Unlock Agility by Making Sense of Demand Transference

Consumer preference and behavior changes lead CPGs to renovate and rationalize their portfolios while satisfying retailer needs. But being mindful of how demand transfer affects both sides allows for optimal assortment mixes and accurate transferable demand calculations.

Making Sense of Transfer Demand to Unlock CPG Agility

Consumer needs are changing fast and a new innovation is equally as likely to come from a well-funded technology startup as it is another CPG. Consumers are hungry for newness and have growing appetites for plant- or animal-free products, purpose-led brands, and sustainability. These changes have led CPGs to renovate and rationalize their portfolios, while retailers are seeing a growing number of SKUs from which to choose and are increasingly shifting to smaller store formats, meaning even less room on shelves. How do you rationalize ranges at scale without losing sales to competitors? One of the critical factors to follow closely is transferable demand.

Put simply, transferable demand is about understanding the effects of listing or delisting products. It considers how demand moves between products, brands, and even categories.

How can your CPG create optimal assortment mixes and calculate transferable demand accurately?

And how can you do it across millions of different brand and SKU combinations? If you’re able to get it right, you’ll work with the confidence to make optimal range and pricing choices in a matter of hours or days instead of weeks and months. Major assortment, pricing, and range delisting decisions are going to be far reaching across the enterprise, and their monetary effects could go one of two ways. Historically, the performance of a go-to-market strategy that lists a new or removes an existing SKU or product won’t be known until weeks or even months ahead. But, the right intelligence on transfer demand can ensure ranges are evolved safely, without losing category turnover or share.

Previously, optimizing an assortment and predicting transferable demand was a computational impossibility. Picture this scenario: you need to choose 300 products out of a possible set of 500. There are more ways to choose 300 products out of 500 than there are atoms in the entire universe.

So what do you do and how do you predict transferable demand?

An AI solution that can sit within your organization’s private cloud, looking at data from multiple sources, is the start. including sales and category data down to the most granular EPOS information. Inputs can also include everything from sales and category data, EPOS metrics, 3rd-party data, shopper behavioral insights, and 3D spatial information and planograms.

Across tens of thousands or millions of households, the optimal solution looks at the level of item loyalty within a particular category; for example, what percentage of shoppers are buying the same product every week. It identifies products that shoppers are willing tosubstitute and where shoppers switch brands regularly or buy from an extended repertoire.

It also looks at a product’s importance to customers in terms of total value, far beyond simple metrics such as rate of sale per store. For example, a niche, slow-selling SKU could be so important to some shoppers that its delisting could lead them to move their entire spend to other brands or even retailers. But how can you predict these results ahead of decisions being implemented?

Using an output that makes decisions at scale with accurate forecasts on the share of sales that would be reallocated to other brands in the brand portfolio and the share at risk of being lost, either to other brands or from the category entirely, is the holy grail of the CPG’s toolset.

The importance of consumer decision trees (CDTs)

Consumer decision trees are a visual representation of how consumers choose products according to different need states. Products are grouped into clusters that share similar product attributes, and it’s within these clusters that product switching is most likely to take place. The different product attributes are shown in a hierarchy: by brand, price point, taste, texture, ingredient lists, pack sizes, and more. For example, in the growing dairy-free milks category, there are variables such as soy, almond, oat, chilled, ambient, sweetened, non-sweetened, organic variants, barista variants, and flavors.

Using consumer decision trees, an AI solution can help CPGs identify demand transfer between different clusters of consumer need states, identifying how the introduction of a new product or range will interact with existing products. Opportunity gaps within a category can be quickly identified and the transfer demand from other products accurately predicted. For example, if you’re a CPG in the highly-competitive laundry category and you launch a sustainable, earth-friendly brand, a good AI tool will be able to predict the level of possible brand cannibalization, as well as the opportunity size in gaining share from competitors.

Unlike many off-the-shelf AI platforms, Insite AI is highly adaptable to meet a CPG’s specific business challenges. We understand that your enterprise needs to be agile in meeting consumer needs and reacting to a volatile economic climate while maintaining growth and dealing with the complexity and limits of the supply chain. With advanced AI analytics, you will have the organizational capability and intelligence needed to move faster and smarter.

Funding Incremental Growth With AI

Selecting the right AI solutions to for your category, pricing, and assortment decisions can reduce inventory costs, improve forecast accuracy, and enhance the customer experience. By leveraging these solutions, CPGs can fund incremental growth and achieve their business objectives.

How to Choose an AI Solution for Pricing and Assortment Optimization

Choosing the right solution for critical assortment and pricing decisions means a CPG must practice a lot of due diligence to find the right fit. Having worked across CPGs and teams at all levels, from the c-suite to VPs and category managers, here are some of the questions you should be asking as you evaluate a data science, analytics, or AI-based solution:

1. Protect the IP that is the heart of your CPG’s strategic competitive advantage

   There is nothing more precious than the capabilities, knowledge, and unique intellectual property that’s been crafted over decades (or even hundreds of years in some cases). You want to be sure that any analytics, data-science, or AI-powered solution is going to protect the integrity of these hard-won trade secrets. Therefore, choose a solution that sits within your own private cloud, where no data, learnings, or proprietary information is ever going to leave the organization.

2. Choose a solution built for CPGs and Consumer Brands

   AI is often misunderstood. Some of the world’s largest software companies have promised it as being the remedy to an endless number of business challenges. While some of that might be true, they haven’t always done a good job of explaining what AI or data science actually means for specific business functions in a tangible, applied way. Some promote an AI or data science platform that ends up being completely generic – these solutions are often sold as solving any type of business problem. But, we’re often shown that being all things to everyone makes a master of none. Software and technology without consulting is just a tool, and that tool often ends up being challenging to use and without the promised results. Rather, it’s important to look for a purpose-built solution that’s able to be customized for each unique business case, that serves specific needs, and is able to be intentionally constructed to solve CPG-focused assortment, pricing, demand, and category management challenges.

   • Think about the importance of solving specific problems instead buying a piece of technology

     Start with your specific business problems and translate those into a custom solution that works for stakeholders across your enterprise. This allows for a bespoke solution to be built for individual needs, rather than trying to solve individual problems with a broad solution. CPGs may operate in the same industry, but their IP, modes of operation, and go-to-market strategies vary wildly. Solving big, unique problems is never going to be about buying a piece of technology or a solution that works right out of the box. Instead, look for an AI company whose domain experts will get to know your CPG’s business, its unique challenges, and how best to solve them. Then, get those experts to build a custom solution to do the job by producing desired outcomes.

Predicting Availability at the Shelf: The Power of AI

In this episode, we’re talking about how AI is being used with both CPG companies and retailers to better predict consumer behavior.

Listen to our latest podcast episode on predicting shopper behavior. In this episode, we discuss key strategies for optimizing at-shelf availability, distribution, assortment, and total portfolio optimization.

First appeared here: https://www.foodprocessing.com/podcasts/food-for-thought/buyer-behavior-artificial-intellgience/

Transcript

Erin: Welcome you to the Food For Thought podcast.

Ryan: Thank you very much. I am very pleased to be here.

Erin: Let’s start talking a bit about what Insite AI is all about. What does the company do and who is your end-user?

Ryan: Yeah, thank you very much for the forum. Insite AI, we deliver artificial intelligence solutions focusing on hyper-localization, so solutions that are really tailored or customized to specific problems or platforms that customers are looking for or problems they’re looking to solve. We primarily focus on CPGs. Every now and then, we do connect with retailers, but our primary customer is the CPG, and we do a wide range of things in the artificial intelligence space for them.

Erin: With all of the mountains of data out there, it can definitely seem overwhelming with what to do with it and what direction to take with it. Can you talk about that a little bit more and how InsiteAI incorporates the data that CPG companies are feeding into it?

Ryan: This is actually a question that is one of the first hurdles that we have to overcome when we’re dealing with CPGs. Usually, there is a fairly limited data set. We know that there’s a universe of data out there, but what’s actually usable and complete and clean is a fairly limited data set. So one of the things that we’re finding is that as we start to bring in these mountains of data, one of the first things that we really have to align on is what is clean and complete and what is very accessible. The second part really then factors into the remainder of the mountain, which is all of these really small data points.

A really good example that’s coming out very frequently right now is things like mobility, right? Like external data that can really enrich some of the answers from a predictive system that allows you to kind of drive and do different calculations than you would be able to do if you didn’t have it. But you have to figure out how to incorporate that, how to plug it in where it makes most sense, what type of calculations can leverage it best. And when we’re talking specifically in the food production industry or food services industry, that type of data is hugely important to understand where are people gonna be, what are their patterns, things like that.

With COVID as well we’re seeing a lot of that data that can also be incorporated in understanding, “Will people leave their houses? Will people go to specific restaurants? What type of behaviors will they exhibit?” And some of those COVID data sets will drive, you know, kind of these knock-on forecasts or knock-on patterns that will essentially affect that consumer behavior.

There is a mountain of data out there that the best approach if you’re a CPG or food manufacturer is to analyze each of those data sets against that core base data set that you have. Really start to understand what the value of those components are to your specific business. Artificial intelligence and leveraging data is a little bit like alchemy in the sense that when you’re developing a specific potion, it’s so custom that as you start to try and take that somewhere else, sometimes it just doesn’t work. A data set that was very usable and sensitive to a specific partner is not as usable or sensitive to another partner and essentially it can take you backwards in accuracy. The data really needs to be deciphered and tested. And from that you need to drill down into those couple needles within the haystack of external data within that mountain that can really support the answers in a positive way and support your accuracy increase.

Erin: I like how you mentioned the alchemy aspect. You used a term that I’m not as familiar with that I’d like you to elaborate on. What exactly is clean and complete data?

Ryan: Thank you for giving me the opportunity to elaborate on that because this is something that every single company, partner, student, anyone that’s leveraging any artificial intelligence to drive predictions or understand trends or do analytics is going to come up against. And essentially, the cleanness of data really comes down to the fact of, “Is everything in the right column? Is everything categorized correctly, spelled correctly, do all the characters align the same?” Because what you’re using in artificial intelligence is really being able to crunch a bunch of numbers in a very small amount of timeframe.

You’re crunching a mountain of data, numbers, and attributes and you’re correlating and calculating everything. To get the best answers, everything in there needs to be in an ideal state – as clean as possible. And that way, you don’t get anomalies or mathematic or statistical outliers driven by formulas. Because if you’re getting those, you want them to be relevant and based on the math you’re using. You don’t want them to be irrelevant based on something that’s unclean, that sends accuracy down or confuses the system or the output.

The second piece of that, which is the completeness, is something that we deal with a lot, especially in CPG. Sometimes we get data sets where we might only have a certain number of brands, or we might only have a certain amount of markets, or we might only have data for a specific period. Where you have a projection or a prediction that needs to be executed, but you only have a slice or a sliver without having the complete picture. And in some of these cases, you can kind of work around it.

We’re dealing with a specific set of brands and we know our brand really well. We have all of our data as well as some retailer data and some of the market data, then we can start to put certain pictures together. But, for example, if you’re dealing with very localized, specific, fragmented data such as receipt data, partial loyalty data, or partial sales data, that’s where it becomes a little more tricky because you can start to get these signals that actually send you in the wrong direction.

When we talk about the alchemy piece of it, that’s really one of those things where you need to understand not only the mass behind it and how to actually approach the artificial intelligence. You really then need to understand what your raw materials are to play with so you can produce the best results out of those raw materials versus just applying a methodology in a cookie-cutter fashion.

Erin: I know in doing the research for this particular episode that Insite AI’s tool can help the food processors listening to this episode with behavioral predictions. Walk me through what that’s all about.

Ryan: The principles around artificial intelligence can be achieved through lots of different means. You start to crunch the data, and you’re not just dealing with quantitative data, you’re dealing with qualitative component, but you realize you not only understand kind of what’s going to happen, but you can start to understand the fragments and the segments and the clusters behind what’s driving that future or that prediction.

And I think for us, that’s what really allows us then to start to understand behavior in a very segmented fashion. We are seeing so many microsegments that have popped up. And it’s driven by a combination of different trend timelines specifically driven by the current external environment. We’re seeing timeline-driven components. We’re seeing buying behavior or shopper behavior components as well. You’ve got an ecosystem that, prior to this, was fairly understood. Now what we’re seeing is that ecosystem that we understood is not only changing in these short bursts, but they’re also fragmenting within those changes.

Just to understand that behavioral component of it is really important. That behavioral component of is really telling you which groups of shoppers or consumers are changing, how quickly they’re changing, what groups they’re falling into. And then ultimately, how can you then focus on that level of understanding to then predict their buying pattern? And this, we believe, is going to become hugely more important for really everyone in manufacturing and retail to understand because it means that some of these behaviors are going to be short-term and some of them are gonna be long-term. And you really have an ability to actually influence and drive and set some of those behaviors within these, kind of, short burst trend cycles. And so that’s one of the huge benefits that we’ve seen. And it really is, you know, all about understanding your customer or your consumer at the level in how they’re thinking about the category they’re purchasing in.

Erin: I love what you’re talking about with helping identify and isolate potential short-term or longer-term behavior. If we’ve learned anything in the last year, it’s how disruptions can so severely impact things across the entire supply chain. Can this tool able to help with forecasting when disruptions occur?

For instance, let’s say you are a food manufacturer and you’re looking at your consumer data, you can see that, “We make this particular brand of oat cookie, or we use a certain kind of oat in our product formulation.” Is this the kind of tool that processors can use to say, “We can see people in the Midwest or people in the East are really buying a lot of this particular oat cookie, we need to make sure that we have ordered even more of the oats that we need?” Is that how this tool can help processors?

Ryan: Yes, it’s absolutely one of the ways that kind of leveraging these techniques and these tools you can benefit. First, understanding, “Hey, if I have issues further up the supply chain or sourcing components, I can start to take a look at those and analyze, forecast, and game plan for when I’m going to have that I know.” That leads in to having a trickle-down strategy to say, “Okay, now, I have my kind of core materials and understand what I’m gonna have. Here’s what I can do with those.” Absolutely, we can predict based on those materials, what we know, what we’re going to be able to do with them, and ultimately, what results we’re going to get through the demand and the purchasing.

One of the most interesting things that I’ve seen and been working on over the last couple months is not only just understanding the disruption from the sourcing component or disruption from the global pandemic component where things are happening and we’re trying to figure out, “Okay, what do we have? What can we do?” It’s also from the standpoint of saying, “Hey, you know, if there is a major area of our business that we didn’t see coming, that we didn’t necessarily have that strategic plan for, leveraging the artificial intelligence and the speed and the scenario planning that you can do with tools like this really gives you the ability to essentially disaster control or crisis control your environment.”

If you have a system in the background and you have potential situations where you can’t source materials for certain products, or you can’t now deliver certain products to the store, what this will allow you to do is understand the issue at hand. It also lets you take a look at a larger kind of portfolio level and say, “What other things do I have and how should I approach leveraging those other, products, brands, avenues, and where? Where should I leverage them? If I have an issue where there’s a certain batch of product that I can’t use or I can’t deliver, do I just shift things from other places?” And what’s the impact to that, right? That’s kind of one view or thought process.

There’s also the situation of, “I just can’t get anything. I’ve got a ship that’s stuck in Panama. I’ve got a whole product line that’s going to go down or potentially a whole brand that’s gonna go down for a period of time. What should I put in? What would be the best bet from a retailer perspective? What would be the best bet from a CPG profitability or volume perspective?” Being able to look at that further in real-time and to then say, “Well, is that the strategy I wanna execute? Do I want to push the customers or the consumers one way or another because I now know what the outcome of this crisis is if I just do the normal thing? Maybe I can start to look at multiple different types of outcomes, where I’m doing something non-traditional. I’m pushing them into a different area.”

The last part would be competitive information. You can also gain some competitive intelligence. The timeframe you’d will probably a lot shorter because competitors aren’t going to tell you what’s going on, but at the retail level, you’ll start to understand some of the challenges going on. When you have systems that can move very quickly and analyze in real-time or take in non-traditional data or qualitative data, you can start to then do the same thing with competitive landscape data. This helps you to understand, “Okay, my competitor’s going to have a supply issue. My competitor’s going to have a sourcing issue. How do I capitalize on that? How do I go to a retailer and partner with them or make sure I’m satisfying the consumer with other products that potentially I wouldn’t have had that opportunity if there wasn’t an issue with that competitive landscape?”

There’s so much that can be wrapped into that with what you can do. And it really is all about understanding what’s happening in a moment and being able to not only project, you know, the outcome, but also to strategize along the lines of, “Hey, listen, you know, something’s going wrong. Let’s at least see what the best outcome we have in line with the strategy that we actually want to execute.”

Erin: Are there any trends or behaviors that your teams or clients are picking up on that you can share? I don’t know if that’s competitive information, but is there anything that you guys have noticed that you’re able to share?

Ryan: I think the biggest thing that we’ve seen that’s been happening in the market is the formulation of some of these microsegment behaviors that are actually changing the way that people buy products in stores, but more importantly, really how they buy products in channels. What we are seeing a lot of is really the last year or so has trained the new generation that they don’t need to do things the way that they were doing before. And so some of the anticipated behavior is that things are gonna go back to normal to a certain extent. And in some cases, that is going to be true.

I think one of the biggest challenges and biggest insights that we’ve been able to reveal is that you really have to understand the segment of the shopper in your specific category and how it’s changed over the last 18 months to be able to actually secure that shopper with long-term loyalty. If you think classic brands back in the day, big brands that everybody remembers, where you’re either one thing or another, everyone kind of picks a side and it’s very polarized and it becomes very loyal to products, it’s no longer really that way. The landscape’s much more diverse, and there are a lot more options and a lot more areas where someone can purchase. And so what we are really seeing is that those behaviors are being solidified right now. And essentially, consumers have had the opportunity to test to be part of different behavioral groups, to test different shopping experiences.

This is all opportunities for the retailers and the CPGs to actually secure new customers that they wouldn’t have had access to before. Because of that, now we’re in a situation where the biggest or largest advantage that a CPG can get for itself and a retailer as well is to really deep dive and understand those segments and really understand what’s making those segments tick, how they’re buying, what the makeup is so that they can then formulate those larger segments, push people back into the kind of macro clusters where they were before, where you can manage them more efficiently. Otherwise, these fragments are going to continue and it’s going to become very, very difficult to satisfy large groups of customers because they all are going to buy in these really fragmented and separate ways.

We are seeing a lot of that across multiple categories and partners that we work with. And I think it’s still changing and there will be some settling that happens over the next two years or so. But it is going to look, we believe, fundamentally different. And the current consumer understanding and different roles and constructions that we have previously adhered to we believe are gonna be broken and changed. And whoever figures that out first, you know, and embraces it and strategizes against it is going to see significant wins.

Erin: You have definitely given our listeners a lot to think about and ponder on and so much information about what Insite AI’s tool can help them with. So last question for you is, for our listeners, if anyone wanted to reach out, learn more, maybe hop on board and use this tool as well, how could they do so?

Ryan: Yeah, the best way is you can contact me directly. My email is ryan@insite.ai. I’ll be happy to connect with you, connect you with the right team members. You can also go onto our website and get an understanding of what we do. But what we find is the best way to understand about this is to talk to us. Genuinely bring the challenges that you have. We are going to listen. We are going to break that down, really understand where we can help, really understand where it’s better for you to do things yourself or with other vendors, and approach it in just a really pragmatic way to make sure that you get the best results. So engage with us with your questions, and we’ll genuinely help you try and resolve those challenges, whether it’s something small or something large.

Better predict availability at the shelf through AI. Contact Insite AI.

How Nestle-Purina and Boston Beer are Navigating the AI Journey

Presented in conjunction with the Promotion Optimization Institute.

Artificial Intelligence (AI) is the hot new thing for planning, Category Management and Revenue Growth Management.

Wherever you are a top CPG or an emerging brand, getting game-changing results takes vision, planning and the right partner.

In this panel-style session you’ll hear from two segment leaders, Nestle-Purina and Boston Beer along with AI innovator Insite AI.

They’ll talk about their visons for transforming planning and how they are navigating the AI journey. Q&A included.

Watch The Webinar

Fill out the form below to request access to the webinar

Contact Us

contact@insite.ai

12600 Hill Country Boulevard
Bee Cave, TX 78738
USA

Avoiding Disastrous Category Management & Assortment Decisions

There have never been more choices available for consumers, which leads to massive challenges for category and assortment managers. Which means being able to predict what happens when product change decisions are made is critical.

How to Avoid Disastrous Category Management and Assortment Decisions

Category management as a discipline started to become popular in the 1980s. Fast forward to 2021, and there’s never been more choice for consumers, creating even more of a category challenge for both CPGs brands and retailers.

The number of SKUs in a given category has exploded, particularly over the last 10 years. According to Nielsen, there are 58% more baby food SKUs, with up to 300 for the largest assortments. Similarly, there are +81% coffee SKUS and +42% in healthcare.

There are new products coming into the market all the time, and making the wrong SKU rationalization decisions can be disastrous for a CPG. For the retailers carrying your products, it’s a complex situation. They want to integrate new products into their assortment, sometimes whilst maintaining the same or shrinking available shelf space. Removing a product can have unintended consequences and can lead previously-loyal shoppers of that product to ditch your entire brand for your competitor, or even leave the retailer entirely.

A retail category manager might choose to remove an obscure, low-margin, and slow-selling product variety – logic often dictates that’s the right thing to do. But that item could be the reason that some of the store’s most profitable customers visit in the first place.

One of the dangers of traditional category management for both brand and retailer is that decisions are made in a simplistic manner by looking at metrics like sell through and margin, but without looking at the assortment from a shopper’s perspective. Then there’s the highly complex task of looking at the store holistically and getting to a granular understanding of how a single change in one category can affect the performance of multiple others. Simultaneously, shopper segmentation and profiling is becoming more complex, as are their tastes, preferences, and behaviors.

It’s becoming clearer all the time that, for many established CPGs and retailers, decades-old approaches are still being used to make critical assortment decisions. Often these decisions use primarily historical data, which in today’s faster-and-faster-moving environment, is like looking in a rearview mirror.

Instead of looking back, the top CPGs use all available data, analyze it in real time, and then make well-founded decisions on which moves to make by being able to accurately predict the effects of change on sales, margins, and revenue. Understanding how categories work together and how changes to them impact consumer behavior and satisfaction are the keys to category and assortment success. Not only will your CPG come out ahead, but accurate forecasts that present the most compelling business case to your retailers and channel partners will build and strengthen hard-won, long-term relationships. Simultaneously, you’ll be able to hone in on optimal plans forpricing and promotions and know which marketing levers to pull in order to grow your market share in the respective category.

Talk to the category management experts at Insite AI to learn how our solution will give you the edge you need.

Critical Priorities for CPGs to Maximize Omnichannel and Ecommerce Opportunities

Online shopping has seen exponential growth in the past several years, and the COVID-19 pandemic has prompted even more shoppers to look to the safety of the web for their needs. Not only is that online behavior prominent now, but many studies have shown the majority of shoppers who are doing their business online plan to continue, leaving both the CPG and retail industries changed forever. According to Boston Consulting Group, product makers are facing a radically less familiar sales environment as more shoppers turn to ecommerce and even directly to brands. In order to succeed in this transformed landscape, CPGs must nurture emerging capabilities, as well as adopt new strategies and partnerships quickly and effectively.

This means a turning point for CPGs, fundamentally changing the way they reach consumers and maximize wallet share. For many years, the growth of ecommerce could almost be ignored, with reliance on physical retail holding strong. According to BCG analysis, ecommerce only accounted for about 3% of all food and beverage sales before COVID. A small volume by most standards. However, the pandemic accelerated ecommerce to represent as much as 15% of total retail food and beverage sales. Most interestingly, the BCG analysts predict that 70% of CPG sales growth through to 2022 will come from ecommerce. This opportunity will be won by the CPGs with the most agile and sophisticated omnichannel capabilities

Online shopping increased by 50% during the pandemic (Nielsen, 2020) and social commerce grew by 37.9% (eMarketer, 2020).

In addition, the 2021 Food and Health Survey from the International Food Information Council reported that 1 in 3 Americans are shopping for groceries online more often, and that the majority of them intend to continue these habits. 1 in 3 Americans are shopping for groceries online more often, and that the majority of them intend to continue these habits.

BCG analysis reveals that 40% of the recent growth in online grocery is from people trying it for the very first time. By 2022, ecommerce’s share of grocery is expected to be as much as 3 times higher than pre-pandemic levels.

So what can you do to capitalize on these opportunities?

1. Accurate forecasting

   An overarching theme of shopping during the pandemic has been an insufficient available product inventory. Shoppers have experienced their standard, favorite, and even second-favorite products going out of stock – sometimes for months on end. This has led shoppers to trial and shift to alternative brands, and those which have been available when needed have often seen a permanent demand shift. Even during the most normal of times, a CPG’s critical capability is to accurately predict and respond to changes in demand, ensuring stock ends up exactly where the real-time need is, whether online or offline. These predictive analytics abilities allow more inventory to be allocated accordingly, whether it’s by geographic region or channel. Are you going to rely on retailer demand forecasts? Wouldn’t it be better to have these insights available in real time and with both accuracy and granularity?

2. How do you adapt your marketing and assortments online?

   The levers for marketing and promotion are completely different when selling online vs. in store. Instead of allocating shelf facings and space with tactical deployment of in-store gondola ends, power aisles, and POS, you are dealing with digital shelves. CPGs need to deploy strong relationships with ecommerce shops to secure online visibility and placement. Additionally, a focus on which range of SKUs in each category are essential to meet demand is imperative. It’s not always possible for a full range to be stocked, so making quick decisions on the most profitable and in-demand lines can mean the difference between winning business or losing it to a competitor.

3. Have a deep understanding of the online consumer

   Well executed consumer activation is reliant on an understanding of the shopper. How will they find you? When someone searches for your product, how and where will you appear in the search results? Are searches being conducted by brand name? Product name? Category? Will the shopper behave differently when they have instant access to consumer-generated content and reviews from other buyers? Winning in omnichannel is no simple or easy battle: balancing retail, DTC, ecommerce, marketplaces like Amazon, and delivery partners such as Instacart keep CPGs on their toes. The most valuable tool for managing these challenges will make sense of multi-channel data and make smart, go-to-market decisions using it in real time.The good news is that technology has risen to the challenge; platforms boosted by machine learning, artificial intelligence, and data science are enabling CPGs to optimize their operations in real time, making sense of the mind-boggling combination of supply, demand, marketing, promotion, assortment, pricing, and activation metrics.

It’s the brands who can make all these complex, go-to-market decisions faster and with more accuracy that stand to grow and earn the largest share of wallet.

Launching a New Product in Crisis Mode

New products are often tricky to launch, but doing so amidst a crisis is even more challenging. Here’s a look at how P&G handled the launch of Microban 24 at the beginning of the COVID-19 pandemic.

It’s Possible But Tricky to Launch a New Product During Crisis Mode. So How?

In January 2020, nobody in CPG could have predicted that certain business categories were about to boom; curbside grocery delivery, video communications platforms, and cleaning products were about to explode, but who could have seen it coming? Businesses in these sectors have experienced real category growth during the pandemic, boosting their businesses by delivering value to consumers when they needed it the most.

The COVID-19 pandemic has shaken most of us to the core and taken most of us by surprise, but it’s not the first such event to have done so and it won’t be the last. CPGs must be ready and have as much insight and prediction ability as possible for what happens next.

In February 2020, P&G launched Microban 24, a cleaning and sanitizing product that could kill 99% of cold and flu viruses. The launch coincided with the beginning of the global COVID-19 pandemic and at a time when shoppers were emptying retailers’ shelves of anything that could kill viruses. Microban 24 was on track to end 2020 with sales of over $200 million – more than twice the original projections.

COVID-19 took most business leaders and CPGs by surprise, including the team at P&G who immediately had a capacity and supply chain challenge on their hands; consumers couldn’t buy the new Microban products fast enough, quickly causing inventory shortages. One of the biggest challenges was even just sourcing enough triggers for the spray bottles.

According to the leaders of the world’s most important CPGs, 2020 and the COVID-19 outbreak have changed consumer behavior forever. According to Marc Pritchard, P&G’s Chief Brand Officer, “these are fundamental changes that aren’t going to go back.”

While 2020 was a year of major growth and opportunity for some CPGs, it was a painful experience for many in adopting new ways of working, including becoming more agile, making faster decisions, and dealing with high levels of future uncertainty.

The Microban story begs a fundamental question for CPGs: how can some of them recover, how can those who have won keep flying high amidst quickly evolving landscapes, and how can they stay ahead of the curve? They must be proactive instead of reactive when it comes to demand and revenue forecasting and the respective requirements in terms of manufacturing, logistics, and sales and marketing support.

Leading CPGs like P&G are turning to AI to assist with highly accurate forecasting, enabling new and established brands in their portfolio to remain nimble and having the ability to evolve plans and strategy in near real time. One of the challenges CPGs face is an overwhelming amount of static, historical data collected across the organization and oftenheld in different silos. While executives have access to modern-day KPI dashboards, these often rely on past data and don’t account for the hundreds of factors that can change consumer demand in a world that’s changing faster than ever.

Imagine your ERP system linked with sales and marketing data, your consumer insights, real-time retailer intelligence, direct-to-consumer channels, news and weather data, as well as up-to-the-minute consumer intent and preference analytics coming from social media and listening.

By running millions of ‘what if’ scenarios in a matter of hours, the right AI tool will allow you to continually optimize your go-to-market plans. This includes modelling decisions on category and brand stretch, category adjacencies, and brand extensions. The right platform will give you the power to predict demand, right down to the most granular level: by SKU, by channel, by retailer, and even down to the individual store.

Test new product variants, price points, and shelf-arrangements months before a product goes live, enabling faster time to market and lower development costs. Test assumptions and validate gut feel without the risk of losing time or making failed investments.

As soon as the world changes, like with a COVID-19-type event, a smart AI tool gives you the power to re-forecast category, demand, and supply-chain issues from beginning to end in hours rather than days or months.

Talk to our CPG solution experts and see forecasting like you’ve never seen it before.