CPG's Love Affair with Big Data

Customer Strategy
Customer Experience
Business intelligence from Big Data enables brands to deliver the critical infrastructure needed to streamline processes and understand how customers are responding to product offerings.

Though consumer packaged goods (CPG) companies present their products using attractive bottles and boxes, Big Data rarely comes wrapped all neat and tidy. From social media to point of sale (POS) data, the constant flow of consumer information provides companies with a wealth of insight into the customers' journey. Through Big Data, CPG brands gain an understanding of what's going on in the marketplace, as the available insight affords these companies the opportunity to get to know their target audiences.

However, as Daryl Travis, CEO and founding partner at Brandtrust, notes, many CPG companies are drowning in data but starving for insights, as they struggle to apply their new knowledge productively. Looking back, brands across industries will agree that Big Data has always existed. But, as Travis highlights, its presence has merely manifested and grown alongside technology. Today, this information enables companies to create more accurate sales forecasts as point of sale data and customer feedback helps to adjust production volume, distribution, promotions, and pricing strategies. With Big Data capabilities in place, companies are now unlocking creative business strategies, enabling new levels of consumer responsiveness and operational efficiencies by generating powerful insights for personalized customer experiences. But, as E.J. Kenney, global vice president, consumer and distribution industry business solutions at SAP, emphasizes, successful CPG brands focus on three particular areas as they work to leverage Big Data to the fullest extent:

  1. Consumer insights-By mining new consumer and micro-segment data sources, brands come to understand customers' buying behaviors, thus establishing predictive knowledge of the consumer's needs at a personalized level.
  2. Customer engagement-Combining social and mobile strategies with Big Data analysis enables brands to deliver new consumer experiences that drive growth and loyalty.
  3. Operational effectiveness-Increasing speed and visibility of supply and demand signals allows CPG companies to optimize investments and respond to market shifts and consumer demands.

By both managing and leveraging this vast influx of data from both consumer and retail sources, brands have the ability to develop a holistic view of what drives demand as they work to improve customer engagement, understand consumer demand, assess the effectiveness of promotions and advertisements, and maximize marketing and sales results in real time. According to a report published by the IBM Center for Applied Insights, leaders in the CPG space rely on analytics to inform key sales activities. The study, conducted in collaboration with Kantar Retail, reveals that 67 percent of CPG leaders apply analytics to understand the consumer environment, while 61 percent use data to inform distribution planning. The insights gleaned are also used to improve product innovation (59 percent) and share pricing and promotions (54 percent).

However, to truly succeed in Big Data analytics, CPG companies must ensure that their efforts span across organization boundaries in order to leverage a consistent set of data, for insights that are lost in translation will trigger missed growth opportunities. "Big Data, combined with advanced predictive analytics, has enabled CPG companies to not only monitor and predict outcomes, but also to target the product and consumer offerings that drive profitable growth with higher accuracy," Kenney says. "To be successful, this endeavor requires CPG companies to not only have the capability to acquire and process the data by applying predictive analysis, but they also need the capability to make the insight actionable across their company."

Companies must break down silos between functions to ensure marketing, sales, and management teams are tightly connected in order to glean proper, business-wide insights. "To be successful, Big Data must be effectively integrated into how your company does business," Ann Dozier, vice president, consumer products and retail at Capgemini Consultingemphasizes. "It is about changing the mindset of the organization to think insights first when making decisions. The key to turning Big Data from data to insights to action is ensuring you have the organizational capability, the right talent, and the right technology to effectively leverage both structured and unstructured data from consumers and business partners."

Once CPG companies establish an enterprisewide data infrastructure, groups across the organization have the opportunity to pinpoint specific drivers that allow them to hone their practices and approach consumers in ways that develop deeper, personal connections. In many instances, today's consumers seek the intangible. Dozier notes that, while customers factor price and quality into their purchase decisions, they are also interested in the impact the product has on the environment and what the beloved brands stand for in a moral sense. Today's eco-minded consumers are concerned with the greater good of humanity, and CPGs have the opportunity to tap into these tendencies to earn the trust and respect of both current and potential customers.

Knowing what motivates consumers has become critical in the CPG industry, for the time to market for a new product has been compressed dramatically. Once one item gains traction, Travis highlights, the product can quickly be copied and improved upon within a short timeframe, thereby eliminating the first mover competitive advantage. Therefore, it's essential and necessary for CPG brands to stay on top of Big Data to understand how consumers are thinking and socializing these needs. This also enables companies to align their operations with the needs of the consumer, implementing predictive tactics that encourage sales in the future by resonating with the target market.

P&G, Coca-Cola Make Big Data Part of the Business Plan

For Procter & Gamble (P&G), Big Data has ushered in a cultural revolution that has shifted the company's mindset from one focused on historical business results, to one that's driven by real-time data and predictive analytics to make better decisions. By implementing digital technology and advanced analytics across the entire organization, P&G has sparked the move toward better innovation, greater productivity, lower costs, and faster growth. From the insights gleaned, P&G plans to touch and improve the lives of its loyal consumers by developing intimate customer relationships. For instance, when P&G's Pampers brand looked into what mothers were truly concerned about, it discovered that, beyond keeping their babies dry, mothers were interested in learning about early childhood development. Thus, the company extended its reach by providing mothers with leading information on infant health and wellness to not only differentiate the brand from its competitors, but also cultivate the deeper relationships P&G continues to seek for all its brands.

Coca-Cola, the world's leading beverage company, has taken an interesting approach to Big Data by using insights into crop growth and weather conditions to perfect its orange juice production and ensure its Minute Maid and Simply Orange brands offer consistent quality year-round. According to Bloomberg News, Coca-Cola's orange juice brands account for 17 percent of all juice-related products sold in the top 22 markets worldwide, and superior production techniques has become the company's secret weapon. Using its "Black Book" model, Coca-Cola has created an algorithm that combines data such as expected crop yields, cost pressures, weather date, and acidity and sweetness to determine how to blend the juice in order to create the consistent taste and pulp content. Because the average orange involves 600 various flavors, Coca-Cola can use the generated data to adjust production and create the quality product its consumers have come to depend upon.