How AI is The Key to CPG Growth Amidst Channel Blurring
Consumers today enjoy new levels of shopping convenience, brought to them by the rise of click and collect, home delivery and subscription models. Channel blurring, or consumers moving purchases of a product to alternative channels, has had a noticeable effect on where consumers shop, what products manufacturers and retailers sell, and how they sell them.
According to IRI, online sales of consumer packaged goods rose 35.4% in 2018, with more than half of purchases coming from pure-play online retailers.
Thus, in order to remain successful, CPG companies must be able to quickly and accurately identify opportunities for growth beyond traditional store formats. Technology powered by artificial intelligence can better understand where consumers are shopping, as well as their purchase preferences and habits, in order to optimize a CPG’s approach to marketing and promotions.
A New Zero Moment of Truth
Twenty years ago, a shopper looking to buy dog food likely went to their local pet store. But today, dog lovers can have food delivered on a monthly basis through an online subscription service, or choose between a variety of pet store options or a supermarket. What’s more, the zero moment of truth – the point in the buying journey when a consumer researches a product – has also changed. Traditionally, the zero moment of truth was at the shelf, and marketing and promotional efforts were focused on meeting the consumer there. Now, there are two of those moments.
The first takes place before a shopper either walks into a store or checks out online. Consumers today are prepared and have done their due diligence ahead of time, researching which pet food they need and whether it’s available at their store of choice. They have searched the internet, seen products promoted on social media, read reviews or received a recommendation by a friend. However, once at the shelf, a shopper might find that another product is on sale, or the store is out of a specific size of the product they wanted.
That’s when the second zero moment of truth is created — when shoppers explore alternatives on their phones. It may be to check availability through other channels or retailers or to learn more about brands that they hadn’t considered before. As a result, marketing and promotional efforts must now cast a wider net, and CPGs need to be able to evaluate these different data points in order to reach customers in multiple channels, ensuring their product is chosen as a result.
Traditional Methods Preventing a Holistic Market View
As a result of channel blurring, companies must be more agile and operate across all retail verticals, understanding consumers’ product and channel preferences. However, historical trade promotion management methods lack a 360-degree view of consumers and do not provide a holistic enterprise-view of category, brand and consumer impact. Information silos limit a company, as they’re only able to make decisions based on isolated data and factors at play. Not to mention, CPGs often rely on historical data to respond to an environment that has already changed.
What CPGs need now
Where solutions were traditionally reactive, artificial intelligence technology can provide CPGs with predictive and even preemptive insights. It’s impossible to physically manage the massive amount of data a CPG company has, and artificial intelligence can not only harvest it all but also analyze it and recommend actionable steps as part of a cohesive business plan. By increasing speed and eliminating data silos, artificial intelligence can help harmonize data across channels and sources. This allows users to identify subtle shifts in how consumers are buying or will soon buy products so that CPG companies can be at the forefront of new trends.
By providing a detailed understanding of what’s occurring at the shopper level – including who’s buying what and from where – CPGs can target the right channels and shopper segments in a personalized way. What’s more, artificial intelligence measures the success of promotional efforts on an ongoing basis, continuously recommending next steps as it detects best pockets of revenue growth opportunities.
Why Artificial Intelligence
Artificial intelligence helps CPGs gain a holistic view of the individual customer – how and when they make purchases across channels – and makes predictive, not reactive, recommendations to meet their needs. Insights without recommended actions cause CPGs to rely on the rear-view mirror to drive the road ahead.
But with AI that continuously learns from past marketing and promotional efforts, they have access to true GPS-style navigation, offering them forward visibility to quickly spot stop signs or roadblocks that analysts or business intelligence tools may not see.
Channel blurring has added increased costs, including shipping and shifts in traditional marketing such as social media and mobile apps, and CPGs have been looking for new ways to identify opportunities to drive profitable revenue growth. Now, AI makes this possible by interpreting the full scope and scale of the customer providing contextual and actionable recommendations to optimize their marketing and trade promotion strategy.