Consumer-packaged-goods companies today are dealing with a lot of challenges, including economic uncertainty, rapidly changing consumption patterns, increased cost pressure due to retailer consolidation. As a result, the rate of growth in the industry has slowed down considerably, dropping to a meager 3.2% in the past decade. To achieve accelerated growth in this decade, players in the CPG industry are beginning to recognize the need for more robust data analytics tools and processes. A McKinsey survey of the most successful CPG companies of the last decade shows that they outperform their competitors in the categories that they compete, such as the usage of sophisticated analytical tools for setting prices and collecting data from retailers.
Why data analytics is vital for manufactures in the CPG industry
Incorporating data analytics into their processes provides CPG manufacturers with a mix of direct and indirect benefits. For starters, gathering and analyzing data means marketing teams can constantly produce never ending growth opportunities by designing buyer-specific campaigns and promotions. Businesses can also analyze the market situation in-real time and react to rapidly changing consumption patterns. An example of this was seen in the pandemic where change in the consumption habits of consumers led to rapid spikes and fall in demand in some product categories. Without access to real-time data analytics, manufacturers cannot react in time to match rising demand, leading to potentially huge losses.
Executives of consumer-packaged goods companies need access to powerful data analytics tools to make data-driven and well-informed decisions if they will emerge as true business leaders, as one poor decision in the fast-paced CPG industry can be disastrous. Therefore, employing a data-backed business strategy is crucial for success in a business landscape where there is almost no room for wrong decisions.
As important as digital data analytics is, the CPG industry still has a lot of catching up to in terms of digital maturity. A 2020 Digital Quotient survey by McKinsey shows that the consumer goods industry is the third lowest digitally mature industry and is only fifth place when it comes to analytics maturity.
The challenges of adopting digital analytics tools and processes
While almost all business leaders in the CPG industry agree that investment in digital analytics is vital, more than half believe that these investments haven’t yielded the desired results. Research shows that only 40% of CPGS that have invested into building data analytics tools and processes have achieved returns above their capital cost. Here are some of the challenges that businesses face with adopting digital analytics processes that deliver.
Many B2B brands in the FMCG sector fail to connect their digital analysis programs to the enterprise strategy, treating digital analytics efforts a side, pet-project rather that seeing it as a tool that enables strategic goal setting and achievement. Other companies swing to the opposite side and invest data analytics tools and processes without understanding what their business’s unique needs are or how they will use the data generated to drive growth and provide significant impact.
Another challenge that brands face when adopting digital analytics is underinvesting in managing change. Senior executives often say that they wish they spend as much or even more on change management as they did on new technology. If the most senior business executives do not have a comprehensive plan to encourage the adoption of technology by the frontline workers, new techniques and tools won’t get maximized.
Winning the digital analytics race with RedCloud
As consumers rapidly adapt to new tech-enabled ways of shopping, the consumer purchasing path has become more complex, making it difficult for brands to know exactly where to adjust their efforts to compete more effectively. It’s important for CPG brands to use data from various sources to influence their decisions in order to avoid wasting resources on unnecessary endeavors.
In the CPG industry, there are three main sources of data: social data, machine data, and transactional data. Social data comprises of a consumer’s online behavior, transactional data is generated by online and offline transactions and records. Unfortunately, these two types of data sources are limited in providing meaningful insights into the $760 billion CPG market, especially in emerging market where most of it isn’t captured or reported back to the manufacturers. Most brands simply lose sight of their stock the minute it’s shipped out, creating a lack of visibility across the entire distribution chain.
Thus, what the CPG industry needs is a digital solution that captures real-world behavior across the entire distribution network, provide brands with visibility they need into the behavior of distributors, retailers and the end consumer. In other words, they need RedCloud.
RedCloud has built RedConnect, the industry’s first digital ecosystem that allows brands to see exactly what is happening across their distribution network in real time, unlocking the full value of the network and providing the much-needed visibility. Now, marketing teams can do trade marketing with ease, and know what areas are consuming their goods the most, and design campaigns to better target those regions. Operations teams now have more visibility and control over order and inventory management.
With RedConnect, brands, distributors, and merchants can now sell smarter, buy better and pay simpler.