As a Consumer packaged goods (CPG) manufacturer, you’re looking for any advantage to strengthen relationships and improve sales. Today’s data analytics tools could be the answer for CPG manufacturers struggling to take the next step.
CPG manufacturers today face new competition from all sides. Consumers have more purchase choices, more access to products and higher-quality options than ever before. Private-label products are now competing on quality, not just price. Online shopping is creating a new way to buy as well as immediate access to a broader array of product options, and advancements in supply chain management are getting those products to the consumer faster than ever.
In light of this new reality, CPG manufacturers must overhaul the way they engage consumers and manage their distribution channels to stay relevant in an age of online shopping, changing consumer expectations and new in-store dynamics – and the solution lies in technology.
CPG manufacturers can use in-store data collection and analytics tools to create a comprehensive view of consumer shopping and buying habits, engage the consumer directly at the point of decision and ensure product availability in near-real time. A company empowered by data will make better decisions and sell more products – and this makes them more valuable to their partners as well as to consumers.
The Challenge: Informed Decisions Require Data
When product creation and manufacturing ends, distribution begins; to sell a product, a manufacturer needs the product accessible to the consumer, and it needs the consumer to know about and want the product. In-store marketing has to work at the point of decision, in store and in real time.
CPG manufacturers and their in-store product representatives work with store managers on the best ways to display and sell products – but without a way to connect data analytics tools to their decision-making, they rely on outdated processes for how products appear in a store by making “gut-based” and “rut-based” decisions. Instincts (guts) and traditions (ruts) are not enough to be successful.
To make informed decisions powered by facts, a manufacturer should add technologies to its arsenal that collect and analyze in-store data to give insight into a shopper’s journey. The manufacturer then should use that data to personalize how it engages the customer to drive greater brand affinity at the point of decision.
The Advantages of Actionable Data
CPG manufacturers with “connected products” that use software and sensors to collect in-store data can give their partners more accurate information on the way consumers shop.
A store can see from UPC codes scanned at a register it is selling more of a certain type of product, but it may be unclear exactly why sales jumped. Although a store may have theories – the product was on an end-cap or was on sale, for example – without hard data, all it really knows is that more consumers bought it.
CPG manufacturers are now able to determine why a product’s sales were higher or lower in a given time period. They can tell what in-store marketing is effective; when is it effective; with what demographic groups it is effective; and even how many sales are being lost due to a lack of inventory.
All of this information can be collected at the point of decision and leveraged to change how a manufacturer engages consumers and gets its products to market. Using existing technology will empower both CPGs and stores to make better decisions, sell more products, keep prices competitive and decrease waste.
Case in Point: Mondelēz’s Custom Data Collection Solution
Mondelēz International, a CPG company encompassing such brands as Nabisco, Trident and Cadbury, sought a way to track and engage shoppers at each step of the purchase decision journey, with the dual goal of improving in-store sales and better understanding the journey from attraction to purchase.
Its products are mainly sold in complex environments over which the company has little control, and the company had only limited or outdated point-of-sale data – and no data at all about when or why a shopper picked up its product versus a competitor’s, or vice versa.
To move past these challenges, Mondelēz engaged Clarity Consulting, a Chicago-based technology company, to craft a custom technology solution – a “smart shelf” that provides more insight into the shopper journey. Clarity solved that problem with a device that can:
- Display product information and ads on small digital displays that would attract a shopper’s attention and ensure product visibility;
- Determine shopper gender and age group via in-store video data analytics;
- Calculate shopper dwell time and physical distance from the shelf or product;
- Sense where shoppers looked and which products they considered;
- Dynamically change the digital displays to draw attention to Mondelēz products, based on shopper demographics, dwell time and visual focus
- Sense when a product was removed from the rack and whether it was returned to the rack in the right place; and
- Link shopper insights to product selection and updating the displays to show a “Thank you!” message.
Beginning with the company’s specific challenges and working backward to create the right technology solution, Clarity designed a custom product to collect rich data that Mondelēz and its partners can use to see which products are performing well, as well as why products are selling.
The “smart shelf” gives insight into a shopper’s journey when purchasing an item and, if the sale did not take place, shows why a disconnect took place. Mondelēz now can aggregate and analyze this information for itself and its store partners to fix any disconnect by engaging with shoppers to encourage the purchase.
Changing Processes to Drive Growth
Companies that want to make better decisions on how to market and display their products – and thus help their store partners sell them – need in-store data collection and analytics tools to ensure those decisions are informed rather than gut- or rut-based.
By creating a more comprehensive view of consumer shopping and buying habits, data analytics tools answer two of life’s toughest questions – “why?” and “how?” – to help a CPG manufacturer grow its business. And internal digital innovation teams are not enough; CPGs need new ideas from outside to both challenge and complement their internal creativity.
Technology is advancing at incredible speeds, and CPGs need to consider future possibilities in addition to what is possible today. They need to create a culture that embraces technology sooner, relishes new ideas and accepts failure as a necessary part of success – because the organization that fails the most may also end up being the organization with the greatest success.