CGT20 Sales & Marketing Report-postgate Consumer goods technology, sales and marketing, marketing technology, technology, sales, marketing, consumer goods, artificial intelligence, automation, customer service, IT, beverages, food, packaged goods, CPG, Procter & Gamble, Unilever, Kraft Heinz, P

Consumer behavior has shifted so abruptly that brands are rewriting their engagement playbooks, with execution differing wildly from brand to brand. With historical data an unreliable indicator to build a strategy around — and consumer needs fluctuating based on geographical location — one-size-fits-all marketing strategies are ineffective. Now, CGs must experiment with online and digital efforts and leverage social media to develop their brands. Forging direct relationships with consumers can also help brands test and connect with consumers, and to be sure, the pandemic has served as the shove-off-the-diving-board plunge into the DTC pool for some. PepsiCo launched not one, but two DTC e-commerce sites — Snacks.com and PantryShop.com — while Impossible Foods accelerated its long-held plans for an e-commerce site, dovetailing the initiative with a retail expansion. Within a few days, the company received orders from every state and reported high repeat and satisfaction rates. For brands rocked by the spring retail closures, DTC sales have served as both a pipeline and a lifeline. Nike reported sales of $3.7 billion for its direct segment in fiscal Q1, up 12%, and it remains head-down on bringing consumers into its app ecosystem to drive engagement and loyalty. “We’re entering an era where companies will try new things and find new ways for consumer engagement, and I think the companies that are bold, willing to take risks, and seize opportunities will get ahead,” notes Robert Beredo, chief digital officer of L’Oréal Canada, which has deepened its investments in artificial intelligence and explored live video shopping.

Consumer Demand Forces Brands to Pivot

“Frankly, we know that some trends — including the rise in convenient, practical home deliveries — are here to stay.”

Rachel Konrad chief communications officer, Impossible Foods

“We know a consumer who connects with us on two or more platforms has a lifetime value that’s four times higher than those who don’t.”

John Donahoe President and CEO, Nike

DTC sales growth from 2019

24.3%

Estimated DTC sales in 2020

$17.75

billion

Source: eMarketer, “Direct-to-Consumer Brands 2020”

RB leaned into flu season with its Mucinex Sickwear capsule collection. The social commerce campaign was amplified through the brand’s DTC website and a live-streamed YouTube fashion runway event produced by a team of Cannes Lion and Webby Award winners. The limited-edition, six-piece sleepwear collection features such design details as tissue pockets and pillow hoodies, with price tags of $46-$140. “Connecting with our consumers through alternate social commerce and direct-to-consumer channels allows us to bring the power of the Mucinex brand to people along their entire sickness to wellness journey, building relationships that are meaningful and lasting,” says Cynthia Chen, president, North America health at RB.

“[DTC] allows us to get closer to consumers to … have an even better understanding of their needs and their habits, including their purchase habits, and that all can be very complementary and important in the broader context.”

Jon Moeller Vice Chairman, COO and CFO, P&G

With so many unknowns, data and analytics ensure these experiments are more than throwing things against the wall to see what sticks. Studiously tracking and analyzing consumer behavior and engagement is a growing priority, serving as the much-needed compass during the storm. When asked which activities they've shifted resources to during the pandemic in consideration of marketing opportunities, 40% of CPG CMOs say in The CMO Survey they are improving data integration to allow for end-to-end customer tracking. To seize on this, retailers such as CVS Pharmacy and Rite Aid are launching their own digital media programs to strengthen their relationships with CGs via access to valuable consumer insights. By partnering with the merchants, CGs can target their ad spend and personalize campaigns for more effective engagement. Hormel Foods has brought millions of new consumers into its brands during the health crisis. The company is leveraging a combination of IRI data, on-shelf availability data, custom research and data science for deeper insight into these buyers, including their demographics, behaviors and assessment of whether they will stay in the brand franchises over the long term. “While we know it’s unreasonable to retain 100% of the new consumers, as brand stewards, it is our responsibility to keep as many consumers in our brands as possible,” says Jim Snee, Hormel Foods president and CEO. Avocados From Mexico is similarly relying on its consumer data platform with predictive capabilities and real-time personalization data to navigate the new consumer demand signals during COVID-19. “We built consumer clusters, and those clusters are being fed by new interactions [with] those consumers,” says Ivonne Kinser, Avocados From Mexico head of digital marketing. “We have right now over 80 million user IDs, and we have those clusterized in different segments.”

Data to Survive, Tech to Thrive

30%

33%

19%

15%

Basic Departmental Analytics Basic Enterprise Reporting Basic Analytics Investigative Analytics Predictive Analytics

Consumer Insights Analytic Maturity for CGs

Source: CGT & RIS, "Retail and Consumer Goods Analytics Study 2020"

People who chose products recommended by a human vs. AI when asked to focus on experiential and sensory attributes

58%

People who chose products recommended by AI vs. a human when asked to focus on utilitarian and functional attributes

67%

Source: Journal of Marketing via Harvard Business Review, “When Do We Trust AI’s Recommendations More Than People’s?”

General Mills’ Pillsbury.com and BettyCrocker.com websites funnel a steady stream of consumer insights to the company, receiving 7 million unique visitors each month. By digitizing its legacy Box Tops for Education program, the company has collected more than 25 million digital receipts that it can leverage to build personalized relationships with consumers.

CGs who cited consumer insights as a top area of focus

50%

Source: CGT & RIS, "Retail and Consumer Goods Analytics Study 2020"

Marketing technology is responsible for around one-quarter of CMO budgets because it is crucial to attaining that ultimate goal of digital transformation. In fact, chief marketing technologist blogger Scott Brinker estimates that there are 8,000 solutions available in the martech landscape today — up 13.6% from last year. Enter COVID-19, and the CG industry has essentially been thrown into fast-tracking its digital transformation strategies and investments in 2020. This global pandemic has forced consumers to shift their shopping to online out of necessity, which has in turn forced sales and marketing teams to shift focus to digital. However, digital media has proven to be more interactive and engaging, opening the doors to new opportunities for marketers. CG brands can now track how a consumer found them, how they interacted with their brand, and even who they shared it with. Brands can live-stream and have a two-way interaction with consumers through likes, comments, feedback, etc. For example, according to Hubspot, weekly chat volume via onsite chat and Facebook Messenger increased 5% after March 16 (after the onset of COVID-19), based on previous Q1 global weekly averages. Being able to digitally transform with this opportunity brings a level of connection that is just not possible through more traditional media. What’s more? Timing is everything when it comes to interacting with consumers online, giving way to more automated tools like chatbots. In fact, according to Forrester, the worldwide marketing automation technology market is predicted to grow from $15.6 billion in 2019 to $25.1 billion in 2023 (a 9.9% CAGR in five years). Why? Because by automating the software to respond to simple tasks like customer service in faster response time (24/7/365, by the way), CG sales and marketing executives have more time to focus on making more meaningful, longer-lasting relationships.

COVID-19 Catapults CGs into Digital Transformation

How many times have we seen this meme all over social media?

One such company, RB, is focused this year on fusing its multiple data sources to improve consumer segmentation and marketing campaign measurement with Google Cloud. RB will use the provider’s machine learning capabilities to evaluate ROI and plan future campaigns, while also running its own machine learning and auto-machine-learning models to generate insights to optimize media spend in a quest to create more authentic digital journeys while respecting data privacy.

“Only by utilizing data will we be able to better serve consumers and shoppers and create meaningful experiences for them.”

Fabrice Beaulieu EVP Group Marketing Excellence and EVP Category Development Organization Hygiene, RB

Digital channels account for almost 80% of marketing budgets in 2020

Marketing technology takes up 27.8% of marketing budgets for consumer product companies in 2020

Source: Gartner, "The Annual CMO Spend Survey Research, Anna Maria Virzi and Ewan McIntyre, July 8, 2020"

Discrete manufacturing (the industry with the largest DX spending amount) will only grow 6.6% this year, down from 14.5% growth in 2019

Source: IDC, "Worldwide Semiannual Digital Transformation Spending Guide"

With even more of the sales cycle happening online, the most successful brands need to pivot and meet consumers where they spend most of their time (Facebook, Instagram and even TikTok), and embrace a two-way digital marketing street. “I’ve been inspired by the consumer-centric approach to innovation that has emerged due to the coronavirus,” Mars Wrigley CIO Romain Apert recently told CGT. “It’s clear we’re living in a much more digital world, from the role of workplaces, telemedicine and e-learning.” Apert’s hypothesis that the consumer goods’ value equation model must shift away from a traditional one, which requires the world remain stable and predictable, is no longer science fiction, he says. “It’s science fact.”

Trade promotion management and optimization tools have always been a major line item for consumer goods companies, and while the goal of connecting CGs and their retailer-partners on trade spend sounds simple enough, the task is much easier said than done. There are so many moving parts from the pricing to promotions to assortment to shelf placement and everything in between — not to mention figuring out what to do with all the data derived from the various moving parts — making this business function incredibly complicated. But when it all comes together, bridging the gap between cross-functional teams (including sales and marketing) coupled with advanced analytics enables CGs to achieve true revenue growth management (RGM) to drive big profits. For example, Coca-Cola CEO James Quincey attributed a portion of its 2020 growth to “RGM 2.0,” which is driving value for its customers and bottlers. “A renewed focus on commercial execution — on strategically tailoring price/pack offerings by channel and outlet — is delivering growth for the newly re-franchised North American bottling system,” he said. Of course, things have changed post-pandemic, so for those CGs who are on the fence about embracing RGM, it may be similar to the forced fast-tracking of digital transformation — they may not have a choice but to jump in with both feet and take advantage of this opportunity to boost revenues.

From TPM to RGM: Bridging Sales & Marketing with Advanced Analytics

Source: POI, "POI Pulse September 30, 2019"

CG companies are putting AI/ML to work for trade promotions

27%

CPG companies are using and advancing RGM practices and tools, requiring cross-functional teams to work together between departments

50%+

Source: CGT & RIS, Retail & Consumer Goods Analytics Study 2020

13%

17%

23%

Assortment Planning Promotion Effectiveness Pricing Trade Promotions

Impact of COVID-19 on Analysis Areas of Focus

Source: CGT & RIS, "Retail and Consumer Goods Analytics Study 2020"

Analytic Maturity for RGM Business Functions

Assortment Planning Space Planning Pricing & Promotions Promotional Effectiveness Marketing Spend

11% 27% 8% 11% 7%

Basic Departmental Analytics (Ad Hoc Reporting of Information)

Business Function

Basic Analytics (After-the-Fact Trends and Analysis)

Basic Enterprise Reporting (After-the-Fact Information Reporting)

Investigative Analytics (Correlation/Causal Analysis, Forecasting Techniques)

Predictive Analytics (Predictive Modelling, Optimization Algorithms)

11% 19% 23% 30% 41%

52% 31% 31% 26% 26%

22% 15% 31% 30% 26%

4% 8% 8% 4% 0%

“When you get the brands, the innovation, the RGM and the execution, great things happen not just for the consumer, but for the customer.”

James Quincey Chairman and CEO, Coca-Cola

Source: CGT & RIS, "Retail and Consumer Goods Analytics Study 2020"

While many consumer goods companies have felt the short- and long-term impacts of the pandemic earlier this year, arguably one of the hardest hit business areas for CG is retail execution (REX). With social distancing and lockdown restrictions on a global level, many field sales reps have simply been at a standstill for the last several months since buyers and retailers don’t want “unnecessary” people in stores. The typical role of REX has been to get the right product in the right place at the right time; however, the surge of e-commerce post-pandemic has caused many out-of-stocks in retail stores. Curbside and BOPIS have become the priority, leaving CG brands with the decision to reboot their entire REX strategy, or redirect those retail brokers while in-store bodies are limited. Those that are operating virtually for now can turn to the one common thread noted throughout this report, which is data. Field sales reps can still leverage scan or syndicated data from stores that is helping them do the jobs they would otherwise be physically doing in stores. Chobani president and COO Peter McGuinness ventured out with his retail execution team in the spring, touting how “they get up early everyday and go to stores to pack out the shelves and reorder inventory so that people get the products they want.” This may sound like business as usual, but keeping shelves stocked has been an ongoing challenge for many CG brands as consumers continue to stockpile goods and shipping is delayed. On the other hand, Coca-Cola has found success in redirection. “The company has redeployed its ground sales reps and trained them in merchandising.” CEO James Quincey said in an April 2020 investors call. “Coca-Cola hopes this will result in increased share of displays of stock on the floor, aided by a ruthless prioritization of core products and key brands to help customers simplify their supply chains.” The general REX guidelines still exist: BYOD as a standard in emerging markets, on-premise and cloud are equally popular, field reps are tasked with selling more — but the circumstances have drastically changed. Whether CGs decide it’s best for them to reboot their REX strategy or redirect resources to other priorities, what is clear is that there is no one-size-fits-all approach.

Retail Execution Reboot or Redirect?

Overall satisfaction with the ability to execute at store level has increased 21.1%

Among office-based users, 32.9% agree/strongly agree (up 10.9%) that their analytical needs are being met

Source: POI, "Vendor Panorama for Retail Execution and Monitoring in Consumer Goods"

Advanced REX Capabilities to Watch

Image Recognition Gamification Retail Activity Optimization Social Selling Guided Selling Augmented Reality Crowdsourcing

Source: POI, "Vendor Panorama for Retail Execution and Monitoring in Consumer Goods"

Key Takeaways

PRESENTED BY

Brands must recognize today’s consumer demand for transparency and purpose in marketing, and be ready to do the hard work that comes with that.

One-size-fits-all marketing strategies are a relic, and today’s companies must get granular in their consumer targeting. Partnering for retail insights and social listening can help.

While executed in different forms, connecting DTC should be top of mind for CGs, and tracking and analyzing those interactions are crucial.

More than 50% of CPG companies are using and advancing RGM practices and tools, requiring cross-functional teams to work together between departments.

Discrete and process manufacturing will deliver the largest DX spending amounts throughout the forecast, accounting for nearly 30% of the worldwide total.

With even more of the sales cycle happening online, the most successful brands need to pivot and meet consumers where they spend most of their time — like Facebook, Instagram and TikTok.

Digital transform brings a level of connection that is just not possible through more traditional media.

Marketing technology takes up 27.8% of marketing budgets for consumer product companies in 2020.

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