Scenario planning is now more crucial than ever due to constant shifts and uncertainty in the CPG industry. CPG Data Analytics can help by providing valuable insights with many practical applications for businesses.
The importance of scenario planning in today's CPG industry
The Covid-19 pandemic caused a sharp increase in online shopping due to government restrictions and people’s concern about going into public spaces. And even after the removal of all restrictions, the trend is still here. Today, 27% of the global population shops online, with over 2.14 billion online shoppers across the world. While this shift in consumer behavior completely changed how businesses structure their strategy and interact with consumers, it also provides an exciting opportunity as online shopping produces way more data than in-store shopping. As noted by Forbes, the enormous amount of CPG sales data generated by online shopping can benefit companies in several ways, from pricing and promotion strategies to CPG supply chain optimization.
CPG Data Analytics is now crucial for businesses to make sense of all data generated and leverage them to increase profit. The global market has been deeply affected by the pandemic in 2020 and inflation now, and is continuing to change at an alarming rate. In this context, planning is a must if businesses want to survive and catch new opportunities to thrive.
Why using CPG Data Analytics in Scenario Planning?
Gaining CPG Data Insights to improve planning and forecasting is a game changer in an industry that underwent several major shifts in the last few years alone. Not surprisingly, forecasting platform Float reported a +339% increase in scenario planning from April 2019 to April 2020.
With the importance of scenario planning increasing more and more as uncertainty rise, stepping up your prediction and analysis capabilities means gaining a considerable competitive advantage.
But how can consumer data analytics support a company when it comes to planning and decision-making?
Analyzing consumer’s data can provide valuable insights which will help executives make informed decisions. The insights can span across many relevant sectors, from demand forecasting to pricing and promotion strategies, from supply chain optimization and new product development to targeting and market research. These insights enable companies to adopt data-driven solutions to navigate different scenarios effectively.
Looking into the crystal ball: CPG Data Insights for Demand Forecasting
Demand forecasting is vital for supply chain organizations and to avoid revenue loss due to understocking or overstocking. Moreover, accurate demand forecasting allows companies to understand the market and their customers better, which results in more efficient strategies and better relationships with clients.
Which data should companies take into account when it comes to demand forecasting? The most immediate answer is historical sales data, which is correct, but there are many more to consider: market trends, consumer behavior patterns, pricing and promotion strategies, and external factors impacting demand.
By analyzing all this data, businesses can identify customer demand patterns and forecast future scenarios. Having access to this sort of data insights is crucial for scenario planning, as it allows to anticipate competitors and prepare for different scenarios, such as shifts in consumer preferences, seasonal fluctuations, economic changes, and many more.
Market segmentation with CPG Data Analytics
Data Insights into consumers’ preferences, demographics and spending habits help businesses better understand their customers, segment them into clusters and design efficient strategies. Having valuable customer insights means being able to structure personalized marketing strategies, which results in increased profits:
According to McKinsey, “Personalization can deliver five to eight times the ROI on marketing spend and can lift sales by 10% or more.” AI-powered marketing tools open the road to personalization and data-driven marketing.
How to design a marketing strategy that works?
- Understand the market and your customers through comprehensive data analysis;
- Leverage market segmentation to identify consumers’ clusters;
- Target different clusters with personalized marketing campaigns and promotions;
- Use machine learning to forecast different scenarios;
- Optimize ad spending and trade promotion management;
- Constantly measure strategy and promotion effectiveness.
Pricing and promotion strategies optimization with CPG Data Analytics
When designing a pricing strategy, companies must take into account many factors falling into two categories (Seedari U.R., 2021):
- Internal factors: fixed costs, production costs, brand image.
- External factors: competitors’ pricing strategies, demand, and eventual government policy.
Pricing analytics play an important role in decision-making. Understanding pricing dynamics and incorporating relevant data into scenario planning allow companies to set up realistic simulations by testing different pricing strategies, inflation increases, shifts in demand, competitors’ strategies, and consumers’ spending power or behavior.
Supply chain optimization
Digitalization is quickly affecting supply chain management, and businesses need to keep pace to stay at the top of the game. Advanced AI-powered analytics is one of the most important emerging technology for supply chain management, and executives around the world are well aware of this.
Consumer insights for supply chain analytics are the future of SCM, to ensure a resilient, agile and efficient supply chain and provide on-shelf availability solutions.
How to do it?
Advanced CPG Data Analytics sheds light on the supply chain, providing visibility on:
- logistics
- inventory levels
- suppliers’ performance
- production capacity.
Being able to see the clear picture puts the company in a position of control over the entire supply chain. The data obtained through analyzing CPG data can be incorporated into scenario planning by running different simulations to assess the efficiency and resilience of the logistic system in different situations.
Developing better products with CPG Data Analytics
The digital transformation is affecting every industry, but although being an extremely dynamic market with a high rate of product innovation, the consumer packaged goods one is taking more time than others to adopt new solutions. But that’s a short-sighted approach: companies should take the opportunity as fast as they can, as it has now been proven that consumer data analysis can benefit many business areas, including product development.
How is that?
CPG Data Insights provide companies with a deeper-than-ever understanding of their customers and the market, while at the same time speeding up many phases of new product development (identifications of new features, pricing strategy, marketing) through highly effective simulations.
Benefits of CPG analytics for scenario planning
Assessing consumer data can improve scenario planning by offering valuable insights that enable companies to make more informed decisions. Using data to identify consumer behavior can contribute to several areas: demand forecasting, market segmentation, pricing and promotion strategies optimization, supply chain optimization and new product development.
CPG Analytics solutions companies empower businesses to embrace the future, unlocking fresh and promising opportunities for revenue growth management, increased profits, and competitive advantage. Innovation is the biggest driver of growth, and now it’s not the time to be left behind.
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