As the consumer goods landscape shifts dramatically during the pandemic, PepsiCo is scaling its Demand Accelerator (DX) initiative to better navigate today's consumer behavior changes and improve its retail relationships, including through better data sharing.
Born out of PepsiCo’s desire to unite its siloed sales, marketing and insights teams to deliver integrated solutions, DX leverages data and analytics to identify the company’s most valuable consumers. It then uses these insights to inform personalized marketing efforts and in-store tools and capabilities.
Now the No. 3 consumer goods company is focused on scaling DX globally and driving these best practices across its footprint to more seamlessly align functions and accelerate category growth. PepsiCo sells through more than 200 countries and territories, and DX, which started in the U.S. in 2015, now has a significant presence in Latin America, Europe, the Middle East and Asia.
“Our DNA is very much around local businesses managed by general managers, and there are many, many benefits to that,” Jeff Swearingen, PepsiCo senior VP and head of DX, tells CGT. “But one of the things that makes that a bit challenging is you can have a lot of capabilities that are in various levels of maturity and have different levels of impact.”
DX instead identifies the best capabilities within the company for what it’s solving for, and then lifts them up to democratize across the company’s entire global footprint. When market gaps are identified, in addition to working internally, its PepLabs team also works with startup and venture capital companies to find new capabilities.
It has also created a set of capabilities that map against a framework of “identify, engage, convert and optimize,” which are placed under an umbrella called PepViz to provide visibility into marketplace opportunities. This helps the company identify the right capabilities and flex to solve retailers’ individual needs, thereby boosting relationships and developing confidence for such things as data sharing and co-development.
“The vision is we're going to get to this flywheel effect across the world where we have the best capabilities fully democratized, across all markets, which allow us to accelerate as much growth as we can for our categories in all of those markets,” he says. “But also more consistently deliver against the needs and the desires of consumers.”
During its development of DX, the company built an integrated data set to better understand both consumer behavior and retail performance. Two primary, layered data sets were created — Consumer DNA (CDNA) and Store DNA (SDNA) — which currently contain about 105 million U.S. households and 500,000 retail outlets.
Thanks to this, PepsiCo can identify consumers and markets with higher propensity to purchase new products, as well as where they’re most likely to purchase them.
“Having that kind of data allows us very to be very personalized and digitally driven in our media and our messaging,” says Swearingen. “And it also allows us to partner very closely with our retail partners to ensure that, in those most valuable stores for a new product, that we're able to have great presence in those stores [and] make it easy for consumers to find the new product. And we also [might] lean in a little bit more with in store marketing, and to celebrate the product a little more.”
Having access to this level of consumer data has helped PepsiCo navigate the demand shifts of the pandemic, beginning with the early retail shutdowns last March. They employ the insights to adjust how they’re servicing stores, making necessary inventory and consumer engagement changes.
Swearingen cites PepsiCo’s Quaker Foods brand as an example, which experienced rising sales during the pandemic. Thanks to access to these consumer data sets, the company very quickly pivoted both its inventory and its media and messaging. It was also able to better engage with retail partners and provide analytical insight around these demand shifts.
“At the end of the day, it's good for business, no doubt. But … what really makes us feel great about it is we're there for consumers,” he says. “And when they're at their most vulnerable and feeling the most stressed, they can count on us. And that means a lot.”
Powering retail Collaboration and Data Sharing
As both brands and retailers move forward in meeting these new consumer expectations, PepsiCo will continue its collaboration efforts with retailers through product innovation, marketing and data sharing. Part of its data sharing efforts include developing analytics with retailers to optimize and maximize business.
While the call for increased data sharing with retailers has escalated during the pandemic, Swearingen acknowledges PepsiCo as being lucky for already being in such data sharing arrangements with retailers for a few years. As a result, this shift wasn’t quite so abrupt for them.
“The underlying driver is everyone is looking for ways to better deliver against the new expectations of consumers. They're looking for ways to either hang on to the business windfall that's come their way as a result of a pandemic, or to regain their lost consumers when the pandemic goes away,” he notes. “And so with those underlying motivation, sometimes data sharing is a way to unlock strategies that can deliver against that.”
“I'll be honest, I think there's an opportunity for a lot more open data sharing across industry than we see today,” he adds. “And I think part of it is just the maturity of clean-room environments and ways to simply share data in a way that protects privacy, and that protects intellectual property."
“We do a lot of the data sharing in clean-room environments. So we are equally focused on creating environments where we're protecting data and protecting IP, and I think retailers are as well. And as those types of environments continue to mature, then I think data sharing will mature as well.”
Adapting and anticipating today's Consumer Behavior Shifts
Looking at how today’s pandemic-prompted consumer behavior shifts could stick, the PepsiCo exec notes that beyond the massive shift to online that the industry experienced, retailers are now looking for ways to nurture these changes to create a more systematic approach so that the habit sticks.
Aiding this are such things as auto replenish and auto list generation, but he also sees it in more subtle ways, such as companies shifting some available products to deliver against more experiential things that people miss from restaurants. Today’s consumers are seeking both value for their purchases and affordable luxuries to make them feel good during these difficult times.
Swearingen also anticipates the online shift to become represented in the return to brick-and-mortar. Consumers are becoming accustomed to finding what they want with just a few clicks, and they’ll expect that ease of navigation around stores.
They’ll also expect to receive a similar level of inspiration that they can find online, such as what they’re receiving now with recipes and virtual parties, and more personalization.
In creating these integration solutions through DX, PepsiCo, which entered the direct-to-consumer market last year, seeks to connect with consumers through such personalized digital media, and then deliver against expectations in both the online and retail environments.
"Much of what we are learning from online behavior enables us to better understand how to create conditions in traditional retail that will equally delight consumers," says Swearingen.
Thanks to machine learning, PepsiCo can then optimize this information to improve subsequent results.
“Most of those puzzle pieces, if not all of them, are on the table today,” he says. “It’s a matter of just assembling the puzzle, and I think when we do that, we create a much richer [and] more fulfilling experience for consumers.”