The Consumer Packaged Goods (CPG) industry is a unique one, functioning in a ‘value-conscious consumer’ market. Thanks to thin margins, low switching costs, and almost saturated markets, competition is intense and brands are forced to take another look at their old ways of working. Especially with a data revolution underway, CPG conglomerates are fast transforming their data collecting and consumption strategies.
Recent studies point to increasing use of data analytics tools by CPGs to gain useful data insight at their disposal. They are taking to external data sources to guide business decisions, extract customer activities, and eventually gain a competitive advantage.
Arguably, data analytics is as big of a disruptor for CPG conglomerates as e-commerce. It impacts a variety of business processes, eventually having a multiplying effect on the bottom line.
What are the benefits of this data revolution? Let’s take a look.
Monitoring customer needs
Using big data, CPG firms can forecast demand accurately and therefore route goods intelligently, based on real-time information. The data revolution has armed brands with unprecedented insight into consumer behavior. E-commerce activities generate clickstream data, user behavior data, purchase data, preferences, and price sensitivity, all of which can be leveraged to build comprehensive customer views and monitor unique needs.
Improved supply chain management
With data, complicated supply chain operations are easy, since CPG brands can identify opportunities for reducing costs, perform demand analysis, and troubleshoot issues to keep the supply chain running smoothly. With data analytics and business intelligence, a CPG brand can see a 360-degree view of its supply chain through real-time knowledge transfers.
In fact, every step of the value chain, from manufacturing to supply chain to packaging, has the potential to benefit immensely from this data revolution.
The CPG industry’s reliance on inventory management cannot be stressed enough. With data analytics, alerts of low inventory and product shelf life, for example, can improve decision-making capability in an organization. This can allow brands to perform accurate demand planning, and stock only what’s required.
Another great inventory management benefit offered by the data revolution is the ability to consolidate data from multiple sources and therefore manage inventory across the globe. With a deeper understanding and clarity of inventory levels, businesses can reduce costs.
It’s no secret that businesses are investing in their social media channels to track customer behavior. Not just for B2C brands, social media offers a wealth of predictive analytics for B2B brands as well. With the right CRM and APIs, CPG brands can capture consumer purchase patterns and leverage this information to create targeted marketing campaigns.
A CPG business’s customers are not a homogeneous lot. Because one size rarely ever fits all, the need for targeted marketing is greater than ever. But manually sieving through a large amount of customer data to obtain important data is not possible. This is why, traditionally, marketing has been based on hunches and best guesses.
But now, by leveraging data analytics, brands can create different customer segments (based on purchase history and preferences) and use this to push targeted marketing messages. Artificial intelligence and machine learning algorithms take raw data and break it down to present actionable stats for marketing and sales departments. In this way, creating powerful marketing strategies that deliver a high ROI becomes easier.
The future of CPG lies in data
Creating a 360-degree view of the customer is needed now more than ever before, and it is now easier thanks to the data revolution. Customers’ purchase patterns, motivations, and preferences will give CPG brands an enormous amount of data to use for conducting business successfully. With data, CPG businesses can predict product success and failure, consumer demand, and order fulfillment and optimize inventory and sourcing.
In an ultra-competitive landscape, embracing the power of data will truly set a CPG brand apart. It’s time for the industry to adopt big data and AI technology to drive superior and efficient decision-making. It’d be safe to say that the future of CPG conglomerates lies in data.