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CGT’S ANNUAL LOOK AT INSPIRATIONAL EXECUTIVES DRIVING INNOVATIVE CHANGE AT THEIR ORGANIZATIONS


CONTENTS June 2018

VOLUME 26 NUMBER 3

CGT ADVISORY BOARDS

COVER STORY

EXECUTIVE COUNCIL

Despite all the conversation about machine learning driving the future of consumer goods, let’s not forget that this industry is still guided by old-fashioned human intelligence. CGT‘s annual Visionaries feature recognizes 10 executives who’ve been invaluable to the recent success of their organizations — and who might even inspire others to develop some visions of your own.

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Departments

04 EDITOR’S NOTE Companion Pieces This year’s CGT “Visionaries” do a pretty good job illustrating all the industry changes discussed in our annual “Sales & Marketing Study.” 36 TECHNOLOGY SOLUTIONS GUIDE: ARTIFICIAL INTELLIGENCE/ MACHINE LEARNING

CGT presents a comparison chart of solution providers on the forefront of artificial intelligence and machine learning for the consumer goods industry. Plus, industry experts provide thought leadership on challenges, opportunities, and implementation issues for companies navigating this new playing field.

42 CGTECH TIPS In this new sponsored content series, industry experts offer pragmatic advice to consumer goods executives looking to optimize their use of key tools and technologies. This month: Retail Execution.

Special Report 11

SALES & MARKETING STUDY 2018

How do you confront a consumer-driven world? By re-evaluating every sales and marketing practice in your organization. Once again developed with support from IDC Manufacturing Insights, CGT’s annual Sales & Marketing Study examines the current state of the industry — in analytics, consumer engagement, revenue management, new product development and corporate structure — and how consumer goods must evolve to stay relevant in the new retail marketplace. Progress Report Organization New Product Development Data & Analytics Trade Promotion Management Conversational Commerce

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Julia Anderson Smithfield Foods

Constance Howlett Estée Lauder

Denny Belcastro Kimberly-Clark

EJ Kenney SAP

Tony Bender Edgewell Personal Care

John Phillips PepsiCo

Pam Brown

Kevin Puppe Johnson & Johnson

Michael Forhez Oracle

Doug Rammel BAI Suavecito

Mike Gorshe Accenture

John Rossi

Jon Harding Conair Corporation Justin Honaman Accenture

Steve Sigrist Newell Brands Swan Sit Nike

EDITORIAL

Kevin Barnes Ferguson Enterprises Tony Bender Edgewell Personal Care Rick Brindle Mondelez International Ann Dozier Southern Wine & Spirits Michael Ferrara HairUWear Jon Harding Conair Corporation Peter Hatch Reynolds American Inc. Service Co. Chris Hobson VF Corp.

Constance Howlett The Estée Lauder Companies, Inc. Betsey Nohe Morton Salt, Inc. John Phillips PepsiCo Kevin Puppe Johnson & Johnson Doug Rammel BAI Suavecito Steve Sigrist Newell Brands Dan Woo Nestlé USA Filiz Yavuz Perry Ellis International

RESEARCH

Werner Graf, Chair Mindtree Gene Alvarez Gartner Lora Cecere Supply Chain Insights Michael Forhez Oracle Nona Cusick Capgemini Simon Ellis IDC

Don Lanham Hitachi Consulting Meena Surti Patel Cognizant Cheryl Perkins Innovationedge LLC Werner Graf (chair) Mindtree Steve Rosenstock Clarkston Consulting

Consumer Goods Technology (USPS 0011-255, ISSN 1530-8421) is published 6 times per year: February, April, June, August, October and December, by Ensemble IQ, 1 Gateway Center, 11-43 Raymond Plaza, FL16, Newark, NJ 07102. Subscription rates: $89 for U.S. addresses; $99 for Canadian addresses; $109 for all other addresses. Single copies are $20; add $2 for postage to Canada, or $5 to other countries. For Air Mail, add $65. Copyright 2016 by Ensemble IQ. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or information storage and retrieval system without permission in writing from the publisher. Periodicals postage paid at Newark, NJ 07102 and additional mailing offices. Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@ wrightsmedia.com or (877) 652-5295. POSTMASTER: send address changes to: Consumer Goods Technology, PO Box 1842, Lowell, MA 01853-1842.

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Companion Pieces Until the final few weeks of production, work on the two primary pieces of content for this month’s issue was conducted separately, with senior editor Nicole Gillo taking the lead on our annual “Visionaries” showcase and me doing the same for the 9th annual “Sales & Marketing Study.” Once we did start looking at the two features together, it was immediately clear that we had a matching pair: the trends discussed in the report were reflected in the accomplishments of our Visionaries, and vice versa. Efforts to develop best-in-class e-commerce and omnichannel capabilities, improve analytics expertise throughout the enterprise, align the planning and execution of all commercial spending, and find better ways to engage with consumers were among the more obvious consistencies. That works out pretty nicely, we think. If you look at the report as an examination of the key challenges facing the consumer goods industry, then our Visionaries profiles can be seen as presenting some of the ways in which leading executives are addressing those issues. Of course, one very possible (not to mention trendy) way of addressing some of these challenges is through the use of artificial intelligence tools, which many companies are employing to improve both internal planning and external engagement — as well as to better align those two activities. To help readers get a handle on the numerous tools that are currently available, CGT this month presents its inaugural “Tech Solutions Guide” for AI/Machine Learning. The guide encompasses well-known solution providers who’ve added AI-driven enhancements to existing tools, along with new vendors presenting unique offerings. These vendors support a broad array of business functions, as you’ll see. The guide marks our first attempt to examine this space, so we welcome your feedback on the information we’ve provided. It certainly is not an exhaustive view of the vendor landscape (which might be next to impossible, actually). But we do hope it offers a little guidance to companies that need some direction. So let us know how we did — and please, tell us about other solution providers we should be covering. One final note on this issue: We labeled this our “9th Annual” Sales & Marketing Study in recognition of the number of years we’ve worked with Simon Ellis and IDC Manufacturing Insights to examine the state of the industry (and a big thank you to Simon for once again helping us out). Technically, however, CGT has been publishing this report since 2005. As an example of how much things have changed, our first report noted that, at the time, fewer than half of consumer goods companies were using any technology at all to support such critical business functions as TPM, demand planning and account management. It’s hard to believe that, as recently as 13 years ago, technology was still viewed as an option rather than as an integral part of business activity. It reminded me of the time about five years ago when a fresh-from-college new hire asked me how business reporters could have possibly done their jobs before the Internet came along. I actually had to stop and think about it before I answered him. Peter Breen, Editor-in-Chief

MANAGING DIRECTOR AND PUBLISHER Albert Guffanti aguffanti@ensembleiq.com EDITORIAL Editor-in-Chief: Peter Breen pbreen@ensembleiq.com Senior Editor: Nicole Gillo ngillo@ensembleiq.com Contributing Editors: Tim Binder, Jamie Grill-Goodman, Patrycja Malinowska, Charlie Menchaca, Samantha Nelson SALES Associate Brand Director: Bill Little blittle@ensembleiq.com Senior Account Executive: Jolly Patel jpatel@ensembleiq.com Assistant to Brand Director: Jen Johnson jjohnson@ensembleiq.com EVENTS Vice President, Events: Michael Cronin mcronin@ensembleiq.com Director, Event Planning: Patricia Benkner pbenkner@ensembleiq.com Director, Event Content: John Hall jhall@ensembleiq.com MARKETING Marketing Manager: Susan Tomaski stomaski@ensembleiq.com AUDIENCE ENGAGEMENT Director of Audience Engagement: Gail Reboletti greboletti@ensembleiq.com Audience Development Manager: Shelley Patton spatton@ensembleiq.com ONLINE MEDIA Director Product Development: Jason Ward jward@ensembleiq.com Web Development Manager: Scott Ernst sernst@ensembleiq.com Online Project Manager: Whitney Gregson wryerson@ensembleiq.com PROJECT MANAGEMENT/ PRODUCTION/ART Vice President, Production: Kathryn Homenick khomenick@ensembleiq.com Creative Director: Colette Magliaro cmagliaro@ensembleiq.com Custom Project Manager: Kathy Colwell kcolwell@ensembleiq.com Custom Project Manager: Judi Lam jlam@ensembleiq.com Production Manager: Patricia Wisser pwisser@ensembleiq.com Subscriptions: 978-671-0449 CORPORATE OFFICERS Alan Glass Executive Chairman David Shanker Chief Executive Officers Richard Rivera Chief Operating Officer & Chief Financial Officer Korry Stagnito Chief Brand Officer Therese Herbig President, Enterprise Solutions Joel Hughes Chief Digital Officer Jennifer Turner Chief Human Resources Officer Tanner Van Dusen Senior Vice President, Innovation

CORPORATE OFFICE 8550 W. Bryn Mawr Ave. Ste. 200 Chicago, IL 60631 Phone: +1 773-992-4450 Fax: +1 773-992-4455 www.consumergoods.com

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COVER STORY

CGT’S ANNUAL LOOK AT INSPIRATIONAL EXECUTIVES DRIVING INNOVATIVE CHANGE AT THEIR ORGANIZATIONS here’s a lot of conversation these days about the ways in which artificial intelligence will drive the future of consumer goods. But we probably shouldn’t forget the fact that this industry is still being guided by some pretty solid, old-fashioned human intelligence. If you need proof, we have all the evidence you need right here.

this group as well, such as a tireless work ethic, a relentless desire to learn and a spirited willingness to try new things — and also fail on occasion as part of the learning process. Another is the understanding that one person’s vision often takes a whole team (or even organization) to execute; all of this year’s Visionaries readily assert that collaboration — and the kind of leadership that inspires it — is critical to success.

Business vision manifests itself in many ways, and the 10 executives spotlighted by CGT this year illustrate many of them: from innovative business models that are disrupting the entire consumer goods marketplace to unique strategies that help existing companies build out new capabilities and stronger connections with customers and consumers.

Without further ado, CGT is proud to present its 16th class of Visionaries. Nominated by their bosses, peers, partners and even the occasional competitor, the innovation and leadership of these 10 executives have proven invaluable to the recent success of their organizations. If you read closely enough, they might even help you develop some visions of your own.

But while each of this ye a r ’s s t o r i e s i s unique, there are obvious commonalities among

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COVER STORY

JON BRANDON COLLINS Vice President, E-Commerce Sales Corsicana Mattress Co.

5 months with company and in current role

VISION IN ACTION: One of Collins’ greatest achievements has been establishing digital partnerships that helped position Corsicana for strong e-commerce growth while improving internal efficiencies and speed to market. In previous roles, he also introduced a new approach to client services that improved retention by 43% and co-authored a selling methodology for B2B sales to smaller companies. ON THE HORIZON: Collins and his team are focused on building and launching a fully compressible “mattress in a box” for online-only sales that will substantially improve Corsicana’s ecommerce positioning in the home furnishings segment. Ultimately, the product will help drive sales growth over the next 12 months. Elsewhere, Collins is working on the second phase of a recently launched corporate website.

“Winning is not a culture, it’s a byproduct of the culture you create.” TECH BENEFITS: Most helpful to Collins has been a fully customizable CRM solution that can integrate with campaign and marketing automation tools. LEADERSHIP PHILOSOPHY: “Winning is not a culture, it’s a by-product of the culture you create,” says Collins. “Define your culture and be intentional about driving it.” This philosophy inspires Collins daily and encourages him to build a unified workforce. LOOKING AHEAD: “There is so much competition in the market,” says Collins. “Whatever you commit yourself to, devote every minute of your time at work for your company to it. Do not waiver or waste any time. Just two unproductive working days per month amount to a full month of unproductiveness at the end of the year.”

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ZAHIR DOSSA Co-Founder & Chief Executive Officer Function of Beauty

3 years with company and in current role

VISION IN ACTION: Making Function of Beauty actually happen took a heck of a lot of vision: The company uses proprietary algorithms to develop unique hair care products for every single customer. “It’s one thing to have an idea for individually filled and formulated products,” says Dossa. “But it’s a whole other thing to see it actually happen.” ON THE HORIZON: Working to expand the young company internationally in response to a large number of requests is a current priority. “We’re very excited to share Function of Beauty and the products with the world,” he says. TECH BENEFITS: Web development and design have been vital to the company’s growth. “I was able to design and code Function of Beauty to begin selling products at the onset without having to rely on outside sources,” Dossa explains. LEADERSHIP PHILOSOPHY: At the end of the day, more time is spent with your co-workers than anyone else, Dossa notes. “I therefore try to create an awesome workplace that is super-collaborative and aligned with a common purpose.” DISCOVERING THE UNKNOWN: “I really love strategic board games,” says Dossa. “When work seems a bit overwhelming, I take a step back and imagine it all as a super-challenging board game. I’m able to get a ton of perspective that way.”

“I try to create an awesome workplace that is supercollaborative and aligned with a common purpose.”


ANN DOZIER Senior Vice President, Chief Information Officer Southern Glazer’s Wine & Spirits

4.5 years with company; 3 years in current role

VISION IN ACTION: Over her 30 years in the industry, Dozier has enjoyed many great experiences, all driven by leaders that provided her with wonderful opportunities to learn and grow, she says. “Today, I try to do the same for others on my team and across Southern Glazer’s.” ON THE HORIZON: The company’s technology team is currently focused on three key areas: integrating and strengthening the foundational systems and infrastructures brought together through the 2016 merger of Southern Wine & Spirits of America and Glazer’s Inc.; delivering a “single source of truth” for the company through a data lake with capabilities ranging from day-to-day reporting

AMY ENDEMANN Head of Marketing Sun Basket

to predictive analytics; and expanding sales and service capabilities through digital efforts for CRM, sales force effectiveness and e-commerce. TECH BENEFITS: Dozier was fortunate to get involved early in her career with electronic data interchange, which led to e-commerce, then e-business, then B2B and B2C as the internet evolved. “Although the technology and terminology have changed over the years, the benefit it offered my career was the ability to stay connected with the customers and partners that drove growth and effectiveness for my company across almost every area of the business,” she explains. LEADERSHIP PHILOSOPHY: “Collaboration is the key to success for any leader, but especially when you lead IT,” asserts Dozier. “It takes collaboration across the team to ensure a solution moves from ideation to implementation — and most importantly, it takes a seamless partnership with the business. As an IT leader, I practice servant leadership, as IT touches so much of what we do today in our business. My team must be strong partners, advisors and enablers to the business while operating in an environment of empowerment and engagement.”

long-term strategy. While Sun Basket already offers meal plans that can help combat specific health problems (obesity, diabetes, and heart disease), she strives to get more healthcare professionals and insurance providers on board with the idea that it’s healthier and more economical to prevent illness by eating right than to treat it later with drugs and surgery.

3.5 years with company and in current role

VISION IN ACTION: Endemann has been helping build Sun Basket’s brand, team, and business since its inception three years ago. (The company offers meals and recipes featuring fresh organic ingredients by subscription). “It’s been incredible to be involved from day one,” she says. “I remember packing kale into bags in the cold room at our first facility, sweating over whether we would be able to pack all 30 boxes that we sold that week.” Since then, “from scaling marketing spend to constant team hires and reorganization, Sun Basket has taught me how to roll with the changes that come with rocket-ship growth.” ON THE HORIZON: Most recently, Endemann has been working to understand how the concept of “food as medicine” can fit into the company’s

TECH BENEFITS: Database platforms such as Nielsen, IRI, and Looker have helped Endemann learn how to pull her own data and get comfortable asking the right questions. “When I am lucky enough to have an analyst, these tasks are often overlooked,” she comments. LEADERSHIP PHILOSOPHY: “Be nimble and be humble,” instructs Endemann. “In a startup, everyone has to be a player-coach. Nobody is too busy or important to get in the weeds when we need to focus on solving a problem.” LOOKING AHEAD: “Don’t forget about the consumer while you’re swimming in data,” she cautions. “Remember to listen to the real words and emotions that your consumers are feeding back to you to get the right perspective.”

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COVER STORY

AMJAD MALIK

SHAMIM MOHAMMAD

Vice President, Global Revenue Growth Management Kellogg Company

Senior Vice President, Chief Information Officer CarMax

22 years with company; 3 years in current role

VISION IN ACTION: Malik was part of the team that led the implementation of a revenue growth management program across the globe for Kellogg. Key to the project’s success was starting with a clearly defined framework around the key pillars of RGM: price, promotion and trade. The next step was to ensure Kellogg had the appropriate analytical horsepower, systems, tools and training to support the initiative, and then to rewire the existing process to bring KPI visibility and cadence. Lastly, and most importantly, was gaining support from upper management to drive prioritization. ON THE HORIZON: The question Kellogg is trying to answer now is, “If I have a dollar to invest, where and how should I invest it to drive the most profitable sales growth,” explains Malik. The goal is to leverage data and analytics to measure the ROI of all sales and marketing tactics to maximize the return on commercial investment.

“Always remember that storytelling is critical to bring your insights to life.”

3 years with company and in current role

VISION IN ACTION: In recent years, Mohammad has been fortunate to partner with other senior leaders in leading the company’s digital transformation. “It’s been incredible to be part of a journey that is empowering our associates, sparking innovation, and driving a more seamless shopping experience for our customers,” he says. ON THE HORIZON: A few years ago, CarMax embarked upon its digital journey to better meet evolving customer expectations and revolutionize car buying — yet again. The company has created a product-centric organization that delivers technology-enabled products and services that have earned high marks from customers. The next phase of transformation will focus on the key IT priorities of efficiency, reliability and maturity.

ZAK NORMANDIN Co-Founder & Chief Executive Officer Dirty Lemon Beverages

3 years with company and in current role

TECH BENEFITS: “SAS was my go-to during my early years. It taught me how to analyze huge amounts of data, make sense of it, and create insights to drive sales,” says Malik. “More recently, I would say cloud-based solutions that improve speed and accessibility have been extremely beneficial.” LEADERSHIP PHILOSOPHY: “I strive to be a collaborative leader and a team player,” he says. “I love and live by the quote from Henry Ford: ‘Coming together is a beginning, staying together is progress, and working together is success.’” ADVICE FOR THE NEXT GEN: Young professionals entering the field should leverage data and analytics to drive insights, posits Malik. “However, always remember that storytelling is critical to bring your insights to life.”

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VISION IN ACTION: Normandin believes his “ankle biter” brand — which sells to consumers only via text message — is well-positioned to take a leading role in the traditional beverage category. “To realize our mission, I’ve assembled an incredible team of progressive thinkers to disrupt beverage distribution through conversation,” he says. “This vision is unique and differentiated in a stagnant industry that lacks any true innovation. I feel genuinely lucky to be building the company with a strong foundation made up of thought leaders and innovators that challenge the status quo daily.” ON THE HORIZON: Last summer, the company launched its first retail concept, The Drug Store, in New York City. The idea was to showcase the craft that “mixologists” use to make each bottle of Dirty Lemon in a physical


TECH BENEFITS: One of the most influential technologies for Mohammad has been cloud architecture, which he says has opened up unimaginable possibilities for both technology executives and their companies by providing speed, agility and exponentially increased opportunities for innovation. LEADERSHIP PHILOSOPHY: Mohammad believes that workplaces should be highly collaborative, entrepreneurial environments. “I grow and promote people who embrace change and aren’t afraid of it. Great talent wants to work at an innovative company, so I strive to create a great, innovative workplace that helps my talent stay engaged and achieve their goals.” “I also recognize associates who embrace the opportunity to learn,” Mohammad says. And he holds himself to the same standard. “Leaders who don’t want to learn can’t move an organization forward, which leads to frustrated teams and ultimately a standstill,” he notes. LOOKING AHEAD: “Invest time in getting to know people and building those relationships,” Mohammad advises young professionals. “In my early career, I did not invest enough time [doing that]. I’ve learned that a healthy, vibrant, eclectic network is extremely important to be successful as a leader. I would advise talented men and women to cultivate a strong network of relationships inside and outside your company.”

space, with visitors enjoying made-to-order cocktails from some of New York’s most talented bartenders. The concept proved successful enough that Dirty Lemon decided to reopen The Drug Store in a new space, with a custom layout and comprehensive event schedule designed to elevate its brand positioning. TECH BENEFITS: Perhaps obviously, the technology Normandin has found most useful in his career has been SMS, the core component of Dirty Lemon’s business model. The technology has helped the company connect directly with consumers and build meaningful relationships with its growing base of loyalists worldwide. LEADERSHIP PHILOSOPHY: “I have high expectations for my team and value the opinions and strengths of each member,” says Normandin. “I recognize the importance of building a team I can confidently rely on, and the culture of the company reflects that.” ADVICE FOR THE NEXT GEN: “Do not start a business unless you are willing to risk losing everything in the process,” Normandin advises young professionals. “Building a company is not easy. It is emotionally taxing and forces you to make sacrifices that aren’t always readily apparent.”

MATT PIERRE

Director of E-Commerce, North America General Mills

28 years with company; 6 years in current role

VISION IN ACTION: Pierre and his team lead the company’s e-commerce shopper marketing activity across online retailers, driving brand-specific, day-part solutions and event activations across a portfolio spanning 26 product categories. “What I like about General Mills is that there are so many intelligent folks [who] challenge you on a daily basis,” says Pierre. General Mills was “only dabbling” in e-commerce when Pierre was placed in charge of the emerging practice seven years ago. “In the digital and e-commerce worlds, sales and marketing are braided together. Because I had a lot of industry experience on the finance, brand, shopper sales and retail channel sides, I was able to marry them all together, bring it into the e-commerce world and influence the organization.” LEADERSHIP PHILOSOPHY: “I’m fortunate to have what I consider the best team in the industry,” says Pierre. “Even our most junior people have an advantage because they are native to this space. I tell them to be bold and share their instincts because, frankly, they should have the largest voice in the organization when it comes to e-commerce because they understand it better.”

“Even our most junior people have an advantage because they are native to this space. They should have the largest voice in the organization … because they understand it better.”

LOOKING AHEAD: The biggest difference between traditional marketing and e-commerce “is that there’s a lot more data,” explains Pierre. “That means the ability to make changes in real time and a lot more iteration. And there will need to be a lot of iteration because this isn’t an environment where companies can ask consumers what they want. They don’t know.”

*EDITOR’S NOTE: Pierre was inducted into Path to Purchase Institute’s Hall of Fame this spring. The above information was excerpted from an interview first published by Shopper Marketing magazine.

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COVER STORY and improve profitability as it takes hold of the entire shopping journey for consumers.

MARY RODGERS Director of Marketing Communications Cuisinart (Conair Corp.)

23 years with company; 10 years in current role

LEADERSHIP PHILOSOPHY: “It’s my job to inspire people who work alongside me,” says Rodgers. “I pride myself on not being a micromanager. I keep an open mind so individuals feel comfortable bringing fresh ideas to the table and everyone who touches the business has a role in keeping us on the cutting edge.”

VISION IN ACTION: Some of Rodgers’ most significant accomplishments include implementation of technologies that changed both thought and people processes, impacting employee behavior, speed to market and the organization’s bottom line. “But I believe my biggest accomplishment to date is continuing to be relevant in the ever-changing arena of marketing and technology,” she says.

“Stay malleable and open to new ideas and processes to continue to contribute and be relevant in an ever-changing world.”

ON THE HORIZON: At the top of the todo list is bringing together all disparate data in an enterprise CRM platform. This project will enable Cuisinart to improve its systems and processes, personalizing marketing to consumers while driving greater efficiency. Also high on the list is launching a direct-to-consumer e-commerce platform fueled by a new pick-pack facility. By bringing “aftermarket” sales of parts and accessories in-house, Cuisinart will gain greater control

LOOKING AHEAD: Never let the clay harden, Rodgers advises. “You must stay malleable and open to new ideas and processes in order to continue to contribute and be relevant in an ever-changing world. Also, read: Stay on top of business news, startups, and technology improvements and use this knowledge to contribute ideas to your business. Lastly, get out in the world — the view from your desk is not a direct reflection of our reality.”

TINA SHARKEY Co-Founder & Chief Executive Officer Brandless

10 months with company and in current role

VISION IN ACTION: Sharkey’s visionary view of the industry was more than adequately illustrated simply through the launch of her anti-brand, proconsumer business last year (see CGT’s April 2018 issue). ON THE HORIZON: Brandless has had so much success selling “clean” beauty and personal care products that Sharkey can’t wait to continue building out the category. “Everyone deserves to have extraordinary products that are rid of the things that we don’t want to put on or in our bodies,” she says. Therefore, expect to see several new items coming out in those categories.

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TECH BENEFITS: For the co-founder of an ecommerce company using data analytics to drive consumer engagement and product development, Sharkey’s favorite technology is a relatively simple one: She loves the “incredible efficiency of collaborative editing” provided by Google Docs. LEADERSHIP PHILOSOPHY: “I strive to hire the most extraordinary people, and then give them the tools to push themselves and succeed,” says Sharkey. “When new employees start, we ask them to set an intention for what they want to achieve that year, and then we work with them to make sure they have all of the support needed to meet and exceed that goal.” FINDING INSPIRATION: Sharkey is an avid believer that magic has no formula. “Success is achieved by an alchemy of high-achieving people who are committed to a greater purpose or cause,” she says. CGT


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CONSUMER GOODS COMPANIES TAKE A FRESH LOOK AT CORPORATE STRUCTURE, INSIGHTS, INNOVATION AND RETAILER RELATIONS IN RESPONSE TO THE NEW MARKETPLACE

SPONSORED BY C ONT E NT PA R T N ER

TITLE SPONSOR


SPONSORED CONTENT

Of Consumers and Big Brands — Disruptive Technology, Driving Change April Action to May Mayhem

BY MICHAEL FORHEZ

As a Senior Director at Oracle, Michael brings 20 plus years of diversified sales, marketing and management consulting experience. Frequently called upon to write and speak on subjects germane to the consumer products and retail sectors, Michael serves as an evangelist within the Consumer Markets, and has committed his career to engaging with various stakeholders to better understand and reflect their collective requirements.

Today, everyone in the Consumer Markets is trying to figure out a growth/survival and investment/operating strategy…examples abound: ● Digital-native focused Ulta Salon has joined the S&P 500 ● Walmart has sold UK based brick & mortar retailer, Asda, to Sainsbury’s ● Walmart recently bought 77% of India’s e-commerce retailer, Flipkart ● Kroger is amping up its e-commerce platform, in a challenge to Amazon, through a just signed agreement with Ocado ● Kroger has also recently bought meal-kit company, Home Chef, in a deal worth $700 million ● Meanwhile, the venerable UK retailer, Marks & Spencer, has announced plans to close 40 more stores ● While in China, JD.com announced an 020 strategy for opening 1000 convenience stores a day, for 5 years! ● Finally, Ahold Delhaize USA has formed an e-commerce company To outside observers, these organizations seem to exist under the aegis of the ancient Latin motto, ‘Ego igitur non crit cras’ which translates, ‘I am therefore I will be tomorrow.’ We’ll see. Today, however, it’s become perfectly clear that the technology enabled consumer/customer method of buying is changing faster than the brand/retailer method of selling. In this environment, management perspective is necessarily transitioning to ‘Outside-In’ thinking rather than the archetypal ‘Inside-Out’ process, with business decisions rapidly shifting from an executive intuition model to a customer/consumer, data information insights model. How fast is the consumer changing? Fast! There is now a new ‘fluidity’ in how digitally enabled ‘connected’ consumers are shopping. The combination of the physical and digital, AKA, phygital, is restructuring the consumer’s purchase journey while disrupting historic trading partner processes, arrangements and agreements. At the same time, and at an ever increasing pace, consumers are becoming more and more information driven, with a combined focus on convenience, personalization, speed, reasonable price, choice and quality.

Statista and Domo estimates that there are 2.5 billion smartphone users; 3.7 billion humans in the internet population; 23.5 billion IoT connected devices installed worldwide, and 15.2 million texts sent every minute, generating approximately 2.5 quintillion bytes of data a day. According to the U.S. Census Bureau, for the first quarter of 2018, e-commerce grew at rate of 16.4% while total retail sales grew only at 5.3%. E-commerce sales in the first quarter of 2018 accounted for 9.3% of total sales. Management, and shareholders, are noticing. Retailers and brands are, of necessity, investing in advanced in-store and cloud based technologies to optimize value chain and retail market share. Significant effort and capital is also being devoted to optimizing supply chain operations to close the ever tightening gap between demand and delivery.

Today’s Phygitals — Tomorrow’s Mega Disruptors

Retailers and Brands are also scrambling, with some succeeding, for ways to convert prospective shoppers into loyal buyers by drawing them into a techfilled, new age. In this quest, the smartest players are aggressively testing and investing in emerging technologies –including for IoT, e-commerce and frictionless commerce, artificial reality, and facial recognition– all of which are shifting requirements for a completely re-invented consumer/customer experience. Some examples: ● Warby Parker eye wear is currently valued at $1.75 billion – in less than 8 years ● Unilever bought Dollar Shave Club, in 2016, for $1 billion ● Casper mattress disrupted a $29 billion industry in 4 years ● Glossier, founded in 2014, already has a valuation of $390 million, and is IPO bound ● With WeChat and Alipay, millions of consumers now pay with their phones, without credit, debit cards or checking accounts Technology is rapidly changing all forms of traditional commerce. The ability to assemble the various disparate pieces –often in unconventional ways– to serve, surprise and delight customers –every day– is now the order of the day. Hail the Connected Consumer!


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EDITOR’S NOTE

Confronting the Consumer-Driven World A search for “best toothpaste” on YouTube generates 9,250 results. So who needs to know what “4 out of 5 dentists recommend” when you can consult with “Teeth Talk Girl,” a YouTube channel run by a registered dental hygienist that has 3,788 subscribers. It’s not likely that Teeth Talk Girl is having much impact on the world’s toothpaste preferences. (She’s not a fan of whiteners, by the way.) But the point is clear: Any brand trying to make an impression with consumers these days has a lot of other voices with which to contend — including a whole lot of those self-same consumers, armed with simple technology that makes it as easy for them to reach a mass audience as it is for a multi-billion dollar consumer goods company. Meanwhile, one of the world’s most important consumer goods retailers is working very hard to automate as much of the buyer-seller relationship as possible. “You’re increasingly not working with humans over there,” says Sam Gagliardi, IRI’s senior vice president of e-commerce, in reference to Amazon.com. Buyers at some traditional retailers are focusing more on smaller brands because looking for unique products “is what’s driving the consumer back into the store,” according to RangeMe founder and chief executive officer Nicky Jackson. The online product-sourcing platform for retailers showcases more than 125,000 different suppliers, exemplifying the new competitive landscape. As if these issues aren’t enough to send the traditional sales and marketing-driven consumer goods company into a business transformation frenzy, let’s not forget the potential of direct-to-consumer selling. “I truly believe every brand owner is going to become a retailer,” suggested industry advisor Andy Walter, a former IT and shared services leader at Procter & Gamble, at the recent Retail & Consumer Goods Analytics Summit.

Driving the Right Balance Chief marketing officers now devote more than one-fifth of their budgets to technology, according to Gartner. More specifically, they plan to quadruple spending on analytics in the next three years, says Deloitte. In sales, mobile field tools providing access to deeper data are making retail execution a real-time activity. Consumer goods companies are scrambling to find the tools needed to effectively react to all the changes taking place. That task, too, has become harder than it used to be, due to the explosion of new technology that’s occurred. And it’s no longer just back-office business tools that need to be considered. Even consumer technologies — smart appliances, voice assistants, wearables — are providing new ways for product manufacturers to engage with audiences. What makes it doubly exciting is that these technologies also act as windows into consumer behavior that can be analyzed to develop even stronger engagement. One area for the industry to consider, however, is avoiding an over-reliance on technology — for example, the way that programmatic advertising seems to have let some organizations put their marketing strategy on autopilot along with their ad campaigns. “The tools of our craft have never been so sophisticated,” said Eric Reynolds, chief marketing officer at Clorox Co., at the IRI Growth Summit in March. “We worship at the altar of data and technology now.” But Reynolds warned against blind devotion that would let marketing “evolve into a series of transactions involving data,” with brand building being forsaken entirely. “Technology shouldn’t change what we market, but how we market,” he advised. Put another way, the goal for brands is to “serve consumers in ways that are distinct to [the brand] and personal for each” individual, said Adam Sussman, Nike’s chief digital officer, at the recent ShopTalk conference. “Technology is most powerful when it serves people.” Our goal with this year’s 9th annual Consumer Goods Sales & Marketing Study was to examine the various ways in which companies are learning to do that. Enjoy.

CONSUMERGOODS.COM | JUNE 2018 | CGT

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THE PROGRESS REPORT

Simon Ellis IDC Manufacturing Insights

‘Improvement’ Is for Losers

CONSUMER GOODS COMPANIES ARE TAKING STEPS TOWARD TRUE TRANSFORMATIONAL CHANGE n the nine years that CGT and IDC have collaborated on this report, the general topics that we’ve covered haven’t really changed much, because the areas that consumer goods companies cite as critical for running their businesses have remained pretty consistent. But at the same time, we’ve shifted the theme of these topics from “How do I improve what I already do?” to “How should I be doing these things in the future?” Digital transformation of the sales and marketing functions has become the single biggest issue in the consumer goods industry, so we’ll focus a lot of this year’s discussion on how that’s playing out at some companies. It’s not just digital for its own sake, however, but rather how these technologies can let businesses behave differently in fundamental ways, to do things that were not previously possible — or at least not practical. Depending on whom you ask, companies are either undergoing a gradual but consistent shift to digital business models — or facing bankruptcy tomorrow if they don’t adopt digital today. While the reality is likely somewhere in between for most organizations, it’s certain that the future for any CG lies with digital. In early 2018, IDC updated and amplified the following predictions, some of which were first presented in last year’s report:

1

As much as 90% of industry growth over the next decade will be captured by companies that successfully engage directly with consumers. The decades-old battle for control between consumer goods manufacturers and retail-

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ers is over and the winner is … the consumer — who is relentlessly connected, craves individuality/personalization, and is intolerant of complexity and latency. As older consumers give way en masse to the Millennial and Gen Y generations, this “problem” gets worse. That, as we’ve said, is a consumer goods company’s worst nightmare — but also its greatest opportunity. Companies that figure out how best to engage with these in-control consumers will be positioned to capture more than their fair share of growth.

2

In the next few years, as barriers to entry continue to fall, smaller, newer competitors will wrest 10 to 15 share points from traditional, large enterprise players. Less than 3% of industry growth in the last three years came from traditional players. While small entrants historically have always earned a significant piece of the pie, many analysts believe their share has never been higher. As one prime example, nearly half (49%) of the 200 top-selling packaged goods launches in 2017 came from small suppliers with annual revenue of less than

$1 billion, according to IRI’s annual “New Product Pacesetters” report (see more on page 20). No one believes this to be an anomaly anymore, because new competitors to traditional businesses are appearing in evergrowing numbers. The historical barriers to entry (manufacturing capabilities, technology — a workforce) have disappeared; they’ve either become “commodities” or are now available via the cloud. Entrepreneurs have long started businesses out of their garages; the difference these days is that they can build up a global customer base while still in the garage. Another factor is that, as consumers look either for personalized products or items that appeal to their generation, smaller competitors are better positioned to be flexible and take risks.

3

Successful businesses will adopt and adapt capabilities to capitalize on the growing “front edge” of the industry while ensuring that the traditional base business is properly supported. The challenge for traditional players is

Entrepreneurs have long started businesses out of the garage; the difference these days is that they can build up a global customer base while still in the garage.


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the balancing act of protecting the base business while finding new ways to capture growth. While most of the industry conversation centers on digital disruption, most current business is still conducted with conventional products through traditional retail — and will remain that way for some time. Appealing to younger consumers through new and novel ways is important, but so is making sure that the existing business is properly served (even as it shrinks). Companies able to do this well will be the ones that thrive.

4

By 2020, one-third of consumer goods companies will have made gains through digital transformation, with the remainder held back by inflexible/outdated business models, processes or functional structures. IDC research finds that one of the biggest gaps currently between digital thrivers and survivors is in the area of leadership, which holds the critical responsibility of creating a vision for the direction their companies must head. Yet despite all the obvious industry indicators, many leaders are still not ready to change direction by adopting new business models or functional structures. What’s more, not every company that has a vision will be able to fully leverage its investments in supply chain and the other areas of digital transformation (which has many dimensions). But we already see some leaders laying out a roadmap for their companies to evolve. As noted last year, noteworthy examples include Bayer’s move to join with Monsanto to increase agricultural innovation, and Under Armour’s investments in technology-enabled products and health information (a recent security-breach setback notwithstanding). These moves required executive leadership to recognize how both the business model and enabling processes must change — and not just incrementally, but fundamentally.

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5

Within five years, the majority of large consumer goods companies will have reached a level of trade promotion maturity that lets them leverage sophisticated optimization tools. The concept of trade promotion is going to change in the coming years as direct-toconsumer sales and private-label brands inevitably grow. But as we noted earlier, traditional trade will persist for many years. Trade promotion has been problematic for many companies that have less than full visibility into performance and lift. This is changing — and has to change. The tools are available, the data is available, and within a few years, we expect that true optimization — of promotion planning, execution and analytics — will be a reality for all large players, and many small and medium-sized ones as well. (Also on the horizon is broader, greater alignment of the commercial spend. See page 30.)

For these projections, we define new products as both “Horizon 1” launches such as line extensions and variants, and “Horizon 2” innovation like new brands and new value propositions. Winning companies will most assuredly focus more on the latter. This won’t happen in all product categories, of course, but it almost certainly will in health & beauty and personal care. One of the implications here is the need for companies to up their game in the new product development and implementation process (see page 20).

7

Data, Data, Data … and Quality Though not a “trend” per se, the subject of data and data quality is essential to discuss. Many people IDC speaks with think of the Internet of Things as an “instrumentation problem” and, while that may have been true to a degree in 2016, it’s now really a “data and analytics problem.” You can capture all the sensor data in the

FIGURE 1

Most Important Element for Business Success 18.5%

Service

(on-time, in-full issue resolution)

Product quality

(performance, meeting customer needs, endurance)

16.7% 64.8%

Cost

(gross margin, profit, supply chain as cost center)

������: ��� 2018 �������� ����� ������

6

By 2020, the contribution of new products (less than three years in market) to overall revenue will increase by 20%. Many product categories already experience high SKU churn. IDC expects this to accelerate over time, as consumers become more demanding of personalization and product differentiation.

world, but it’s not useful if you don’t have accurate data quality and comprehensive analytics capabilities. As we move rapidly into a world where the consumer has become the primary driving force for the industry, consumer goods companies are confronting some tricky questions — in particular, how to shift from a mass-market world to one that values per-


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sonalization and customization. The other implication for a consumercentric world is that the focus for many businesses has shifted. While cost and service remain important, of course, the majority of companies now place the greatest emphasis on product quality (see Figure 1). This shift has been occurring for a few years, but as illustrated in the chart, almost half of consumer goods companies now cite product quality as most important. The other profound implication from our discussions with consumer goods companies is the nature of competition. If lateral competitors will gain 10 to 15 share points over the next five years, larger companies will be required to change the ways in which they compete. Many of these small, nimble, disruptive new competitors have been digitally enabled, with business models built on competencies that weren’t possible in an “analog” world.

FIGURE 2

Three Horizons for Digital Transformation Horizon 1 Efficiency and effectiveness: Do the things we do today in the supply chain better

Horizon 2 Be resilient to market disruption: Have a supply chain that can quickly adapt to disruption in the marketplace

Horizon 3 Be the disruptor: Supply chain supports new business models or dramatically re-imagined ones

Being digitally enabled doesn’t guarantee business success, of course. But consumer goods companies cannot succeed without it. While many traditional

ORGANIZATION

Taking the ‘&’ Out of Sales & Marketing E-COMMERCE IS HELPING TO FINALLY BRING THE FUNCTIONS TOGETHER BY PETER BREEN

f all the fortified walls separating business units in the typical consumer goods organization, none has been thicker over the years than the one between sales and marketing. The division has proved to be dysfunctional at times, with a lack of communication often leading to counter-productive, even conflicting activity at retail, where sales-side trade promotion programs would overlap with (and possibly nullify) marketing-driven consumer promotion or mass media cam-

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60

% say it’s about efficiency (ROI)

paigns. Such misalignment would work back through the supply chain, too, leading to poor inventory planning. “In an age when sales channels and marketing tactics are more numerous and complex than ever before, alignment has never been more critical,” says Lora Cecere, founder of Supply Chain Insights. “Yet alignment is still elusive for most companies.” Among the reasons are conflicting performance incentives, according to Cecere. “The sales department is focused on vol-

80

% expect to be disrupted within 3 years Leaders

companies are modernizing to be more resilient to external disruption, the real leaders are striving to become the disruptors (see figure 2). ●

ume and effectiveness, while marketing is incentivized on market share. Meanwhile, the supply chain organization is focused on cost mitigation.” However, every recent appointment of a chief growth officer or chief demand officer (by Coca-Cola, Mondelez International, Kellogg and Colgate-Palmolive, among others) has created another crack in that historic wall, as consumer goods companies increasingly acknowledge the fact that sales and marketing need to have the same marching orders. A big reason why is that e-commerce has blended the two roles more than ever before by eliminating the distinction between consumer and shopper, closing the gap between the onset of a consumer need and the completion of a purchase designed to fill that need. While the traditional purchase funnel is still there in theory, a consumer can now get from start to finish in a few seconds and a couple of clicks.

A Cultural Shift in Yogurt “How can you not have sales and market-


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ing integrated,” asked Peter McGuinness, who after four years as chief marketing and brand officer at Chobani was named chief marketing, commercial and demand officer last summer. The new position (if that isn’t obvious) signaled Chobani’s decision to align sales, marketing, product innovation, insights, analytics and category management into a single, integrated “Demand Creation” unit. “We’re combining all of those people and all of those budgets to [create] a large, connected, non-competitive demand budget. So it’s pretty cool,” McGuinness explained to CGT soon after taking on the role. “We’re developing things at the right time for the right reasons, based on consumer and customer feedback.”

“There’s always been historic, healthy tension between marketing and sales” as companies conducted the long-standing trade promotion vs. brand building debate. “And you’d have weekly status alignment calls,” he explained. “But they’re [still] separate departments. No matter how much you try … you’re never going to have full alignment. So [uniting the functions] felt like a faster, easier, more enlightened go-to-market strategy.” “And now we’re all working early, often and upstream developing the new products and platforms, the packaging, the marketing and all the innovation — and the salespeople are seeing all of that from the very beginning, so they can sell better,” he said. McGuinness acknowledged that Chobani doesn’t have the “historical legacy structures” (both tangible and theoretical) that likely keep so many older, traditional CGs from following the same course of action. “We didn’t have to tear down walls or deal with silos and fiefdoms,” because they never became entrenched at 12-year-old Chobani. Still, the tools needed to “de-trench” are now available. And the idea that CGs should realign to become consumer- rather than product-centric has, for the most part, gained industry-wide consensus. The only thing still needed is the organizational readiness to start tapping away at the wall. ●

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NEW PRODUCT DEVELOPMENT

A Made to Order Marketplace CHOOSIER CONSUMERS, MULTIPLYING COMPETITORS HAVE CGS RETHINKING PRODUCT DEVELOPMENT BY PETER BREEN

he average category leader in a brick-and-mortar store has a 13% market share online, according to IRI. Launching a few new flavors isn’t going to fix that. Nearly half (49%) of the 200 top-selling packaged goods launches in 2017 came from small suppliers with annual revenue of less than $1 billion, according to IRI’s “New Product Pacesetters” report for 2017. What’s more, 40% of the food and beverage products and 25% of the non-food items in that total were launched by brands new to the marketplace. With Millennials far less likely than previous generations to select traditional, mainstream brands, and with the digital age making it far easier for these consumers to find alternative brands that better match their own preferences, consumer goods companies can no longer rely on brand extensions or “new and improved” product attributes to add much incremental revenue. The perfect example has been well scrutinized: ongoing efforts by Procter & Gamble’s Gillette to top the prior year’s “innovation” (and dollar growth) with features and benefits that helped more to increase razor prices than to provide real consumer value. While P&G succeeded in driving incremental growth, it also left the door wide open for startups Dollar Shave Club and Harry’s, Inc. to leverage the internet, solve for real consumer needs (price, ease of purchase) that Gillette had been ignoring, and steal share. “You have to create new and unique value,” says Zahir Dossa, who launched Function of Beauty to deliver “hyper-ultra personalization” in personal care. The 2-year-old company’s shampoos and conditioners are formulated differently for each specific shopper — whose name is then placed on the bottle. (12 billion formulations are possible.) “You take [your] brand completely out of it and give it to them,” Dossa says.

Personalizing the Product While most CGs aren’t taking their brands out of the equation just yet, many are testing the personalized product waters. For one, Nike’s “By You” collection lets consumers build their own shoes, starting with the type and including materials, colors and other features. “By allowing consumers to design and


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develop their own shoes, Nike is effectively transforming portions of its innovation process from company-led to consumer-led,” Mark Osborn, vice president of digital strategy & business planning at SAP, said in a recent blog on consumergoods.com. “Previously, Nike would have commissioned expensive, qualitative consumer research studies to predict shifting needs and preferences, and then interpret the findings to make big bets on product innovations and extensions,” Osborn explained. “Now, Nike delivers an entirely personalized experience for the consumer while gaining real-time insights at a macro-level into broader shifts in preferences — all at no incremental R&D cost.”

more commonplace among larger CGs is the use of accelerators or incubators that find emerging brands with potential and shepherd them through the growth process — going the adoption route then birthing the babies themselves, so to speak. In May, Kraft Heinz presented the first round of recruits for Springboard, a platform the company unveiled in March to nurture, scale and accelerate the growth of “disruptive brands.” Among the initial wave were low-carb chips made from egg whites (Quevos), beverages made from aronia berries (Poppilu), and a 400-year-old family recipe for beef jerky (Ayoba-Yo).

overall brand experience. These days, a brand’s ability to simplify the fulfillment process can be just as important as the product itself. For instance, Dirty Lemon Beverages co-founder Zak Normandin thinks the company’s unique fulfillment model — direct delivery on orders that can only be placed via text message — is as important to success as the healthy juices it sells. “Technology provides the ability to offer service beyond the product itself,” explained Martin Aubut, chief digital officer for L’Oréal Canada, which is on the lookout for tools that will improve the shopper’s path to purchase — as well independent brands that can

Personalizing the Process Nike isn’t quite turning the entire innovation process over to consumers. But it is addressing an important shopping trend while also gathering critical intelligence to fuel the internal NPD process — which, if it isn’t clear already, needs to be far less internal than it used to be. “Membership serves our consumer, and membership serves our business,” said Adam Sussman, Nike’s chief digital officer, about NikePlus, the brand’s appcentered loyalty program. The program has 100 million-plus members worldwide who have become de-facto contributors to the innovation process. “All the data drives optimal product recommendations,” Sussman told the audience at ShopTalk in March. Similarly, Conair’s Cuisinart tracks social media sentiment to help drive its innovation, modifying existing products and developing new ones based on what consumers are saying. By gaining a better understanding of consumer need ahead of time, “You can save yourself a lot of time and money when you’re engineering a product from scratch,” noted Mary Rodgers, the brand’s director of marketing communications. Another strategy that’s becoming

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Nike By You lets shoppers build their own sneakers from scratch.

Personalizing Beyond the Product Companies also are using these incubators to find and foster new technologies that can help with another critically important aspect of new “product” development: improving consumer engagement and loyalty by enhancing the

enhance the portfolio. “Stop worrying about launch success and [instead] worry about customer lifetime value,” said Aubut, while speaking in March at an event. His point? Even new product development needs to adopt a stronger focus on the consumer. ●


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DATA & ANALYTICS

Going Deeper with the Data ANALYTICS CAPABILITIES HAVE BECOME THE LIFEBLOOD OF ENGAGEMENT BY SIMON ELLIS, IDC MANUFACTURING INSIGHTS, AND CGT STAFF

nalytics has become the largest line item on the budgets of chief marketing officers, according to Gartner’s 2017-18 “CMO Spend Study,” which compares allocations across 13 capabilities. And while it already commands about 9% of the total budget, analytics spending is expected to nearly quadruple over the next three years, according to Gartner. “This significant budgetary commitment is grounded in CMOs’ understanding that analytics is central to delivering [consumer] experience; identifying, understanding and growing [the consumer base]; and measuring and optimizing marketing performance,” the report states. The emerging mission of consumer goods companies is to create and offer engaging experiences at scale for both the consumer (the end-user) and the customer (still mainly retailers). It’s no longer enough to meet the specific needs of consumer segments; companies must meet and exceed the needs of individual consumers, both in ways they expect and ways they have not yet imagined. The catalyst for fulfilling this mission is, of course, digital. “Digitalization is a matter of four strategic themes: better, closer engagement and knowledge of consumers and shoppers; a partnership renewal between manufacturers and retailers to mutually grow the category and deliver value to shoppers; automating internal processes to operate faster and more efficiently; and, very often, the opportunity to rein-

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vent business models in which data becomes part of the product,” says Vittorio Cretella, principal at VCAdvisory and former chief information officer of Mars, Inc. “Analytics is an essential enabler across these four dimensions,” Cretella says. “What used to be operational reporting focused on “What happened” needs to evolve into strategic insight that explains why it happened and what will happen next.” “Data is the new currency,” said Joher Akolawala, senior vice president and global CIO at Mondelez International, while speaking at the Retail and Consumer Goods Analytics Summit in April. Critical to a brand’s future success is the ability to understand the DNA of its consumers, and the underlying ability to leverage analytics as a business solution rather than a traditional IT project, he explained. Predictive analytics is the future.

Rules of Engagement Over the next few years, consumer goods companies will emphasize innovation excellence as it relates to the success of new products (and the number that will be required), the ways in which both consumers and customers are engaged (and how that activity will be funded), and the ability of the supply chain to manage new and different engagement models. Evolving consumer and customer expectations make this strategy mandatory,

but implementation success and efficacy will determine profitability and competitive differentiation. Engaging successfully, and repeatedly, with the consumer is now the central imperative. The “old ways” of engaging with consumers, as well as connecting with customers, will no longer suffice. But engaging with the ultimate user, who might have varied experiences and services over the product’s lifecycle, is not a trivial undertaking. There is substantial investment required to achieve that goal, particularly as it relates to data and analytics. In conjunction with that effort, it must be re co g n i ze d t h at CG companies engage with extensive retail networks serving both geographic areas and consumer segments (grocery, drug, club and mass market). These traditional partners, as well as new digital partners like Amazon, will have to be connected. Retailers, too, now have a greater stake in this game if they want to stay relevant (and in business). CVS Health may once have believed that consumer analytics was an activity “best left to our partners,” according to chief analytics officer Robert Darin, while speaking at RCAS. But the drugstore giant now understands that “analytics is how we’re going to do business,” a competency that must be pervasive throughout the organization — especially since CVS’s ambitious mission


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is nothing less than reinventing the retail pharmacy experience. As discussed in last year’s report, there are three key elements to tackling this need to engage consumers and connect with customers: PERSONALIZATION AT SCALE: As already noted, successful engagement with consumers is what will distinguish winners from losers in the digital marketplace. Offering digitally enabled experiences to individual consumers at scale is a significant challenge, and some of the automated practices currently in vogue (retargeting, programmatic buying) fall quite a bit short of true relationship-building personalization. Ideally, companies should be delivering personalized products and shopping experiences at the precise time and location that consumers want them — and in an immersive way that meets or even exceeds their expectations. Having the right technologies in place to profitably deliver these capabilities will be key. ADVANCED CHANNEL MANAGEMENT: Historically, the role of the retailer has been largely defined as making the original sale, working with the national brand on promotions, and being the location for returns. In truth, however, the retailer is often the “face” of the brand in the eyes of consumers. With the growing strategic priority for manufacturers to engage directly with consumers, brand owners need to change how they interact with their retail customers. OMNICHANNEL PROMOTION: An important factor for both consumer engagement and customer connection is the way brands handle promotions while shifting from analog to digital interaction. Whether it’s consumer promotions like coupons or trade deals such as temporary price reductions, the ability to

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TA B L E 1

The Importance of Analytics DIGITAL CAPABILITIES MOST CRITICAL TO BUSINESS PERFORMANCE TODAY

IN 3 Y EA RS

Cloud

#1

#2

Big data analytics

#2

#1

B2B cloud commerce networks

#3

#3

Smart mobility

#4

#4

Internet of Things

#5

#5

manage and align activity across channels has become critical. (This concept is discussed in more detail on page 30.) Adding even greater complexity will be direct-to-consumer commerce, which most CGs are starting to accept as a strategic necessity — if not to actually sell product, then at least to acquire a direct stream of consumer behavior data that can be used to improve future engagement. Here, the ability to move funds across promotional vehicles, engage digitally and get smarter about allocating funds are all key capabilities.

Accelerating Innovation The ability to offer new products to the marketplace that meet new or unmet consumer needs and, to a lesser degree, the necessity to “beat the fade” by extending or modifying portfolios through new flavors, colors and fragrances, is central to CG success. Implementing a coherent, extended process innovation platform is the first step, but it’s not enough. In a digitally enabled marketplace, sourcing new ideas from all quarters — especially consumers themselves — will be an essential skill, as will be the ability to transparently manage

all products through the full lifecycle (see page 20.) There are a significant number of competencies required to thrive in a digitally enabled word, but none is more fundamental than analytics. While most CGs recognize the increasing availability of data from myriad sources (much of it coming from downstream), many still worry about having the necessary analytics chops to extract real value — and rightfully so. When asked in a 2018 IDC survey about modern, digital capabilities with the potential to impact business performance, CG companies cited big data analytics as second highest in overall importance behind only cloud architecture; in three years, they expect it to be most important (see Table 1).

Closing the Data Gap We’ve previously discussed the notion of a “data gap,” where incoming data exceeds the organization’s analytics capabilities, and how problematic that will be for companies that don’t invest in improvements — as well as how beneficial it will be as a competitive advantage for those that get it right. Indeed, in IDC’s supply chain research, we’ve noted that comprehensive analytics are central to the future. In the same survey mentioned above, respondents were asked


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about their efforts to improve big data analytics, and they cited the following efforts: • 50% have implemented advanced analytics capabilities at either an enterprise or functional level. • 25% are exploring or piloting new analytics capabilities. • 25% don’t think they’re important. We’d like to politely suggest to this last, perplexingly laggard 25% that advanced analytics are critically important. But otherwise, there seems to be material progress being made toward adopting modern, digital analytics capabilities to handle big data. We’ve also discussed in past reports about expanding supply chain intelligence beyond the things we know and the things we don’t know to include the things we “don’t know that we don’t know.” Whether it’s a potential disruption, a product quality problem or a fast-emerging market opportunity, supply chains that enable proactive steps or fast responses are going to win. Analytics capabilities mean everything to

future success for consumer goods companies, who will have to collect, analyze and generate insights from ever-growing data sources, and then be able to turn them into real-time actions that enhance products and experiences for consumers. Over the past two years, IDC has conducted a number of surveys that asked respondents about the principal drivers for exploring and investing in digital tools. The top priority has almost overwhelmingly been about consumer/customer needs (as it has in several recent CGT surveys as well). Advancements in machine learning will certainly help improve capabilities tremendously, giving companies the ability to analyze ever-expanding sets of data to uncover actionable insights that would not have been humanly possible to find — or at least not at anywhere near the same speed. “You have to spend as little time as possible working on the data and as much time as possible developing the impact,” said Stan

Sthanunanathan, Unilever’s executive vice president of consumer and market insights, at a recent industry event. The goal should be “augmented intelligence” that combines the best aspects of machine learning and human understanding, he suggested. “Both CGs and retailers have been operating for decades with a proven business model that did not rely heavily on data and insights,” says Cretella. “That must change starting at the top of the organization, where leaders need to understand and appreciate the importance of making decisions based on facts and not only on experience.” We live in an increasingly data-driven world, with differentiated insights now a vital piece of competitive capital. Many (if not most) CGs still have a lot of internal work remaining to build the cultural understanding, cross-functional processes and dataspecific skills needed to gain this advantage. However, they no longer have a choice in the matter. If you don’t believe us, go ask your CMO. ●

TRADE PROMOTION MANAGEMENT

Working Off the Same Page COMPANIES ARE INCHING TOWARD ALIGNED COMMERCIAL SPENDING ACROSS SILOS

unning a concurrent shopper marketing campaign can improve support for a trade promotion program by 22%; adding a trade promotion component can improve the ROI of shopper marketing effort by 29% (see chart 2). The higher the level of integration between the two, the better the incremental results can be, according to extensive data analysis from Foresight ROI. With data like that readily available, it would seem logical that shopper and trade programs would be planned, sold

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in and executed in lockstep by this point in time. After all, they’re typically conducted in the same venues and targeted at the same shoppers (or at least similar pools). Heck, they even often employ the same marketing tactics. Then again, the CG industry hasn’t always operated logically. These are, after all, the people who used to sell hot dogs in packs of 10 and buns in packs of eight. And so, in many organizations, shopper and trade aren’t in lockstep — they’re simply trying to avoid stepping on each

other’s toes. Case in point: While walking attendees through a “best practice” example of the annual trade planning process at a recent industry event, the presenter identified the most likely stage at which the shopper plan might be considered. “Wouldn’t it make sense to have someone looking across all of these things?” asks Craig DeSimone, director of global revenue management at Kellogg Co. “Companies need to understand better that this is all a commercial investment,” said DeSimone, adding that he believes


Softftftftft Puftposft-built foft Consumftft Goods Compftnifts Trade Planning | Advanced Analytics | tpm.afsi.com Retail Execution | Direct Store Delivery | re.afsi.com

Thftftft is ft ftftftson fthy moftft thftn 50% of thft bftftnds in youft shopping cftftt hftvft bftftn touchftd by AFS Tftchnologifts Softftftftftft

“Thank you AFS Team for the gftftftt suppoftt you have provided to Nestle throughout the year. Ouft succftss ftould not bft possiblft ftithout youft collftboftfttion ftnd you bfting pftftt of ouft tftftm!”

“AFS hfts bftftn ft tftuft pftfttnftft in every sense of the word. Their onboarding and implementation team is outstftnding and have worked with us ftvftfty stftp of thft ftftyft”

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~Joelle Simmons, VP of Sales

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Oregon Ice Cream


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CHART 1

Need for Integration HOW IMPORTANT IS IT FOR A SHOPPER MARKETING OPTIMIZATION TOOL TO INTEGRATE WITH THE FOLLOWING SYSTEMS? Trade promotion management

43% 36%

CRM Enterprise resource planning

33%

Retail execution Financial management

26% 19%

Answers reflect the number of respondents citing each system as important SOURCE: CGT/CIERANT CORP.

starting from scratch, according to recent research from CGT and Cierant Corp. While some ERP platforms are working on this growing need for alignment, there currently is no single tech stack that will let companies easily analyze all investments together, analysts say. If and when there are, revamping or even replacing existing systems to accommodate the big-picture view will require significant time and resources. That’s why PwC Strategy& suggests initiating the change when the organization is already planning a major technology implementation (like the migration to S/4HANA being undertaken by many of SAP’s clients). Such upgrades are an ideal time for companies to determine what business process improvements can be undertaken to make the implementation even more effective.

Taking the First Step Kellogg is farther ahead than most CGs in this regard. This understanding is becoming even more critical. In fact, there has been recent discussion across the industry not only about aligning shopper and trade activity, but about building systems and processes that will let companies integrate planning and analysis across trade, shopper, national consumer promotion, digital marketing, e-commerce and even packaging to provide a holistic view of all commercial spending. The spider web-style path to purchase caused by the move to omnichannel shopping has made doing so far more of a business imperative than it ever was before. Moving toward such a broad commercial view requires companies to take a fresh look at the key building blocks they use for planning, execution and performance management to develop better methods of upstream strategic collaboration. It also might require them to use a “blank sheet” approach for budgeting

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CHART 2

Shopper Marketing/ Trade Synergies 29% 22%

Shopper increases trade support

Trade integration increases shopper ROI

SOURCE: FORESIGHT ROI

that could be facilitated by another recent industry trend: zero-based budgeting. Roughly one-fifth of CGs have already forsaken the traditional yearover-year approach to budgeting and are

It’s hard to imagine full commercial alignment anytime soon, however, when most companies still aren’t even doing a good job uniting shopper and trade. Despite widespread acknowledgment of the need, some standard industry issues have kept this from happening. The first is the aforementioned siloed nature of business functions at most CGs. Trade is a sales activity, and shopper does have “marketing” in its name. Different departments and separate budgets don’t lend themselves to easy alignment. Another issue is the fact, despite the many similarities, the shopper and trade practices aren’t quite apples to apples — maybe more like oranges to tangerines, with somewhat different objectives and KPIs. For one, the short-term analysis typically used to measure trade programs “isn’t going to be effective for shopper marketing,” DeSimone says. And the longer-term measurement needed to prove out shopper is often more difficult and, therefore, more expensive, to obtain. Marketing mix analysis tools, meanwhile, “only get at


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shopper a little bit” because of the narrow scope of most programs, he says. At an even more basic level, many organizations haven’t even adopted good processes for managing shopper marketing itself, let alone take steps to align it. As a discipline, shopper hasn’t quite refined itself to the level of trade, partly because it’s a newer but also because it is nowhere near as big a cost center for CGs. Trade promotion spending, the second largest line item at most consumer goods companies (after cost of goods sold), represents somewhere between 16% to 25% of gross sales. It’s been a necessary evil of the CG industry since the early 1970s. With that much money at stake (about $500 billion worldwide, according to some estimates), it’s become imperative for CGs to track their spending as efficiently as possible. Not that the effort always works: For all the sophisticated management and optimization tools now available, a fair number of companies are still emailing spreadsheets from one department to another. Shopper marketing as a distinct discipline of the CG organization isn’t as old (roughly 12 years, give or take), or as costly (about 2% of sales, according to Path to Purchase Institute). So the impetus to build systems and processes to manage shopper activity hasn’t been as strong. But this obstacle, at least, is being addressed, thanks to the arrival of solutions that can help manage shopper. In addition to the aforementioned Foresight ROI, companies like Cierant and Shopperations are providing tools to help CGs gain greater transparency into their activity. “There is room for us to be more like scientists and not just artists,” says Olga Yurovski, who left her job as a shopper marketing director at what was then ConAgra Foods several years ago to launch Shopperations. “I always felt jealous about not having a system like the salespeople had. They were always so buttoned up with their financial reporting.”

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84% of companies believe

that improving shopper marketing agility and cost-effectiveness has become more critical in the last two years.

The need is understood: According to the aforementioned CGT/Cierant study, 84% of companies believe that improving shopper marketing agility and costeffectiveness has become more critical in the last two years.

Conagra works to make sure that trade and shopper programs are aligned at retail.

Finding Common Ground Aligning shopper and trade activity “is absolutely our goal” at Conagra Brands, according to Bob Waibel, the company’s senior director of shopper marketing. “We work very hard to make sure that we’re aligned with a holistic plan.” The CG operates primarily as a fieldbased organization, with shopper marketers embedded within the customer sales teams at key accounts like Walmart and Kroger. So shopper isn’t so much a separate discipline as the bridge between brand and sales, a mechanism for “bringing the brand plan into the retail environment,” he explains. Conagra currently uses separate tools to manage trade (Blacksmith Applications) and shopper (Shopperations) activity. So the next step will be to gain more detailed clarity by aligning the solutions “sooner, rather than later,” Waibel says. “We are reasonably well aligned with our funding,” with trade and shopper activity managed largely from the same budget, says John Clement, director of sales planning & innovation at Welch Foods. The two activities also are considered together during the annual planning process for retail accounts, he says. “Some of it is just a function of our size and the way we’re set up. We don’t have a 10-person shopper marketing department


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CONSUMER ENGAGEMENT

Something to Talk About MARKETERS ARE SCRAMBLING TO ‘ARTICULATE’ STRATEGIES FOR CONVERSATIONAL COMMERCE BY PETER BREEN

that’s located somewhere else,” because shopper sits within the sales department, Clement notes. “We’re a team that’s working together consistently throughout the week” and in constant contact with field teams. “So we’re not disconnected.” The company uses TPO software from T-Pro Solutions (and other tools) to keep the activity adequately aligned. “We’re getting better at it,” Clement says. In general, then, the industry does seem to be heading in the right direction. Wayne Spencer, president of T-Pro Solutions, thinks shopper marketing management/ optimization tools will be adopted faster than their trade promotion counterparts were. “You need to merge the two silos to optimize the two investments,” he says. “It’s a natural progression.” The first thing companies must do is “realize what the opportunity is,” says Rick Abens, chief executive officer and founder of Foresight ROI (and another ConAgra veteran). Abens believes that most CGs are working to align the two functions. “It’s just a matter of degree and the level of success.” Increasingly, the level of overall success for CGs will depend on how well they do in aligning their commercial spend. ●

here’s a simple reason why voice assistance became an immediate sensation with consumers, according to Joel Warady, chief sales & marketing officer for Enjoy Life Foods: “We’ve had a voice for 5,000 years.” Adoption of “conversational commerce” is expected to be swift, with online researcher comScore, Inc. expecting 50% of all searches to be conducted via voice by 2020. There already are 50 million voice-first devices in the market; 19% of Amazon Echo owners have used their device to make a purchase, comScore says. What’s more, 85% of consumer interaction with companies will be conducted without human involvement by 2020, according to Gartner. That means CGs need to quickly find new ways to make themselves heard — literally as well as figuratively. “If there isn’t a voice strategy in place for 2019, you should feel very uncomfortable,” advises Warady. “Start with something small [now] because it will be a vital part of the overall strategy.” “Assistance is the new battleground for growth,” said Ted Souder, retail head of industry for Google, during the Path to Purchase Summit last March. The digital giant is still trying to figure out “what voice search results look like” and “what voice ad units look like,” he said. Heaven help brand marketers when they do.

Talking Shop Tackling this trend adds two more critical items to the digital transformation punch list at consumer goods companies. The first is to adopt voice as a direct-communication vehicle, something that at least a few marketers feel has positive benefits. “Voice is a powerful way to elevate the brand experience in everyday life,” said Mark Berinato, vice president of experience design at Panera Bread, which last year put together a cross-functional team of designers, IT personnel and product managers to start working on a strategic plan. Replacing those clunky, text-based chatbots on brand websites is one obvious move. (Vendors like Voysis, profiled on page 45, have emerged to help CGs do that.) Scores of brands also have created skills for Amazon’s Alexa, currently more to test and learn than to achieve any specific objectives. Beiersdorf’s Eucerin brand recently launched a skill that lets consumers answer questions to determine the product best suited for their particular needs. Product information cards detailing the ultimate recommendation are sent to the consumer’s smartphone for reference when a purchase is made. (Skills currently can’t accommodate transactions.)

CONSUMERGOODS.COM | JUNE 2018 | CGT

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19 % of Amazon

Echo owners have used their device to make a purchase.

The recent “Bottle Genius” campaign talked whiskey shoppers at a New York City liquor store through the selection process.

While it gets most of the hype (in part due to some recent incidents of miscommunication), Amazon currently only has a small share of the voice assistant market because most activity occurs through smartphones, says Ethan Goodman, senior vice president of shopper experience at The Mars Agency, which helped Eucerin build the skill. But for obvious reasons, it is a leader in shopping-related activity. Mars also recently created a “Bottle

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Genius” skill that helped shoppers in a New York liquor store find the right whiskey. Shoppers talked to an Echo device attached to a custom-built, illuminated shelf that lit up to identify the recommendations.

The Shelfless Digital Shelf The other vital “to do” item for CGs is figuring out how to work through third-party personal-assistant services like Alexa, Google Home, Microsoft

Cortana or Apple’s Siri — all of which operate independently, and some of which might have competitive strategies in mind: Alexa only recommends Amazon’s own products when queried about diapers, baby wipes or batteries, according to reports. “You need to be the No. 1 result right now” or you’re probably out of luck, says Goodman. Alexa typically uses the current Amazon Choice item for the product category, he notes, so optimizing product pages on Amazon.com can help. Looking ahead, it likely won’t be long before voice assistance moves beyond technology devices and becomes embedded in standard home appliances (and homes themselves), apparel and other everyday items. “We know that new voice technology may not have high penetration with our entire shopper base,” Rob Ciaffaglione, Beiersdorf’s team leader for shopper and customer marketing, told Shopper Marketing. “We believe that, over time, voice is the future.” CGT


NEXT MEETING October 29-31, 2018 Orlando, Florida

JOIN THE LEAGUE OF LEADERS AND CONTRIBUTE TO THE CAUSE OF INNOVATION AND ACTION The League of Leaders is an elite task force of industry peers who learn through sharing, who act through collaboration, and who lead through collective support. It is an exclusive gathering of influential executives in the consumer goods industry who are committed to fostering best practices for the strategic use of technology to drive meaningful business growth. This exclusive executive program is committed to identifying best practices and deepening the understanding of business and technology efforts across the enterprise. Those invited to join the League don’t just follow the trends; rather, they pave the way for new thinking. Put simply, you have to be excellent – and you have to stay excellent. The companies that have been invited — consumer goods manufacturers along with elite industry partners and solution providers — have impressed CGT with their industry-leading passion and prowess. They understand that collaborative learning with other leading thinkers positively can positively impact the industry at large. League of Leaders meetings deliver: • Powerful peer introductions and connections • Access to key business contacts • Strategic discussions on the future of the industry • Advance exposure to research, reports and case studies • In-depth access and connection with CGT’s editorial staff

FOR MORE INFORMATION ON JOINING THE LEAGUE OF LEADERS, PLEASE CONTACT: Albert Guffanti Brand Director, Consumer Goods Technology Email: aguffanti@ensembleIQ.com Phone: 973-607-1301

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Tech Solutions Guide

2018 AI/MACHINE LEARNING SOLUTIONS

GUIDE

In this edition of the Technology Solutions Guide series, CGT presents a comparison chart of solution providers on the forefront of artificial intelligence and machine learning implementation. In addition, experts from guide sponsors AnswerRocket, Prevedere and Spring provide thought leadership for CG manufacturers navigating this emerging area of business intelligence.

MIKE FINLEY Chief Scientist AnswerRocket

RICH WAGNER CEO & President Prevedere

CONOR KEANE CEO Spring

Does the consumer goods Q industry already have a solid understanding of the benefits

artificial intelligence can deliver, or is there still a lot of learning needed? How can CGs best get up to speed? MIKE FINLEY: When Nicolas Appert invented a way to package food for Napoleon’s army, he couldn’t have known this would transform the consumer goods industry. We’ll see the same thing with AI. The basics of the technology may SPONSORED BY

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CGT | JUNE 2018 | CONSUMERGOODS.COM

be understood in principle today, but the actual impact will only be understood after the fact. The confusion about AI isn’t limited to consumer goods. With such rapid evolution, leaders across industries are looking to AI for competitive advantage. Even leading technologists are confounded about its possibilities. So it’s no surprise that the great benefit for AI in CG is as yet undiscovered. To get up to speed, first identify your current pain points and limitations. Once you understand what problem you’re trying to solve, do your research. CGT has great resources; you can also seek out webinars, podcasts, or think pieces from consultants who study this space. RICH WAGNER: The use of artificial intelligence in almost any industry is still very new. However, we’re rapidly seeing more impactful business uses of AI in consumer goods and retail than in any other industry. The challenge for CG leadership will be to maintain an open mind while AI uncovers insights that may contradict years of “business as usual.” The landscape is changing faster than before, and AI can help leaders stay ahead if they are willing to invest the time and resources. CONOR KEANE: CG companies understand the benefits of artificial intelligence. It’s actually making a lot of executives insecure right now, because


Equip your team with AI to answer your “why” questions. In seconds.

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Tech Solutions Guide

“The challenge for leadership will be to maintain an open mind while AI uncovers insights that may contradict years of ‘business as usual.’” RICH WAGNER, PREVEDERE

they realize they need to master AI to stay relevant. Adoption is uneven. Some companies are in advanced stages of using AI to run their business, but most are still in research mode, running exploratory programs on things like assortment optimization. These pilots have shown mixed results. I believe organizations that are taking an agile approach have an advantage. The best way to learn is to jump in and experiment. First, though, you need to know what problem you’re trying to solve. We’ve targeted our investment on actual workflows and desired outcomes, so we’re able to achieve substantial benefits fairly quickly. One of our focus areas is using AI to optimize behavior. We’re capturing knowledge and expertise, and sharing best practices that become standard operating procedure across an entire team.

On which areas of Q the business are CGs focusing their early AI initiatives? Which areas do you think are being under-considered at this stage? FINLEY: Consumers, packaging, goods: the industry name

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says it all. Three vast subjects combined into a single field. The sheer quantity of data that can be collected from one of these areas is compounded by the need to merge data from all three and try to compete with other companies swimming in the same data tsunami. AI has already been applied to manufacturing and customer service, but many CGs are ignoring its value in augmenting human decision-making ability. Two possible reasons why: They fear AI will replace jobs (whereas we find people are freed up for more advanced, less repetitive work) and the benefits aren’t as quantifiable as say, preventing machine downtime. Humans by themselves can’t keep up with this unprecedented level of data. Today’s brand managers barely have the tools to project a few market scenarios; tomorrow’s augmented business leaders will implement strategies that simultaneously mitigate threats and exploit opportunities. WAGNER: One of the early uses of AI was to analyze emails, chat logs and social posts to determine the sentiment of the consumer. This all falls in the category of “unstructured data” analysis, where the information can be text, numbers or images, spread across various platforms and formats. While this is important, businesses

live or die based on how well they prepare for the future — either bracing for headwinds or capitalizing on tailwinds. AI can powerfully analyze “time-series data” (such as weekly sales volume or monthly revenue figures) and identify leading indicators not only with internal metrics, but with external factors such as weather, income or consumer sentiment. AI can provide a holistic understanding of what drives business performance and can very accurately predict future performance based on signals happening now. KEANE: Most companies are making significant investments in supply chain efficiency and focusing a lot on assortment optimization. We anticipate that the industry will begin to pay more attention to process optimization for things like pricing, stocking frequency, dynamic routing, alternate offers, intelligent visit planning, fixed asset deployment, and workforce enablement and training. Sales rep performance optimization is very important, too. You should focus on implementing algorithms that can deliver real value. AI tools need to be integrated with actual processes and workflows to ensure adoption. You have to learn from the field experts and incorporate their expertise into the machine learning algorithm — they know the consumer better than anyone. Right now, we’re looking at how organizations like Amazon, Uber and some of the big trading banks are using recommendation engines to influence behavior. We’re also focused on shifting the primary interface from screen to voice.


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Prevedere is an industry insights and predictive analytics company helping business leaders make better decisions by providing a real-time view of their company’s future.

Phone: (888) 686-7746 Email: inquiries@prevedere.com Web: www.prevedere.com


Tech Solutions Guide

“The sheer quantity of data that could be collected is compounded by the need to merge data and try to compete with other companies swimming in the same data tsunami.” MIKE FINLEY, ANSWERROCKET

How difficult will Q it be for companies to implement AI

throughout the enterprise? Is this a 20-year, bank-breaking effort or will the consumer goods industry be “powered by AI” before we know it?

FINLEY: AI already exists in places that, as consumers, we don’t really think about. We use natural language to interact with our phones, and our software recognizes our faces. AI, and any new technology, should be implemented in manageable, measurable sequential steps. This means starting sooner rather than later. A business that waits until it has all the data will be outflanked by more agile teams. They will likely miss many of the benefits and opportunities that they would have found by letting smart people and machines work together. This is not to say that AI won’t cause any disruptions or that it won’t have any cost. But progress always requires some level of change management, and AI is no different. It would be a mistake to overspend or

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to not spend enough. As in all aspects of life, the difference between medicine and poison is the dose. WAGNER: Cloud computing and AI go hand in hand. As a result, gone are the days of spending millions on new hardware and software only to spend months — if not years — implementing a new solution. CG companies large and small can embrace cloudbased AI solutions in a phased approach, leveraging existing IT investments, databases and reporting platforms. Insights delivered with AI through the cloud

hardware every time there are advances in computing power. Cloud-computing providers allow companies to scale up or down as needed, without the need for large capital expenditures. KEANE: I see it both ways. The shift to AI will take some time, but it’s going to happen much faster than most people realize. It has to. The benefits of integrating AI with distribution, merchandising and selling are too great to ignore. Inexpensive tools are everywhere, so trial and error is key. You have to accept that mistakes will be made, because benefits outweigh the costs. Achieving success will not “break the bank” as long as AI engines are focused on driving real-world efficiencies and growing revenue. I believe AI will become pervasive in our industry over the next five years. The more it’s infused into software, the more that costs and risks will decline and adoption will accel-

“The shift to AI will take some time, but it’s going to happen much faster than most people realize. The benefits are too great to ignore.” CONOR KEANE, SPRING can start off with web-based applications. Then, as best practices are developed, these insights can be integrated within existing processes. The additional benefit of cloud-based AI is that companies don’t need to invest in new

erate. We’ll soon start to see an algorithm for optimizing every process imaginable. This will create the need for algorithms that reconcile competing algorithms and governance for legal, ethical and cultural concerns. CGT


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Artificial intelligence will soon have an enormous impact on the way consumer goods are delivered, sold to stores and promoted in the aisle. AI needs to fully understand problems in order to solve them. That’s why we’re focusing our AI efforts at Spring on mapping out workflows and combining the most advanced computer processing power with the most advanced thinking in the industry. It’s all part of helping you: Be Knowledgeable: Identify opportunities and best practices that others miss.

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Tech Solutions Guide

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Trade Promotion Management

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Tech Solutions Guide

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Did not provide

The platform quickly senses and responds to the accelerating pace of markets, revenue, and profit opportunities previously trapped in existing processes and IT infrastructures.

Stand-alone

X

Did not provide

The AI toolbox in real-world pricing uses proven and proprietary techniques. The models have been learning for more than a decade on global customers’ real-world production data.

Stand-alone

X

CRM

• Vega • P&G Shop

Leverages purpose-built AI to transform human-delivered customer care into automated assistance across web, email, SMS, messaging apps and voice platforms. Linc empowers brands to deliver “anywhere engagement” and real-time services.

X

X

X

X

New Product Development

www.manthan.com

X

Trade Promotion Management

Manthan

Add-on

Pricing

www.letslinc.com

Customer Care Automation Platform

Did not provide

Marketing/Promotions

Linc Global

IRI Liquid Data

Solutions span forecasting, recommendation and optimization engines, trend-spotting, price localization, and automated model refreshes. Client benefits include speed to insights and action, scalability, and improved real-time business management.

Demand Planning/Forecasting

www.iriworldwide.com

U N I QUE FEATUR ES / B ENEFITS

Retail Account Management/ Planning

IRI

P RODUCT

KE Y CG CUST OME RS

Direct Consumer Engagement

C O MPA N Y / W E B S IT E

STA ND A LONE V S . A D D -ON

Supply Chain/Logistics

B USINES S FUNC TIONS

X

X

X

X

X

X

X

X

X

X

X

X

X

CONSUMERGOODS.COM |

X

X

X

X

X

X

X

X

X

X

X

JUNE 2018 |

CGT

X

X

43

X


Tech Solutions Guide

2018

AL/MACHINE LEARNING SOLUTIONS CHART

www.sap.com/consumer

SAS www.sas.com/en_us/ solutions/ai.html

Satisfi Labs, Inc. www.satis.fi

Shiloh Technologies www.shilohnext.com

44

Enhances business processes with intelligent algorithms using enterprise-grade machine learning capabilities.

Stand-alone

SAS Platform

Did not provide

Delivers AI solutions that incorporate machine learning, computer vision, natural language processing, and forecasting and optimization technologies to help unlock new possibilities. The solution supports diverse environments and can scale for changing business needs.

Add-on

Satisfi Labs Platform

• Mall of America • Miracle Mile Shops • The Irvine Company

The AI network is completely scalable across complex tasks. The speed and accuracy of its online automation, with the personality of a live person, increases customer engagement, transactions and loyalty.

Add-on

ShilohNEXT

• Henkel • Nestlé • Shell

ShilohNEXT allows for ad hoc reports, integrates structured and unstructured data, transforms and enhances data with the user’s terminology, and can connect to software tools such as Excel, PowerBI and Tableau.

Add-on

CGT | JUNE 2018 | CONSUMERGOODS.COM

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

New Product Development

• Kellogg • Swarovski

X

Trade Promotion Management

Leonardo Machine Learning

X

Pricing

Stand-alone

CRM

The IRIS platform delivers OSA alerts daily and identifies potential recaptured sales for global CG and retail users to optimize market position and drive profitability from supply chain to shelf.

Marketing/Promotions

SAP

• Colgate-Palmolive • L’Oréal • Unilever

Demand Planning/Forecasting

www.retailsolutions. com

IRIS On-Shelf Availability Platform

P R ODUCT

Retail Account Management/ Planning

Retail Solutions Inc.

U N I QUE FEATURES / BEN EFITS

Direct Consumer Engagement

CO M PA N Y / W E B S IT E

S TA ND A LONE V S. A D D -ON

KE Y CG CUST OME RS

Supply Chain/Logistics

BUSINES S FUNC TIONS

X


Tech Solutions Guide

Signals Analytics www.signals-analytics. com

www.springglobal.com

SR Promotion PlanningAI

• Dannon • Kraft Heinz • Mars, Inc.

An integrated promotion planning, forecasting, and AI-driven optimization platform that allows users to execute the most optimal promotions. The planning is efficient, while the forecasting has driven 2-4-times higher returns.

Add-on

Trade Promotion Master

Did not provide

An end-to-end predictive solution combining zero-touch planning optimization and evaluation from a single point of entry. Integration of internal and external data with inbound and outbound interfacing connecting the entire business.

Stand-alone

Voice AI Platform

• Heineken • Jack Link’s • Unilever

Empowers consumers to use their voices to find products faster and have a better experience with a brand.

Add-on

Did not provide

An integrated solution for capturing and managing data and generating actionable insights through advanced analytics to offer price, performance and time benefits. DDP enables customers to reduce “time to insight” and analytics across geographies.

Stand-alone

SEE AD ON PAGE 41

Symphony RetailAI www.symphonyretailai. com

Visualfabriq Revenue Management www.visualfabriq.com

Voysis www.voysis.com

Wipro Ltd. www.wipro.com

Data Discovery Platform

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

CONSUMERGOODS.COM |

JUNE 2018 |

New Product Development

Add-on

Trade Promotion Management

Applies AI workflows and processes to solve complex CG challenges. The company specializes in providing “actionable insights” via HQ portals and mobile apps for sales, merchandising and delivery.

Pricing

Command Center

• Coca-Cola • L’Oréal • Unilever

Spring

Marketing/Promotions

Stand-alone

Demand Planning/Forecasting

The platform empowers companies to adapt product decision-making to fast-changing ecosystems by combining data sets, machine learning and analytic engines for decision support that spans the product lifecycle.

Retail Account Management/ Planning

Playbook Platform

• Nestlé • Procter & Gamble • PepsiCo

P R ODUCT

CRM

U N I Q UE FEATUR ES / B EN EFITS

Direct Consumer Engagement

CO MPA N Y / W E B S I TE

S TA ND A LONE V S. A D D -ON

KE Y CG CUST OME RS

Supply Chain/Logistics

BUSINES S FUNC TIONS

CGT

45

X


CGTechTips

S P O N S O R E D

CO N T E N T

Retail Execution

Optimizing Execution for Demanding Consumers

RICARDO BELMAR

Senior Director, Worldwide Enterprise Product Marketing InfoVista

In today’s age of the customer, consumer expectations for branded products have risen dramatically. Ranging from shopping across multiple sales channels, to how they expect retailers and brands to engage with them through personalized content, digital and physical channels have converged. Here are some tips you should follow with retail partners to achieve sales success:

Recognize that product is no longer king — it’s about personalized, engaging experiences.

Consumers expect to have infinite information available to them when researching products and making purchase decisions. The true differentiator at the point of sale is the experience of shopping rather than the product itself. Look at new business models for delivering products to deepen the customer relationship. Subscription services for consumable items have become more than just trendy because they eliminate the pain-point of knowing when to replenish the product. Work with retail partners to increase the amount and quality of product info at the point of sale. Use digital signage and mobile apps, coupled with social media campaigns that encourage shoppers to post about their experiences with your product via Instagram. Food brands, for example, can e-mail recipes using their products as ingredients to inspire, and provide shopping lists for the recipient’s favorite grocery store — integrated into the retailer’s mobile app.

Direct to Consumer means connecting with shoppers at the store.

Develop technology-driven branded displays with retailers that use content to connect with shoppers. Footwear brands, like Nike, have done this well by using creative tabletop-screen displays that detect nearby shoppers and interact with them to highlight the product features of new shoes. The ultimate version of this is a full store-in-a-store concept similar to those of Levi’s, Samsung, and Apple. Remember to work with the retailer to understand infrastructure requirements and load on their store network to ensure the technology performs as shoppers expect. Ensure there is the right connectivity between yourself and your retailers.

Yo u n e e d t o d e l i ve r a consistent, reliable user experience.

While you focus on websites, mobile apps, intranets, and other content delivery mechanisms to get product information to consumers, realize that your retail partners are doing the same. In both environments, the focus should be on the user experience delivered. Whether measured in screen refresh times or POS response times, consumers expect fast, consistent, reliable performance. If you’ve optimized your website for fast content delivery, why wouldn’t you work with retail partners to do the same for their in-store systems that support your content? Investigate how to optimize the performance of any applications used to power those in-store experiences across both your data networks. Converged, personalized digital experiences that bring relevance to consumers, coupled with delivering the right product information to retail partner store associates, combined with rich-media in-store digital experiences, will deepen your engagement and result in increased sales.

sales@infovista.com www.infovista.com


CGTechTips

S P O N S O R E D

CO N T E N T

Retail Execution

3 Strategies to Succeed in Real Time

DAN KASPER

Senior Director, Brand GoSpotCheck

The business world is now a real-time battleground, impacting every industry with a desk-less workforce. This shift is especially prevalent in the consumer goods sector, which is experiencing change faster than ever before. While e-commerce first emerged as a disruptive force, its impact has only been exacerbated by the evergrowing presence of craft brands, limitless mobiledriven technology, and unprecedented consumer expectations. While these are somewhat diverse challenges on the face of things, the commonality they all share is speed. The marketplace, consumers, and the competition are moving at a pace that many brands are struggling to keep up with. Here are three tips for navigating these real-time environments: Implement systems that rapidly enable your team. Implementing systems that intelligently drive activity (as opposed to following an uninformed process) will free up the time of your reps to focus on critical efforts such as brand activation and merchandising excellence — which will drive sales when lowering prices isn’t an option. Using a platform to say, “Here is what’s important this week. Please capture and measure your efforts towards this goal,” ensures that the folks in the field are just as aligned with the goals of the business as the management at corporate. Establish a shared, real-time view of the ground. The reality is that execution strategies rarely meet the expectations originally put forth. Rectifying this situation begins with collecting, analyz-

www.gospotcheck.com

ing, and socializing data in real time. By leveraging data-based insights, consumer goods companies can efficiently deliver real-time instructions for operations and sales teams and offer an opportunity to effectively respond to potential issues, avoid inventory excess, and continue to maximize revenue. Don’t simply focus plans and results — stay on top of managing activities. Most plans are good (or at least always appear to be at first), but they often fail because too much time is spent evaluating results and not enough on managing what’s currently going on in the field. Real-time feedback allows companies to capitalize on revenue by quickly analyzing the best-performing products, strategies and accounts to replicate success.

Editor’s note: GoSpotCheck co-founder and CEO Matt Talbot will conduct a thoughtleadership session on retail execution at this year’s Consumer Goods Sales and Marketing Summit.


Profile for ensembleiq

June 2018  

June 2018