Intelligent marketing gets consumer goods manufacturers back on track
In many sectors, digitalization is threatening the market position of established companies. In the consumer goods industry, where brand manufacturers’ sales have recently grown by less than 1 percent on average, it could prove to be a lifeline. An analysis by the management consulting firm Bain & Company, in collaboration with Google, highlights the opportunities offered by digital technologies.
For the study "Smart Shopper Marketing: The digital key to greater customer proximity", the 35 most important digital applications in seven technology fields were selected and their impact along the value chain of a typical consumer goods producer was examined.
"Determined digitalization can usher in the renaissance of established consumer goods manufacturers," emphasizes Bain Partner and co-author of the study Dr. Mario Häuptli. In fact, there is considerable potential, particularly in the operational processes of brand manufacturers, in marketing and in sales (Fig. 1). Among other things, innovative technologies increase efficiency in production and in customer contact. "However, recapturing market share is not a sure-fire success," says Häuptli. "Manufacturers should move on from the pilot phase and finally commit to digitalization on a broad front."
Major upheaval in marketing and sales
The joint analysis by Bain and Google identifies seven particularly important fields of technology: Automation and robotics, online communication, advanced analytics and machine learning, Internet of Things, blockchain, virtual and augmented reality as well as cloud and software as a service (SaaS). Consumer goods manufacturers are already testing the use of industrial robots and 3D printing in pilot projects. Others are already working with contextual and location-based marketing.
Digitalization is leading to noticeable changes in marketing and sales in particular. A large proportion of expenditure still flows into retailer financing - from promotional discounts to advertising subsidies. But with digitalization, smart shopper marketing is coming to the fore - and with it direct communication with consumers, especially via mobile devices.
More targeted customer approach
Through smart shopper marketing, consumer goods manufacturers are learning to better understand the needs and actual behavior of shoppers. With the help of digital communication channels, they can collect data themselves and reduce retailers' information advantage. "It is crucial to collect data in real time in order to quickly identify customer needs," explains Bain Partner and co-author Miltiadis Athanassiou. "However, it is even more important to use these findings - also in real time."
Digital technologies and direct communication with customers are opening up new opportunities for consumer goods manufacturers to present their brands on various sales channels. This individual form of customer approach promotes sales in both stationary and online retail. For example, pioneers are linking their marketing with information on stock levels, ensuring that customers searching for an item immediately find out whether and where it is in stock. In their own online stores and flagship stores, branded companies learn more about their customers and can increase the value of a customer throughout their entire life cycle.
Rethinking is necessary
Consumer goods manufacturers need to rethink their approach in order to take advantage of all the benefits of smart shopper marketing. Integrated sales and marketing strategies and a massive expansion of technological expertise are required. "The traditional division between marketing and sales is outdated, the future belongs to joint teams in one location," consumer goods expert Athanassiou is convinced. "The digital key to new growth is in the hands of the companies themselves."
About the study
Google has one of the world's most comprehensive cross-industry innovation pipelines, which is particularly relevant for consumer goods manufacturers. Bain & Company is one of the world's leading management consultancies. For this study, the consumer goods experts from both companies have combined their know-how. The result is a completely new perspective on the effects of digitalization on the entire value chain of branded goods companies and the opportunities of smart shopper marketing. In addition to the experience gained from numerous projects, the study also used exclusive data and various publications from both companies on the opportunities of digitalization, the upheaval in the consumer goods industry and new forms of marketing.
