Consider a shopper just 10 years ago. When she walks into the store, she likely has a handwritten list documenting the items for purchase. Coffee, milk and eggs could be at the top of the list, but the exact brand or company may not. The shopper works her way through the supermarket, arriving at the coffee aisle. Perhaps one coffee is advertised as fair trade and certified organic, while another is a more recognizable brand name. The shopper will decide on which product to choose based on these labels, her past experience with the brand and what she likes to think the brand says about her.
In order for consumer packaged goods (CPG) companies to capitalize on the collective buying power of the Millennial generation, they need to leverage the power of predictive analytics. These advanced analytics enable manufacturers to harness the omni-channel shopping behavior of Millennials and create greater and more meaningful touch points to activate this next generation shopper.
Shopping behaviors are rapidly evolving with emergent technologies, and that is creating a problem for CPG manufacturers. For example, the technology-driven changes to shopping behaviors have led to declines in actual purchases and revenue growth. According to a recent report from PricewaterhouseCoopers, both the strongest and weakest performing CPG companies experienced a slowdown in net sales growth in 2012. This is forcing CPGs to find new ways to connect with their shoppers – and that’s where predictive analytics really come into play.
The transformation of the business landscape mainly spurred by technological advancements and economic flux has engendered some troublesome issues that if left unresolved may bode ill for the organizations in the CPG retail market. And, among the range of issues that are trying to prevent CPG companies click into gear, plummeting sales is surely a megawatt contender. In a similar fashion, no lone reason is responsible for the decline in sales, but a pack of reasons is throwing their weight behind this underwhelming performance. From toning up their digital muscles to unveiling new or thoroughly reengineered products to stamping solid footprints in developing markets, CPG manufacturers are taking diverse countermeasures to rescue sales from getting into a downward spiral.
With its soaring popularity, shopper marketing has become a favorite tactic of the consumer packaged goods industry. So, it’s not surprising that CPG manufacturers are on an investment spree to pump money into shopper marketing. Speaking concisely, it is the whole gamut of promotional strategies developed after closely following shoppers along the path to purchase, and then activating them when they are actually in the midst of shopping in a particular in-store setting. The fundamental difference between it and traditional marketing is in the sense that the former gives its undivided attention to the buyer and not the consumer.
Is personalization approaching the sublime?
While on that famous voyage, better known in the marketing circle as “shopper journey”, shoppers show a strong aversion to anything irrelevant. To connect with the customers along this pathway, retailers must be ultra sensitive to diverse contexts. But, what actually retailers are doing to preclude the possibility of overstepping the precincts of relevancy? They have started communicating contextual offers to customers based on their personal demographics. So, when customers enter grocery stores, they get tailored messages about inviting deals on their smart mobile devices depending on their exact location inside the establishment. And, gradually this “me-specific” engagement strategy is winning customers’ affections. Data from Gartner shows that, by 2017, 15% of shoppers will fall in love with context-aware offers.
Millennials, known as the crop of people born between 1980 and 2000, are currently appearing as the effulgent stars in the convenience store firmament. This technology-drenched, nutritionally aware, and multichannel-hopping age cohort is on the threshold of bringing pivotal disruptions in the c-stores shopper demographics. It has been projected by various reliable authorities that by 2017, the Millennials will blow their predecessors, i.e., Baby Boomers convincingly out of the water and emerge as the highest expending consumer brigade in the United States. Accenture Research predicts that by 2020, Millennials will be responsible for approximately 30% of total sales in the retail arena. Naturally, every convenience store operator is big on launching a calculated charm to woo this digitally alive and kicking generation.
A customer, while looking at a product in your store, may decide to search for it online – while in your store. Finding a better deal, he leaves your store – to go and get it elsewhere at a better price. Price – it has become a key consideration in the purchase decisions of today’s budget-conscious shoppers, as they grapple with a recessionary economy.
Intense competition for the shoppers’ wallet leaves you with a very narrow margin for errors in your pricing strategy. For every SKU in your store, you have to hit on that ‘magic’ price which best drives its sales and profitability – while fitting in with your overall price image.
Coffee’s good for you one day; it’s chamomile tea, the next! Shoppers who wanted zero trans-fat foods and no-fat cookies on a shopping trip, come back looking for old-fashioned butter cookies and chocolate wafers, the next time. From baked snacks to herbal teas, vegan to organic, there’s no telling what the shopper in the aisle will demand.
Rapidly changing customer tastes are just one of the factors keeping CPG manufacturers on their toes. Operating in a fiercely competitive marketplace, they are fighting for scarce shelf-space and customer wallet share. They need to respond quickly to competitor promotions and pricing, comply with stringent retailer demands
- all the while striving to deliver new product innovations that stand out amidst the clutter.
Advanced analytics helps to track, understand and leverage every stage in the shopping path on grocery channels
A regular shopper at Sainsbury receives coupons on her favourite products and most purchased items – from spaghetti sauce to cheddar cheese – at the checkout. These personalized coupons, offered while swiping her Nectar loyalty card at the checkout, is part of Sainsbury’s strategy to engage better with its best customers and reward them for their loyalty. And to keep them coming back for more.
‘Coupon at Till’, the innovative scheme, may appear simple enough on the surface but involves data integration, data mining of volumes of Sainsbury’s customer data and advanced analytics at the backend to match the right offers with the right customers – all in real time.
Gone are those simple days when customers’ path to purchase used to be blandly linear. Now, the journey is taken through such a sinuous road that even the canniest consumer packaged goods manufacturer might occasionally feel bouts of vertigo. The ongoing technological turbulences such as unimaginable penetration of social media, soaring popularity of smart and intuitive mobile devices, and exponential growth in web-based commerce has elevated the customers to an omnipotent existence in the marketing ecosystem.