2 million at $9.00, which is $48 million plus $18 million, so $66 million. Contribution is $14.4 million plus $6.3 million, which is $20.7 million. Average price across the 10 million units is $6.60.

In the second quarter the brand ships 7 million core and 3 million premium. Volume is unchanged at 10 million units. Revenue is $42 million plus $27 million, so $69 million. Contribution is $12.6 million plus $9.45 million, which is $22.05 million. Average price is now $6.90.

Read those two quarters against each other. Volume is flat and no list price moved, yet average price rose from $6.60 to $6.90, which is 4.5 percent, and contribution rose 6.5 percent. Every cent of that came from mix.

This is why a price variance has to be split before anyone explains it. A commercial director who reports a 4.5 percent price gain here is reporting something real and describing it wrongly. The same arithmetic runs in reverse when a retailer pushes the opening price point, and then a brand that never discounted watches its average price fall.

The promotion that pays for volume it already had

Back to the single line at $6.00 with $1.80 of contribution. Baseline demand is 10 million units a quarter at full price. Baseline contribution is 10 million units at $1.80 is $18 million.

The retailer asks for a 20 percent temporary price reduction, funded by the manufacturer. 20 percent of $6.00 is $1.20, so the price falls to $4.80 and unit contribution becomes $4.80 minus $4.20, which is $0.60. Unit contribution has dropped by two thirds while the price dropped by a fifth.

The brand measures a 60 percent volume lift during the promoted weeks, so 16 million units ship. Promoted contribution is 16 million units at $0.60 is $9.6 million. Against an $18 million baseline, the promotion destroyed $8.4 million of contribution while selling six million more units.

Now solve for the lift that would have made it neutral. Contribution holds at $18 million when volume times $0.60 equals $18 million, so volume has to reach 30 million units. That is a 200 percent lift on a 10 million unit base. A 20 percent discount on a 30 percent margin needs volume to triple.

The second route to the same answer is the one worth saying out loud in an interview. Of the 16 million units that shipped, 10 million were going to ship anyway. The discount on those is money handed back for nothing: 10 million units at $1.20 is $12 million. The six million incremental units earn $0.60 each, which is $3.6 million. Net effect is $3.6 million minus $12 million, so negative $8.4 million. Both routes agree, and the second one names the mechanism.

The one cent trap, and why the answer is 20 percent

Here is the error this case type produces most reliably, and it has appeared on a page of ours.

Suppose unit margin is six cents and a competitive response forces a one cent price cut. Margin falls to five cents. To hold total contribution, volume times five cents has to equal the old volume times six cents, so volume has to rise by six fifths. That is a 20 percent increase.

The tempting wrong answer is 16.7 percent, because one cent is 16.7 percent of six cents. That figure is the share of margin lost. It answers a different question, and the gap between the two grows as margins thin.

Run it on a published case to see the stakes. McKinsey's Electro-Light prompt puts the drink on shelf "at a price of $2 to retailers" against "each bottle would cost $1.90 to produce and deliver in the new process", with "$40 million in total fixed costs", checked 29 September 2026 at mckinsey.com. Unit margin is 10 cents, so breakeven is 400 million bottles.

Concede one cent of trade discount and margin becomes nine cents. Breakeven moves to $40 million divided by $0.09, which is 444.4 million bottles. That is 11.1 percent more volume for a cent that represents 10 percent of the margin. The general form is the discount divided by what remains, and it is always larger than the discount divided by the original margin.

At a 5 percent contribution margin, which is what a 10 cent margin on a $2 price is, the whole business case lives inside the trade negotiation. That is the sentence to say when a case gives you a thin margin and a promotional plan in the same breath.

What the published consumer goods case leaves out

ZS publishes the only consumer goods launch case we have found with a full worked answer. Its client is "one of the main consumer goods companies in the U.S." and the brief is a new sunscreen formulation, checked 30 September 2026 at zs.com.

The profit answer is published in full. Total population 53 million, roughly half men so 27 million, about 26 percent regular users so 7 million, a 2 percent share so 140,000 buyers, and "Profit per product: $24.99 minus $9.99 equals $15". Then $15 times 140,000 equals "about $2.1 million in annual profit". Every line reconciles when you redo it by hand, and the firm announces its own rounding at each step.

Two things in that answer are worth more than the arithmetic. The share applied to the new product is 2 percent, which the case introduces at the top as the share held by the existing sunscreen. A premium product priced four times higher, selling into a segment the same answer calls distinct, is credited with the incumbent's share. Nothing on the page justifies that.

The second is the sentence "They serve distinct segments, so cannibalization is low." Low is a word, and the $2.1 million never has a single unit subtracted from it. Low and zero are different numbers, and the distance between them is the whole content of a launch case.

Put a figure on it and the reader can see the size. Suppose one buyer in ten would have bought the existing product, so 14,000 of the 140,000. At a $5 unit margin on the old line, that is $70,000 of contribution lost, which is 3.3 percent of $2.1 million. At three buyers in ten and a $9 old margin, the loss is 42,000 times $9, which is $378,000, or 18 percent of the total. The rate and the old margin both matter, and neither is in the published answer.

Where the shelf takes its share, and the CPG case structure

The retailer is a party to every one of these decisions, and its economics decide how hard it pushes. The Census Bureau publishes the lever. In its July 2026 inventories release, checked 29 September 2026 at census.gov, the inventories to sales ratio is 2.11 for clothing and accessories stores and 0.77 for food and beverage stores, seasonally adjusted.

Read those two together. Apparel inventory sits against sales at nearly three times the food and beverage level, so 2.11 divided by 0.77 is 2.74. Markdown pressure in apparel is structural, and a manufacturer negotiating there is negotiating with a buyer who has to clear stock on a clock. A grocery buyer turning inventory that fast is negotiating about shelf space and promotional calendar slots instead.

One caution on that ratio, and it is the Census Bureau's own definition that creates it. The survey glossary states that "Merchandise inventories are the value of stocks of goods held for sale", valued at cost, while sales are recorded at retail price. So the ratio is not an accounting turn figure, and converting it into a number of turns per year mixes two bases. Use it as a relative signal across categories, which is what it supports.

The practical structure that falls out of all of this has four branches, and they are ordered by how much of the answer they usually carry.

1. Net price realization. List price, trade spend, promotional depth and frequency, and the share of volume sold on deal.
2. Mix. Share of units in each line, pack size, and channel, because a club pack and a convenience single are different businesses at the same brand.
3. Volume. Household penetration, purchase frequency, and units per trip, each of which moves for different reasons.
4. Cost to serve. Cost of goods, logistics, and the retailer specific costs that never reach a gross margin line.

How the structure is scored, and where to drill it

No consulting firm publishes a marking scheme. The weights below are ours, applied by our own grader, read from the rubric code in src/lib/grading. The reasoning behind each weight sits on how an answer is assessed.