Article

Jean Littolff
Jean Littolff 26 November 2018

“Half the money (CPG companies) spend is wasted; the trouble is…” - Why only CPG companies that adopt AI analytics will thrive?

Few CPG companies may admit that this century-old “Half the money” quote (from John Wanamaker) still depicts their marketing reality. Yet, more than 60 percent of Fortune 1000 Chief Marketing Officers cannot quantify the impact of marketing in both the short and long term, despite investing in data and analytics. With CPG companies being the highest marketing spenders from all sectors (24% of their budget, and nearly 11% of their revenue), this is particularly damaging, as: - There is fierce competition and decreasing growth. - Marketing budgets are often a primary target for cost savings. - Their RoI should be significantly higher; and their competitors are implementing more advanced solutions.

More advanced solutions are, specifically, AI-powered analytics and decision-making tools: they are a game changer for marketing, sales, and supply management. They could make or break CPG manufacturers and retailers.

The number of challenges faced by marketing teams is ever increasing, leading to an unprecedented level of complexity:

  • Consumers segments are more fragmented than ever.
     
  • Pricing and promotions, a hugely complex area, are intertwined with all the other marketing decisions, and can’t be considered in isolation.
     
  • Marketing budget allocation is increasingly complex. Where is your overall budget best spend, in which media, which campaigns? Amongst such a large array of fragmented marketing and media channels (traditional ATL media - like TV and radio, traditional BTL touch points – point of sales, and the broad digital media), which are generating more content and campaigns, marketing budget decisions are hardly optimised.
    The shift of budgets are often marginal adjustments to previous budgets allocation, rather than a fresh assessment of optimal decisions that will maximise the expected outcomes (think zero-based budgeting in marketing).

How are companies translating their goals (sales and market share, revenue and profit, client satisfaction, brand equity, etc.) into the most effective commercial decisions?

To maximise the expected outcomes, the challenges lies at many levels:

  • Assessing the marketing budgets level that will maximise outcomes and RoI.
     
  • Allocating this budget in the most effective manner.
     
  • Optimising other commercial decisions, like pricing and promotions (and simultaneously optimising price and promotions with other marketing decisions.
     
  • Choosing the best set of commercial decisions (marketing, pricing and promotions) within a product line or a category.
     
  • Even more complex (and a necessity for companies), making optimised decisions across product lines or categories (or even products portfolio), that will maximise goals achievement? For example, how would you shift budget from high share and low growth to low share but high growth categories?

In an ideal world of Zero-Based Budgeting, to assess the right level of marketing investment, its allocation or reallocation (between categories/products, media, campaigns), every spending should be linked to the set of drivers that triggers and justifies the investment.


In reality, companies are struggling with the analysis and assessment of marketing activities (both overall and specific), and commercial decision-making (both strategic and tactical), which are highly complex. And too inefficient.

Companies are struggling as they face the limits of traditional data analytics and BI systems, which we will expose in our next article. 

Please login or register to add a comment.

Contribute Now!

Loving our articles? Do you have an insightful post that you want to shout about? Well, you've come to the right place! We are always looking for fresh Doughnuts to be a part of our community.

Popular Articles

See all
How to Review a Website — A Guide for Beginners

How to Review a Website — A Guide for Beginners

A company website is crucial for any business's digital marketing strategy. To keep up with the changing trends and customer buying behaviors, it's important to review and make necessary changes regularly...

Digital Doughnut Contributor
Digital Doughnut Contributor 25 March 2024
Read more
The Impact of New Technology on Marketing

The Impact of New Technology on Marketing

Technology has impacted every part of our lives. From household chores to business disciplines and etiquette, there's a gadget or app for it. Marketing has changed dramatically over the years, but what is the...

Alex Lysak
Alex Lysak 3 April 2024
Read more
How to Understand Your Customer Needs Through Social Media?

How to Understand Your Customer Needs Through Social Media?

Social media is generally known to be a tool of online communication that is used to easily share information and bring together people with similar ideas on the internet. But brands use them as a marketing tool. And...

Manisha Sukhyani
Manisha Sukhyani 29 August 2017
Read more
10 Great Benefits of Online Proofing Software

10 Great Benefits of Online Proofing Software

Online proofing software enables businesses to fast track their marketing approval workflow. Additionally, with access to a new cache of online markup and revision tools, businesses can also improve the quality of...

Jodie Byass
Jodie Byass 15 September 2016
Read more
Sales and Marketing Collaboration: A Recipe for B2B Success

Sales and Marketing Collaboration: A Recipe for B2B Success

In the world of B2B, the age-old rivalry between Sales and Marketing often overshadows the potential for a fruitful partnership. Yet, when these two departments align their goals, strategies, and efforts, the results...

Zsofia Raffa
Zsofia Raffa 12 September 2024
Read more