Marketing/retail industry

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Question
Hi Leo,

Would like to know what are some of the upcoming areas to enhance consumer experience in the retail and CPG sector. What kind of investments companies are making to improve consumer experience. What will be the way forward for retail/ CPG companies in the area of customer experience management.

Look forward to your response.

Thanks,
Chandra

Answer
customer experience IS to guide organizations.
A customer experience is an interaction between an organization and a customer as perceived through a customer’s conscious and subconscious mind. It is a blend of an organization’s rational performance, the senses stimulated and the emotions evoked and intuitively measured against customer expectations across all moments of contact.
Importantly: A customer experience is not just about a rational experience (e.g. how quickly a phone is answered, what hours you’re open, delivery time scales, etc.). More than 50 percent of a customer experience is subconscious, or how a customer feels. A customer experience is not just about the ‘what,’ but also about the ‘how.’ A customer experience is about how a customer consciously and subconsciously sees his or her experience. It’s a complex process of understanding your organization’s relationship with your customers. When addressed effectively, customer experience eases customer acquisition, drives customer loyalty and improves customer retention.

organizations SHOULD improve their customer experiences by:
-developing  customer experience strategies that deliver results,



Customer experience—the sum total of all the interactions a customer has with your brand during their customer lifecycle—has become the critical differentiator in today’s hypercompetitive, hyperconnected global marketplace.

Differentiation based on product innovation is no longer sustainable because competitors can leapfrog feature/function advantages more quickly than ever. And differentiation based on price kills profitability. On the other hand, research shows that 86 percent of consumers said they would be willing to pay more for a better customer experience.

To optimize both your market share and your margins, you must provide customers with consistent, compelling experiences—before, during, and after their purchases—across all channels. The tremendous impact that customer experience has on business performance is also evident on the downside. Nowadays, when customers have a bad experience with a company, they don’t keep it to themselves; they instantly start venting on social networks. This means you don’t just lose one customer; you lose many, hindering new and existing opportunities to grow your business. You also lose brand value and positive word of mouth—which may be the only truly cost-effective form of advertising left.
There are many things organizations need to do to deliver a superior customer experience. They must respond quickly to customer requests. They must ensure that customer interactions are highly personalized. And they must deliver the right information to the right place at the right time.

Investments in improving the customer experience start by understanding the customer lifecycle, making business changes that unify the customer experience across all channels, and measuring the value of these changes to both the business and the customer.
For upper managers, the challenge doesn’t come in making incremental improvements to the company contact center or Website. Instead, it comes in shifting the strategic focus to providing stellar customer experience—empowering the people in the organization who are connected to each step along the customer’s lifecycle to do what’s needed individually and collectively to deliver compelling and consistent experiences.
Customer experience leadership, however, is not easy, and there are all kinds of issues that can derail even the best-intentioned customer experience initiatives. That’s why so many companies fail to achieve customer experience excellence. But just as there exist a few issues that typically derail corporate customer experience initiatives, there are also best practices that can enable customer experience leaders to overcome these issues.

The following seven power lessons are derived from real-world experiences of successful customer experience leaders. By applying these lessons, you can better ensure the success of your company’s customer experience initiatives—and avoid the most common and potentially disastrous customer experience pitfalls—so that you can optimally affect your company’s top-line revenue, bottom-line profitability, and long-term brand value.

“Research shows that 86 percent of consumers will pay more for a better customer experience.”
============================================


what are the new  areas to enhance consumer experience in the retail and CPG sector
Consumer Behavior Trends Drive Packaging and Brand
Marketing Strategies

Current consumer trends are driving the landscape of the CPG market and
will shape the brand strategy and packaging approaches significantly.
Some of these trends include:
• Private Label Growth: Private label brands have grown significantly
in the past few years and appear poised to continue steady growth going forward. Value-conscious consumers look for ways to spend smart while maintaining the quality of established brand
names. Some private brands are morphing into “brands” of their
own.
• Innovation Drives Loyalty: Dominant brands with strong consumer
loyalty tend to hold on to market position even in a climate of
consumer frugality and a trend toward lower-priced products.
However, CPG companies are finding that they need to reinvest in
even their strong brands by creating different product formats or
adding innovative packaging to create competitive advantage. For
example, Heinz introduced new ketchup bottle shapes to enhance
usability for consumers. This relatively simple new bottle design increased
sales by 20 percent and market share by 6-7 percent. The
basic ketchup recipe remained unchanged, but an innovative bottle
shape increased sales significantly.
• Unique Packaging Drives Trial: Innovative packaging can improve
the consumer experience. In a CPG market where differentiation will be critical, novel packaging can provide consumers with something new. CPG providers are beginning to
understand that the entire consumer experience before, during,
and after the store visit is gaining importance and can be a significant
driver for repeat purchase. More environmentally sustainable
“green” packaging continue to be good business. It not only demonstrates
a CPG company’s values, but affords an opportunity to
engage the consumer on a new level. Consumers have an increased
awareness of their impact on the environment. CPG companies have an opportunity to provide sustainability as a component of the overall consumer experience. If done well, it can
contribute to expressing the brand value and provide an opportunity
for consumers to express their own sustainability beliefs.
• Store Experience Takes Precedence: With today’s technology,
consumers have the ability to minimize their media exposure. This
trend places greater emphasis on the in-store experience. CPG
companies have the opportunity to leverage cutting edge applications
to create a virtual store and determine how products are best
displayed, shelved, and made available to the retail buyer. Conversely,
large retailers like Wal-Mart and Target use the same
applications to determine best store locations, influence buying
patterns, and make more accurate inventory projections.
• Consumers Now In Control: Smartphone technology enables consumers
to be more in control, impacting purchase decisions. The
new marketing paradigm will be based on social groups and the social
behavior patterns exhibited by these groups. This suggests a
profound shift from the long standing demographic and psychographic
approach. The formation of communities of social groups
is based on natural human behavior traits and will impact decisions
regarding choice of products and services. The emergence of communities
based on social groups serves to concentrate and coalesce
the shared interests and even cultural commonalities, which can
provide very specific information on exactly what this group will
buy. Marketers will need to leverage these new touch points to
strengthen brand equity and drive/co-create new products.

Point of View
‘Catch and Keep’ Digital Shoppers
How To Deliver Retail Their Way
We have quietly entered a new era in the evolution of shopping behavior.
The majority of consumers now shop digitally: they begin their shopping journeys online;
rely primarily on digital sources to make decisions about products and services; and move
back and forth across channels of distribution so readily as to erase channel lines.
These digital shoppers also have new expectations for all their shopping experiences—
expectations largely shaped by daily use of the Internet. They expect greater visibility into
the information that enables calculations of value (product/pricing comparisons, access to
promotions, and how-to insights), they want self-service, and they are more interested in
personalized offers and promotions.
And, they want a constant connection to the endless information on the Internet. The device
that provides the connection is less important than the connection itself.
The implications of this digital evolution have been visible to the retail industry for some time.
Yet, the results of a recent worldwide survey on shopper behavior by Cisco IBSG make it
clear that the industry must now race to “catch and keep” the majority of consumers who
effortlessly mash-up digital and physical shopping.







Three years ago, Cisco IBSG conducted its inaugural study to learn about technology-based
shopping behaviors. Specifically, the survey data showed that a broad swath of shoppers
had increased their deal-seeking behavior as compared with the prior two years. Although
some deal-seeking behavior was no doubt caused by the economic challenges of the time,
the research found that regular users of technology were much more aggressive in
seeking lower prices and finding better values. In addition, the data showed a surprising
reliance among shoppers upon Internet-based sources of decision-making information.
Although friends and family were cited as the number-one source of advice for helping to
make a purchase decision, online reviews and ratings were preferred over the advice of instore
employees.
Perhaps most important, the first also showed wide interest among shoppers in new
in-store concepts (called “Mashops”) that combine digital content and virtual experiences,
and deliver them in the physical store environment.

The data showed that:
1) a majority of Americans regularly visited both e-commerce sites and stores prior to making a purchase decision;

2) smartphones and tablets
were an increasingly important part of the shopping journey (though not always in the store);
and
3) digital content could be effectively used to create emotional engagement and trigger
purchasing behavior. The data also showed a continued decline in the influence of
traditional retail decision-shapers such as in-store associates, in-store displays, and print
and broadcast advertising.

New Mashop concepts were tested for shopper interest and anticipated frequency of use.
As before, these findings were cross-referenced by shopper age, gender, device ownership,
and preference by industry segment.

three topics of significance to the
retail industry:
1) changes in shopper expectations (especially for the store);
2) demand for personalized experiences, and willingness of shoppers to share information with retailers;
and
3) preferences for using digital devices in the store.

Finding No. 1: Digital Shoppers Are Now the Majority
Nearly eight in 10 consumers are digital shoppers who regularly research and purchase
products using the Internet. This “Digital Mass Market” accesses the Internet on a daily basis,
owns a mobile phone (though not necessarily a smartphone), and regularly researches or
purchases products and services online.
By age, the Digital Mass Market is dominated by Generation Y (18-29 years of age) and
Generation X (30-39 years of age) males, and Generation X and baby boomer (50-64 years
of age) females. The gender split is 50 percent males and 50 percent females.2
The common denominator of the Digital Mass Market’s digital shopping behavior is the
home personal computer. However, the Digital Mass Market also shops through other
devices:
● 54 percent report they are currently using or would like to use digital touchscreens in the store.
● 48 percent report they are currently using or would like to use a smartphone to shop
while in the store or on the go.
● 47 percent report they are currently using or would like to use a tablet to shop while at
home.


Within the Digital Mass Market is a highly technology-savvy group that can be described as
the “Über Digitals,” who represent a little more than one in 10 of the total population. These
are shoppers who access the Internet daily, own touchscreen smartphones, and use their
smartphones to shop in the store. Nearly two-thirds of Über Digitals are members of the 18-
to 29-year-old Generation Y, and 56 percent are men. Simply put, they do not shop without
technology.
Über Digitals use or are interested in using their smartphones to shop both on the go (93
percent) and from home (90 percent). They shop or are interested in shopping from home
using a PC (96 percent); use or are interested in using a tablet to shop from home (95
percent); and use or are interested in using touchscreens provided by retailers in the store
(79 percent).
The behavioral picture that emerges from today’s Über Digital consumers is that the
shopping journey often begins with a smartphone, but it doesn’t end there. Their use of
multiple devices beyond smartphones (PCs, tablets, and in-store screens) indicates an “allthe-
time, anywhere” desire for Internet content as a guide to making purchase decisions.
Finding No. 2: Internet Content Drives Decisions
Today’s digital shoppers increasingly rely on Internet-based sources of information for
making purchase decisions.
Survey respondents were asked to name the three most important sources of information
they use for making buying decisions. The results revealed continued
growth in reliance on Internet-based data among all U.S. shoppers.
● There was significant growth in reliance upon digitally sourced reviews and ratings,
whether from retailer websites (the leading influencer in this year’s study) or from
online third-party experts.
– This reliance is more pronounced among Digital Mass and Über Digital shoppers.
Nearly three-fourths of the Über Digitals this year cited a decision-making reliance
upon reviews and ratings from retailer websites.
● The influence of friends and family declined. For Über Digitals, friends and family are
less important than two digital sources: reviews on retailer websites and reviews from
expert sources.
● The influence of social media and store employees declined by roughly half from 2010
to 2012.
Finding No. 3: Most Shoppers Cross Channels
The percentage of U.S. shoppers who research products and services on a PC and transact
in the store increased from 57 percent in 2011 to 65 percent in 2012. Those who research
products and services using a smartphone prior to purchasing in the store increased from
24 percent in 2011 to 29 percent in 2012.
All-digital, cross-device behavior also increased: the percentage researching on a
smartphone and purchasing on a PC increased from 26 percent of U.S. shoppers to 33
percent.
The so-called “showrooming” phenomenon of researching in-store and purchasing online
increased slightly from 38 percent to 40 percent. This represents a sizable portion of the
shopping population.

Finding No. 4: They Come to the Store with New Expectations
Compared with two years ago, digital shoppers have higher expectations of retailers. These
appear to be shaped largely by their Internet experiences, and are focused first on what
might be called value transparency.
When asked to evaluate their expectations of retail shopping as compared with two years
ago, more than half of the Digital Mass Market reported that they were somewhat or much
more demanding in:
● Obtaining better values overall
● Gaining visibility into pricing information (including comparative information)
● Accessing information about promotions and coupons
In addition:
● 46 percent of the Digital Mass Market reported they are somewhat or much more
demanding when it comes to accessing information about promotions and coupons.
● 40 percent of the Digital Mass Market (and 54 percent of Über Digitals) reported
heightened expectations for access to all forms of decision-making information.
● More than one-third of the Digital Mass Market now expects greater speed and ease of
finding and purchasing products.

Finding No. 5: They’ll Change Their Minds When Shown Value
Value is also essential to understanding which digital content will lead shoppers to shift their
focus from one product to another, or to consider new items.
Survey respondents were asked to envision two scenarios in both grocery and general
merchandise environments: 1) changing their minds about which products or services to
choose, and 2) being inspired to try something new. The survey then asked respondents two
questions: 1) Which types of content would cause you to select a different product from the
one you were originally considering? 2) Which types of content would lead you to select a
product or service that you had not considered before entering the store?
The results related to the grocery segment were not surprising. Four types of information
were decisive in both shifting decisions and inspiring impulse purchases:
1. Price comparisons (cited by more than half of all respondents)
2. Information about special deals or promotions (indicated by 54 percent as inspiring
a trial)
3. Product availability in nearby stores (selected by more than one-third of
respondents)
4. Information about specially priced bundles of products (identified as important in
inspiring trials by 32 percent of respondents)
The list of important behavior-changing influencers was much longer for general merchandise
shopping—and the level of influence was much higher. Roughly two-thirds of shoppers
would respond to price comparisons, and more than half to information on special deals and
promotions. Large numbers of respondents also pointed to:
● Product ratings and reviews (56 percent noted that these would inspire them to
purchase new items)
● Expert recommendations (42 percent)
● Video and images that show product usage (about 40 percent)

Finding No. 6: Your Device or Mine?
Digital shoppers want to access content on their own devices as well as on store-provided
devices. They also want to access content on their own (as opposed to with assistance from
an in-store associate).
Overall, there was equal preference for BYOD (“bring your own device”) and store-provided
content. Less than one-fourth of all respondents expressed a preference for using their own
device (22 percent), or using a device (or touchscreen) provided by the retailer (21 percent).
Slightly more respondents (28 percent) said that they were happy to use either option.
In terms of mobile device content, 21 percent of shoppers preferred browser-based access,
only 12 percent preferred brand-specific apps, and 20 percent were happy with either
option. In terms of the size of in-store screens, there was a clear preference for a 26-inch
diagonal touchscreen over a tablet-size screen (almost 2 to 1). In addition, about threefourths
of respondents expressed a preference for using a touchscreen as compared with a
keyboard or gesture-based interface.

There was a clear desire for what might be called “assisted” self-service. About one in five
respondents expressed a desire to access digital content in the store completely on their
own. However, two-thirds wanted to access digital content in the store on their own—but
with an employee standing nearby to provide assistance if needed.
In summary, access to content is more important than the type of device used. Retailers
should provide shoppers with easy access to content through both shopper- and storeowned
smart devices. If retailers don’t provide digital shoppers with easy access to content
in the store, shoppers will find it on their own.

They Want Personalized Experiences (Opt-in, Please)
Offering personalized shopping experiences (customized services, offers, and advice) is
becoming more important as a way to encourage buying among the Digital Mass Market.
The survey findings also highlight the types of data digital shoppers are willing to share in
order to receive a personalized shopping experience.
Broadly stated, personalized experiences have the greatest influence on Über Digitals with
regard to influencing purchasing behavior. More than one-third (35 percent) of Über Digitals
said that a personalized experience would “definitely” encourage making a purchase, and 50
percent said it would “possibly” encourage them to make a purchase. The Digital Mass
Market as a whole was a bit more reluctant, with only 18 percent saying that a personalized
experience would “definitely” encourage making a purchase. Nonetheless, 52 percent said
that it “possibly” would do so.
Digital shoppers are also willing to share their personal information (up to a point) in order to
obtain personalized experiences from retailers. In general, shoppers appear willing to grant
retailers permission to mine information from transactions, including shopper identification
(name, gender, address, email), past purchase history, loyalty points, and on-file warranties.
In addition, there is a willingness among some shoppers to share information about potential
future purchases, such as likes, dislikes, hobbies, and interests.
However, the data show that shoppers must be given the choice of opting-in or opting-out of
personalization. Shoppers also do not want retailers to construct personalized offers from
web browsing histories, social media use, mobile phone data, personal financial or credit
card data, or visual technologies such as store-entry facial recognition and license plate
reading. Even in this era of “big data,” retailers should be extremely transparent with their
customers before using this information.

: It’s Still a Store-Centric World
The store will continue to be the site of the vast majority of retail transactions.

According to the survey, the most important reasons for shopping in a store are:
● Opportunity to look at, touch, and compare products (important point for “tactile”
segments of the industry, such as apparel and domestic): 61 percent

Point of View
● Ability to take products and use them immediately: 49 percent
● Ability to try—and try on—products (important for apparel and potentially consumer
electronics retailers that are struggling with commoditization and pure-play
competition): 41 percent
● Value of receiving advice from store staff: 6 percent

Shopper Preferences for In-Store Mashop Concepts
Concept No. 1: Automated Pickup
When shopping online, you can use this service to pick up your
purchase from a safe locker in the store. You access your
purchase by entering a unique code sent to your email
address or mobile phone.
Respondents who were “very interested” or “somewhat
interested” in this concept: 53 percent.

Concept No. 2: Product Selector
This service allows you to view entire product ranges and
detailed information about specific products (as you do
on websites) to help you decide what to buy. It lets you
see detailed specifications, ratings and reviews, product
images, and product comparisons on price, features, and
ratings. You can then use it to buy the product online.
Respondents who were “very interested” or “somewhat
interested” in this concept: 53 percent.

Concept No. 3: Personal Mobile Shopping
You can use your mobile device in the store to get personal
recommendations, offers, and coupons, and scan a product
code to see online product information, ratings and reviews, and
recommendations of accessories for that product. You can also
use this mobile app to find products in the store. For example,
the app could send you money-saving coupons as you enter the
store, or it could help you find healthy ingredients for a recipe.
Respondents who were “very interested” or “somewhat interested” in this concept:
50 percent.

Concept No. 4: Design Center
You can use this service to select products, configure
and arrange them to meet your needs, and create your
own design or solution. You then receive a list of the
items you need, and a picture of your design or solution.
For example, you could design your own room (by
selecting furniture, wall and floor coverings, and so on),
configure a home theater (by selecting components), or
create your own make-up look by selecting various
cosmetics.
Respondents who were “very interested” or “somewhat interested” in this concept:
49 percent.

Concept No. 5: Shopping Helper
You can get help from store staff, who use an online tablet
like an iPad to show you online information and comparisons.
Store staff could use it to access the Internet to help
answer your questions, or to show you detailed specifications,
ratings and reviews, prices, comparisons, and stock
availability. If something isn’t available in-store, you could
buy it online via the tablet for home or store delivery.
Respondents who were “very interested” or “somewhat
interested” in this concept: 39 percent.

Concept No. 6: Product Recommender
You can use this service to receive suggestions,
recommendations, and guided-selling advice to find
products and services that are right for you. It will give
you ideas about how products can do more for you and
work together. For example, you could see outfit
recommendations and suggested accessories for
going to a party, receive recommended recipes with
matched wines, or go through a series of questions to
find digital cameras that best fit your needs.
Respondents who were “very interested” or “somewhat interested” in this concept:
39 percent.



recommends the following steps:
● Define your primary business objective, such as increasing in-store conversions or
expanding basket size.
● Focus on delivering the right content, on the right devices, at the right point in the
omnichannel customer journey. How much does your target shopper likely know when
he or she enters the store?
● Design a user experience that is easy, inviting, and intuitive. Cisco IBSG’s work with
leading retailers shows that this type of development results from a carefully
researched and incremental process.
● Make sure the physical design is inviting to shoppers and catches their attention. Our
research clearly indicates that shoppers prefer midsized, self-service touchscreens.
● Rethink the merchandising and return-on-investment (ROI) implications of in-store
digital content delivery. While in-store screens take up room that can be used for
merchandise and cost money to implement, the benefits should outweigh the costs.
● Enable social interaction by allowing customers to post on Facebook with a single
touchscreen action.
● Use clear and concise signage to call attention to your Mashop solution. Explain how to
use it, and describe the value shoppers receive. Don’t assume shoppers will know what
your Mashop does or how it operates.
● Enlist associate support by placing badged, uniformed personnel at interactive
screens and Mashops to assist shoppers, especially in the early phases of adoption.
Operationalize with Business and Technology Enablers
Once your Mashop concept has been defined and designed, it is important to consider the
following business and technology enablers to scale it across your operation.
Business Enablers
● Knowledge and content management, including content generation, refresh cycles,
decision rights and responsibilities, and content security.
● Operational processes and procedures, including associate roles and responsibilities,
labor and expertise management and optimization, and revenue recognition.
● Channel management, including data integration, cross-channel inventory fulfillment,
and revenue recognition.

Technology Enablers
● Content management and delivery, including security, bandwidth capacity and
optimization, and the architecture required to deliver reliable, high-bandwidth, lowlatency
experiences at peak traffic times.
● Store architecture, including bandwidth capacity, CPU optimization and virtualization,
and total thin-store opportunities.
● Data integration that enables a single view of on-order and on-hand inventory,
customer profiles, and flexible fulfillment.
Leading retailers are actively developing and testing omnichannel digital experiences to
differentiate and revitalize their brands. Given consumers’ new channel-hopping behavior,
what will you do to “catch” customers and “keep” them within your brand during the
shopping journey?



what are some of the upcoming areas to enhance consumer experience in the retail and CPG sector.
On an increasing basis customer/consumer service in the CPG industry is becoming a strategic differentiator.  Enhancing the overall customer experience is now based upon multi-mode interactions that include social media, contact centre, internet, eMail, etc., which must be integrated.  Accordingly, the underlying communications infrastructure could not be more critical to this industry.

BT Connect, BT Contact, BT One, BT Compute, BT Assure and other services represent valuable enablers in helping helped leading CPG manufacturers to meet customer service requirements with global network infrastructure and services providing visibility of assets, people and applications in geographically dispersed environments.



Understanding your demand chain and identifying who is accountable for it are essential first steps.
Companies need to integrate five key areas to make the demand chain a reality.
Driving demand means finding relevance in the vast pools of consumer and corporate data.
A successful demand chain is in sync with a supply chain that can deliver on cost and flexibility.

Consumer-packaged goods (CPG) companies, retailers, and their business partners often tout the ways they put customers at the center of their strategies. But while many companies do a good job of understanding their customers, perhaps not as many create demand by coordinating across marketing, sales, and innovation—functions and activities that now encompass the demand chain.
The demand chain integrates the activities and stakeholders that spark consumers’ devotion to products and brands to drive growth. Often, though, there’s fragmentation both inside a company and among its external partners. Creating customer interaction, efficiency, and growth requires a center of gravity with all the demand functions pulling in the same direction

Putting demand in the crosshairs
Most organizations concentrate on making minor improvements to their supply chains. They can be productive, but these changes won’t spur sustainable growth.
A company that has a strong demand chain linkage will be able to answer the following questions:
• Which segments do we underserve or not serve at all?
• What are the elements that help us better deliver our brand promise?
• How can we create and offer value in a different or better way?
An effective demand chain embraces innovation and aligns with the supply chain, because it will be woven into the fabric of a company, its brands, and its products.

Shifting responsibilities
Demand chain leadership will come from several corners of the company, and each brings its own unique perspective.

Element Value within the demand chain
Executive support Sets the tone for the rest of the organization.

IT buy-in Identifies hidden opportunities using data analytics.


MarketingDefines new ways to offer valueby utilizing customer insights.

SalesDelivers the unique brandpromise to market segments.

InnovationFocuses on the customer’s needsand

The demand chain touches every customer-serving function in the enterprise. So bringing the right people to the table requires reaching across business boundaries that are traditionally rigid or even impermeable.
Companies need to develop strategies that integrate siloed internal resources. This will trigger a collaborative network of partners, thought leaders, brand ambassadors, and suppliers. But it won’t happen overnight.
Defining accountability
Still, organizational challenges can arise.
80% of marketing executives across industries say their companies’ go-to-market demand chain capabilities are not sufficiently efficient or effective. One key obstacle hindering demand chain performance is a lack of understanding and consensus related to roles.
Research finds that in today’s digitized world, an organization’s ability to make distributed group decisions is increasingly important4—meaning the demand chain likely doesn’t have a single owner in the enterprise.

A company’s leaders need to decide how the demand chain will be governed, particularly because multiple stakeholders are involved. Who will drive this sorting-out process—will it be the CEO or COO? Who within the enterprise will dismantle organizational silos? Will brand managers become “demand chain managers,” since they own the profit-and-loss statements? Will a company’s CIO be tasked with enabling innovation across the demand chain?
Once these questions are answered, a company’s executives will need to answer another overriding question: With the demand chain leadership in place and clear accountability roles set, what needs to happen to integrate the functions?

Creating an effective demand chain requires companies to pay attention to five key areas:
1. Create a consistent experience
--no single channel or particular retailer will dominate growth through 2020.
-- that 86% of shoppers use at least two channels as they research, shop, and interact with brands.
- Manufacturers and retailers need to deliver an “omni-channel” shopper experience from start to finish, across physical, digital, and mobile channels.
2. Gain a better picture of the customer
by asking a series of “what is” questions about the firm’s consumers, before shifting to “what if” queries that could give way to customer-centric innovations.
All customer-facing personnel must be involved in the process, and there must be a continual flow of verbal, visual, and quantitative data.
3. Deliver a top-notch customer experience
confirmed that a 7-second reduction in fast-food customers’ waiting time can increase market share
by 1%. Likewise, each added second of drive-thru wait time reduces the amount customers are willing to pay by at least 4 cents.

4. Innovate with the customer’s help
Injecting an experimental mindset into product and service innovation can disrupt markets. Learn to prototype—and learn rapidly. In describing the Kindle’s development, Amazon CEO Jeff Bezos said a company’s leaders can “determine what your customers need and work backward, even if it requires learning new skills.”10 The strategy has served Amazon well, earning it top rankings in the American Customer Satisfaction Index for 12 years running.
5. Define and measure impact
Companies remain in the early stages of figuring out what to measure and how. “The exact metrics are still being fully developed, but they have to be founded on the return on investment,”
The means for measurement will evolve as each new avenue to the customer comes along. The more precisely a company can assess the performance of its brands, the better positioned it will be to make robust brand and business decisions.
Six areas for analytics
Quickly uncovering and effectively responding to customer signals requires expertise in disparate data sources.Bigdata
BusinesssystemsCore analytics, data capture, and insight sharing
Point of saleReal-time opportunity for shopper-specific insight
SyndicateddataAllows broad reach and structured information
Social mediaAbility to discover and follow brands or retailers customers didn't know about
Online marketplaceEnables rich data capture direct from brand site rather than from third-party
MobilityLocation-based data, ease of interaction, shared benefits for company and customer
The ability of CPG companies, retailers, and their industry partners to interpret demand signals in near-real-time is dependent on big data—the vast pools of consumer and corporate data that can be collected, analyzed for patterns and context, mined for insights, and acted upon for measurable impact.
However, most companies lack clarity on the new data landscape and how this data impacts each of the company’s business functions and relationships. Recent research finds that while 80% of retailers are aware of big data, less than half (47%) are clear as to how it will affect their businesses. In addition, only 5% of retailers have, or are in the process of creating, a big data strategy.1

Unlocking big data creates a competitive edge. Companies that can separate signals from the noise on digital platforms will gain the business intelligence to predict consumer behavior and
to create and drive innovation, as well as new products and services.
Reading the signals in unstructured data
For instance, a large US food and beverage maker’s average out-of-stock rate and backroom inventories were significantly higher than industry averages, resulting in missed opportunities and higher costs. To remedy the situation, the company deployed a custom demand-driven replenishment system that uses store-level predictive analytics models—which can aggregate, analyze, and extract patterns from the data. The solution has so far reduced out-of-stocks 70%, backroom inventory 10%, and headcount 15%—representing $20 million in annual earnings before interest, taxes, depreciation, and amortization (EBITDA).16
Gaining customer intelligence through big data requires new processes, tools, and analytic capabilities. It also requires new talent and skill sets (e.g., data scientists and data modelers) to transform the culture to one that is guided by data-driven decisions.
Technology can help sharpen a company’s customer focus. While looking at product-specific metrics, companies should also use the technology to capture, analyze, and disseminate customer-specific data, all while ensuring that security and privacy risks are minimized.
The ability to anticipate and deliver on emerging customer needs requires understanding how the demand chain and supply chain interact with one another. : “The demand chains that will be successful in the future will have supply chains attached to them that can deliver on cost, as in the past, but also deliver on flexibility.”
How a singular view increased profits
, functional groups across the company can determine the stimulus that creates demand by brand and by product—called “demand sensing.” The cross-functional team achieves this by accessing and analyzing the same data:
• Supply chain looks at information flows;
• Sales determines what information is needed to match supply and demand;
• R&D designs pilots for brand consumption; and
• IT consults on using the information.
Gallo uses the resulting insights to create a virtual wine shelf design schematic for retailers. Before it developed the schematic, grocery stores did not count wine sales as a major profit source. Now, wine sales are the first- or second-highest profit generators in the same stores.
Syncing supply and demand
“If you can’t predict your demand signal very well, it’s hard to maximize efficiencies with suppliers,”
“And there are all kinds of places in the supply chain where you can drive efficiencies if you have a more accurate demand signal.”
While companies should now look to the demand chain to capture market opportunities, most have spent years wringing out process efficiencies from their supply chains. Functional leaders must be willing and able to foster collaboration and break down silos to keep the supply and demand chains in sync.
Supply chain excellence today is practically a given; an effective demand chain that is integrated with supply is the differentiator. A complete value chain that is shaped around the customer is what will ultimately drive the bottom line.

We’re all marketers now Engaging customers today requires commitment from the entire company—and a redefined marketing organization..
To truly engage customers for whom “push” advertising is increasingly irrelevant, companies must do more outside the confines of the traditional marketing organization. At the end of the day, customers no longer separate marketing from the product—it is the product. They don’t separate marketing from their in-store or online experience—it is the experience. In the era of engagement, marketing is the company. This shift presents an obvious challenge: if everyone’s responsible for marketing, who’s accountable? And what does this new reality imply for the structure and charter of the marketing organization? It’s a problem that parallels the one that emerged in the early days of the quality movement, before it became embedded in the fabric of general management. To avoid being “in for it,” companies of all stripes must not only recognize that everyone is responsible for marketing but also impose accountability by establishing a new set of relationships between the function and the rest of the organization. In essence, companies need to become marketing vehicles, and the marketing organization itself needs to become the customer-engagement engine, responsible for establishing priorities and stimulating dialogue throughout the enterprise as it seeks to design, build, operate, and renew cutting-edge customer-engagement approaches. As that transformation happens, the marketing organization will look different: there will be a greater distribution of existing marketing tasks to other functions; more councils and informal alliances that coordinate marketing activities across the company; deeper partnerships with external vendors, customers, and perhaps even competitors; and a bigger role for data-driven customer insights. This article provides some real-life examples of these kinds of changes. Marketing’s cutting edge is being redefined every day. While there’s no definitive map showing how companies can successfully navigate the era of engagement, we hope to help senior executives—not just marketers—start to draw one.
Behavior Trends Drive Packaging and Brand
Marketing Strategies
Current consumer trends are driving the landscape of the CPG market and
will shape the brand strategy and packaging approaches significantly.
Some of these trends include:
Private Label Growth: Private label brands have grown significantly
in the past few years and appear poised to continue steady
growth going forward. Value-conscious consumers look for ways to
spend smart while maintaining the quality of established brand
names. Some private brands are morphing into “brands” of their
own.
Innovation Drives Loyalty: Dominant brands with strong consumer
loyalty tend to hold on to market position even in a climate of
consumer frugality and a trend toward lower-priced products.
However, CPG companies are finding that they need to reinvest in
even their strong brands by creating different product formats or
adding innovative packaging to create competitive advantage. For
example, Heinz introduced new ketchup bottle shapes to enhance
usability for consumers. This relatively simple new bottle design increased
sales by 20 percent and market share by 6-7 percent. The
basic ketchup recipe remained unchanged, but an innovative bottle
shape increased sales significantly.
Unique Packaging Drives Trial: Innovative packaging can improve
the consumer experience. In a CPG market where
differentiation will be critical, novel packaging can provide consumers
with something new. CPG providers are beginning to
understand that the entire consumer experience before, during,
and after the store visit is gaining importance and can be a significant
driver for repeat purchase. More environmentally sustainable

“green” packaging continue to be good business. It not only demonstrates
a CPG company’s values, but affords an opportunity to
engage the consumer on a new level. Consumers have an increased
awareness of their impact on the environment. CPG
companies have an opportunity to provide sustainability as a component
of the overall consumer experience. If done well, it can
contribute to expressing the brand value and provide an opportunity
for consumers to express their own sustainability beliefs.
Store Experience Takes Precedence: With today’s technology,
consumers have the ability to minimize their media exposure. This
trend places greater emphasis on the in-store experience. CPG
companies have the opportunity to leverage cutting edge applications
to create a virtual store and determine how products are best
displayed, shelved, and made available to the retail buyer. Conversely,
large retailers like Wal-Mart and Target use the same
applications to determine best store locations, influence buying
patterns, and make more accurate inventory projections.
Consumers Now In Control: Smartphone technology enables consumers
to be more in control, impacting purchase decisions. The
new marketing paradigm will be based on social groups and the social
behavior patterns exhibited by these groups. This suggests a
profound shift from the long standing demographic and psychographic
approach. The formation of communities of social groups
is based on natural human behavior traits and will impact decisions
regarding choice of products and services. The emergence of communities
based on social groups serves to concentrate and coalesce
the shared interests and even cultural commonalities, which can
provide very specific information on exactly what this group will
buy. Marketers will need to leverage these new touch points to
strengthen brand equity and drive/co-create new products.
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