Using AI to Translate Insight into Action


Today, consumer packaged goods brands are tasked with much more than conveniently connecting shoppers with their favorite items. Consumers want brands to anticipate their needs and make relevant products available to them wherever they shop. 

But many CPGs have yet to crack the code. They’re spending countless hours and dollars investing in trade promotions even though 72% of those programs don’t break even. They also invest heavily in new product development even though 95% of new products fail. To be successful in today’s market, CPGs must acquire and learn from a deeper understanding of consumer behavior to make more strategic, more intelligent promotion decisions.

Channel blurring has led to more complexities than ever for both CPGs and retailers. Consumers have the option to shop in physical stores or online, a blend of the two with buy online and pick up in store, or to not even actively shop at all by using a subscription service. On top of this, the growth of today’s private label and regional-based players have led many product lines to hit a premature revenue ceiling. 

But despite what many CPGs may tell themselves, consumption hasn’t decreased — on the contrary, the industry is projected to reach $721.8 billion in 2020. In this battle for market share, traditional approaches to reach consumers just won’t work. The key to sustained, long-term growth is establishing a deeper, proactive understanding of consumer preferences and behavior. 

CPGs know that properly managing product promotions is vital to ensuring that shoppers select their brand over a competitor. But managing the complex trade-offs involved is like walking a tightrope: it requires incredible balance, precision and speed.

First, CPGs need to analyze consumer preferences and behavior in order to drive the right product and promotion decisions at scale. That involves more than just understanding which products and features consumers want; CPGs must also know how and where they buy and what influences their decisions. But until now, forecasting and promotion planning systems were unable to integrate accurate, real-time insights from customer data to understand the big picture and create actionable value. 

AI: Translating insights into actionable decisions 
Analyzing campaigns has traditionally required a significant amount of human effort through business intelligence tools, spreadsheets and historical knowledge. With CPG account teams busy managing promotions in several categories for hundreds of retailers across multiple channels, it’s not humanly possible to forecast what-if scenarios — as retailers tweak promotions every week, with millions of combinations of SKUs, variables and constraints to consider. 

Conversely, data management processes that are augmented and enabled by artificial intelligence can quickly analyze product performance across the value chain in real time. What’s more, AI can learn, sense and predict consumer behavior to improve opportunities for future sales approaches. By comparing product performance against shopper attributes and trends with AI, every single data set in every channel, along with every alternative, can be analyzed in order to translate consumer insights into actionable decisions for CPGs. 

This ensures that CPGs can create a comprehensive understanding of how to optimize their marketing and merchandising approach for existing products and improve the ROI of new products that cater to evolving consumer needs. In essence, AI is an automation mechanism that increases scale, speed and efficiency, helping CPGs leverage data as they get closer to achieving a one-on-one merchandising program.

Everyone understands the importance of making customer-centric product decisions. Success will be a matter of doing it radically better, proactively, more efficiently and effectively. With AI, CPGs can better understand their consumers and embed these insights into predictive models that improve the success of trade promotions and new product launches far beyond what was possible with traditional technologies. 

When it comes to consumable categories, changes and evolving trends are inevitable. Artificial intelligence solutions enable CPGs to better understand consumer behavior in order to optimize revenue and margins. 

About the author
Steve Hornyak is president of Symphony Retail AI, CPG Solutions Hehas spent the past 30 years involved in the software, SAAS and retail technology business sectors and has experience in managing fast-growing and start-up companies.