Delivering the Goods Technology Investments that Boost Consumer Packaged Goods'''' (CPG) Performance pot

Deepening digital marketing capabilities that provide faster, more cost effective ways for companies to provide differentiated, more personalized experiences to engage, acquire and retai

Delivering the Goods

Technology Investments that Boost

Consumer Packaged Goods' (CPG) Performance

1

This Accenture Point of View

explores three specific technology

investments that can help consumer

goods companies satisfy today’s

discerning, demanding and

always-connected consumer:

I Building on advanced analytics

to address all dimensions of data

(quality, security, semantics,

integration, etc.) so that data is

viewed as a platform to improve

market performance and increase

enterprise operating efficiency

II Deepening digital marketing

capabilities that provide faster, more

cost effective ways for companies

to provide differentiated, more

personalized experiences to engage,

acquire and retain customers than traditional marketing channels

III Adopting more open, flexible enterprise architecture to more easily integrate innovations

in consumer technology (e.g., mobile, social media) and enable more efficient multi-channel commerce to improve organization responsiveness and market impact

These investments may require a new kind of collaboration among business executives, marketing and technology, a partnership forged from a shared understanding that the right technology investment can yield strategic advantage and help companies achieve a higher level of performance

Having weathered the downturn by streamlining operations and reducing costs, most consumer goods companies are only too happy to shift

their focus to growth strategies This re-orientation includes a fresh

look at how technology can enable sales and marketing capabilities that contribute to top-line growth More specifically, companies are evaluating investments in consumer-facing and enterprise technology capabilities that can help them connect with, understand and provide what

consumers need when and where they need it

I Build on advanced data

analytics and address

all dimensions of data

to improve market

performance and enterprise

operating efficiency

It is a universal truth that data can

be a consumer goods company’s most

strategic asset Indeed, the past decade

saw many companies invest in data

quality and analytic efforts focused on

evaluating trade promotions, segmenting

customers more narrowly, or dissecting

aspects of functions such as inventory

management or supply chains in order

to identify the source of problems

Yet, even the best ex post facto analysis

by definition generates limited value

for the enterprise Accenture believes

that companies need to extend these

initial efforts to execute enterprise

data management strategies as well

as deepen analytic capability A

coherent data strategy that includes

cross-functional analytics will provide managers with one, integrated, secure, credible version of the truth, rather than fragmented scenarios With that vision in hand, sophisticated modeling and extrapolations can help companies evolve from relying on descriptive analytics to figure out what happened and why, to more predictive analytics that generate insights that can both guide future growth strategies and avoid costly product

or process experiments supported

by "gut" instinct rather than data

Indeed, Accenture’s research and client experience identified several benefits of moving up the analytic curve, the most salient of which is that companies that rely on data analysis outperform those who do not (see sidebar, The Analytics-High Performance Connection) How?

Because they are better able to:

• Drive growth by identifying untapped

opportunities in markets or consumer segments, and transforming processes such as new product development and marketing

• Enhance cost and cash advantage

by increasing balance sheet efficiency, better management of working capital, and higher returns on investment

• Know what really works to improve operations through reengineering key

processes to be more effective

• Restructure the business at scale by higher impact M&A,

divestitures, alliances and value chain restructuring

• Manage risk by using more precise

metrics and models to monitor changing business

Accenture has helped diverse consumer-oriented companies capture the benefits

of customer and marketing analytics

• For a health and beauty manufacturer, a portfolio optimization analysis identified correlations between purchasing behavior and product attributes related

to 150,000 SKUs Through simulations and modeling, the company was able

to rationalize products and eliminate more than 30,000 items, resulting in incremental sales gains as well as a far more simplified supply chain

The Connection between Analytics and High Performance

Accenture’s research of high-performance businesses found that high performers—those companies that consistently outperform their competitors on a variety of dimensions across business cycles—are five times more likely to make extensive use of analytics than their lower-performing competitors Not surprisingly, the importance of business analytics has spawned a healthy, data-centric industry all of its own, with analytic software posting with a compound annual growth rate topping 20 percent for the last four years.1

Figure 1 Analytics framework and potential allocation of responsibilities

• A consumer electronics and

entertainment chain used transaction

analytics to study what customers

bought after making a major product

purchase in order to improve product

assortment and in-store placement,

create unique bundles and increase

replenishment and in-stock levels

The result: customers were offered

more of what they are likely to need

upfront, decreasing returns

• A world renowned theater group used

customer segmentation and marketing

analytics to devise a growth strategy

focused on both deepening "core"

customer attendance and broadening

its overall reach The results informed

more targeted mailings and initiatives,

ultimately increasing the company’s

core audience base by 30 percent, and

a critical customer segment by more

than 50 percent

Achieving growth is a primary concern,

yet so too are operational efficiency,

process excellence and cost control

In these areas also industrial-strength

analytic capability combined with

a coherent enterprise data strategy proves a smart investment For example, analytics conducted across multiple legacy data warehouses helped beverage leader Diageo identify and extract the most relevant data and expedite its use

by executives, enabling faster, more informed decisions Similarly, Unilever used analytics to identify the behaviors, methods and tools used by its best sales team members, then designed

a capability development program around them—one that boosted sales within three months and improved morale among sales representatives

Both these examples show the power

of analytics to improve processes, whether in the hard-wired area of IT or less technical functions such as staff capability-building Yet, despite top-line and operational benefits of using analytics, many companies face hurdles

in deploying analytic capabilities

A fundamental challenge: many companies’ analytics capabilities are

stretched to the breaking point trying

to handle masses of non-transactional data that actually feed enterprise insight The "data explosion" ushered in with the YouTube and social media era has greatly expanded both the types and quantity of relevant data; one estimate is that business-related data doubles every 1.2 years Thus, achieving enterprise-wide or cross-functional data analysis is just the beginning; companies will need to integrate that internal data with all types of external data—unstructured, visual, voice, geospatial—in order to gain the insights that will lead to competitive advantage Such value creating data integration implies a data strategy that addresses data quality, security, semantics and governance issues A solid analytics capability must take all these sources into account (see Figure 1), and allow companies to distill insights with enough granularity to make improvements

at the function or process level

External Data Integration

Business Functions

(Sales, Marketing, Innovation, Supply Chain, Finance, RQT)

Business Intelligence and Predictive Analytics Tools

Consumer Insight Customer Insight Operational Insight CompetitionInsight

Data Analysis

Services

Reporting and

Analytics Services

Data Integration

Services

Consumer Data Syndicated Data Retail Data

Enterprise Consumer and Demand Data Repository

Shipment Data

Line depletion Invoice

Operational Data

ERP WMS Legacy

Business Warehouse

Transactional Data

Internal Data Integration

Loyalty Data Segmentation

POS Transaction Log

IRI Nielsen

Source: Accenture

Can all this disparate data be

harnessed and understood with

emerging technology to result in

improved performance? It can, as

analytic-powered leading companies

like Google, Facebook, Amazon and

Netflix show Traditional consumer

products companies, however, may face

additional challenges; some will need

to acquire and expand analytic and

data strategy talent and capabilities

To do so, companies could consider:

• Augmenting internal and partner

communications to emphasize that

accurate, timely, consistent data is a

strategic priority and a strategic asset

Many companies struggle to develop

master data management approaches

that reflect the complexity of today’s

data landscape and, more important,

ensure a consistently high level of data

utility, as opposed to just management

or quality

• Identifying and integrating the analytic initiatives going on across the enterprise Some clients we have assisted are surprised at the number

of efforts underway that are not well integrated This fragmentation can result in the company buying or accessing the same data (or subsets

of it) multiple times—duplicating time and effort

• Assessing options to acquire capability, including hiring personnel with more advanced analytics expertise, renting short-term from

a third-party, or outsourcing to

a trusted vendor many of which, including Accenture, offer industry- and function-specific tested analytic engines Eli Lilly & Co took the rental route to analyze large data sets related to a new drug The bill for using Amazon’s EC2 platform:

$89, compared to the estimated $1 billion cost of delaying the drug to get company servers up and running (estimated to require 6 to 8 weeks).2

However acquired, advanced analytics give executives insight into the dynamics of their business and how shifts could influence both enterprise and market performance

so that they can make better decisions, faster Indeed, some commentators see analytics as the driver of a third industrial revolution, increasing productivity in a way that railroads, electricity and internal combustion engines did previously.3

Revolutionary or evolutionary, it

is clear that analytics is and will continue to be a major differentiator and value creator for companies in the consumer goods industry

For further reading:

Analytics at Work: Smarter Decisions, Better Results, T Davenport, J Harris, and

R Morison (Harvard Business Press, 2010)

The analytics advantage, by

B Duganier and M.J Salvino, Outlook, October 2010

II Digital marketing allows

companies to optimize

both new and traditional

marketing channels

“Think digital at the

inception, not as an

afterthought.”

- Alexis Nasard,

Chief Commercial Officer,

Heineken International

It could be a game played on a

dedicated product website, a mobile

e-coupon or recipe idea delivered to a

smartphone when a consumer nears a

retailer or product display, or a

location-based sweepstakes facilitated by social

media Whatever the platform, there is

no denying that digital channels have

injected tremendous innovation and

enhanced the impact of marketing in a

few short years Not surprisingly, global

companies from AB InBev to Zappos

have substantially increased their

investments in digital marketing and

assets even as budgets for traditional

marketing initiatives have shrunk

Yet, despite the hype and attention

showered on innovative tactics,

digital marketing should be judged on

the same criteria companies use to

evaluate traditional marketing channels:

Does the spend justify the return?

Has our market share or mindshare

increased? How do we know? How

many more consumers are converted

or more motivated to buy as a result

of our digital efforts? To answer these

questions, companies first need clarity

on the advantages of evolving their

marketing mix to include digital, as

well as the capabilities they need to

support a productive digital effort

The Digital Advantage: A Direct, Dynamic Relationship with Consumers

In our experience, the market and operational benefits from digital marketing are real and accelerating, and frequently form the foundation of campaigns rather than an add-on For example, Heineken launched a global effort online months before related advertising hit TVs The Web videos

at the core of the campaign debuted

on YouTube and Facebook, introduced characters written to appeal to a younger digital consumer base, and allowed visitors to customize video clips.4 In general, digital marketing provides companies with a more flexible and efficient means to engage, acquire, retain and grow customers than many traditional channels

Significant advantages include:

• The ability to gather and deploy analytic insights to respond directly

to consumers with personalized experiences

• More scientific and faster measurement of campaign impact

• Creation of more agile, yet cost effective marketing assets by re-using proven vehicles and approaches

• Increased speed of automation and standardization to support global marketing initiatives in real-time

• The ongoing innovation possible in the more dynamic digital marketplace

An end-to-end digital platform includes

a broad range of capabilities, beginning with a full-scale digital strategy, and including underlying architecture application development, advanced media auditing and Web analytics (e.g., SEO), and robust data management capabilities (see Figure 2)

Figure 2: Integrated Digital Marketing Capabilities

Digital Marketing Strategy and Management

Web Development

iMedia Solutions (SEO/SEM/

Display)

Marketing &

Retail Analytics

Industry &

Economic Modeling

Application Management

Web Migration Services

Data Mgmt

& Data Warehousing

Media Auditing

Intelligent Digital

SEO / SEM Agile

Marketing Analytics

Portfolio Optimization

Partnerships (e.g., comScore)

Agile Intelligent Marketing

Source: Accenture

With these in place, companies are able target and engage consumers

in a fundamentally different way—continuously, dynamically and directly Company-sponsored websites, brand or product fan pages on social networks, and mobile communications can all launch and sustain dialogues with consumers, generating data and gathering insights continuously not just offering information passively Insights can be gleaned directly from a digital platform such as online focus groups for example, or by detecting latent consumer demand by synthesizing transactional data and consumer information gleaned from "SoMoLo"

(social/mobile/local) digital channels with advanced Web analytics Companies are able to develop a concrete picture of the digital consumer and interact with each in a more personal way rather than rely on more general segmentation

Many companies are combining truly digital components—not just digital versions of traditional campaigns or collateral—to deliver a multi-layered, interactive, personalized experience to consumers These frequently launch with a Web-based ad campaign (echoed offline), with online-only video shorts that introduce characters, themes and,

of course, new products or in market products in a new way The next layer might offer a contest of some sort, or perhaps an opportunity to collaborate

on new products, such as Starbucks did with its mystarbucks.com blog and Ford Motor Company’s offer of Web-based tools to customers to design products

A further layer could offer prizes or premiums for purchases or in-store visits The 7-Eleven chain adopted a location-based game played on the SCVNGR mobile platform tied to the opening of "The Hangover, Part 2".5

Although launched to promote new drinks, it accomplished the more general objective of driving traffic to stores because participants were required to check-in using their phone to qualify for prizes—perfect synergy between the target consumer (young males), the tools they use, the products they consume and the movies they are likely to watch

As the Heineken and 7-eleven campaigns demonstrate, digital channels are uniquely engaging, tapping into consumers’ simultaneous desires to be entertained, contribute their own ideas and design the product they want Of course, consumers leave a digital trail

or fingerprint that can be analyzed to finetune marketing efforts further—so the effort is mutually beneficial

In fact, our research shows that creating active user experiences, particularly if they invite ideas for new products, is a clear trend in digital marketing, one that may sound the death knell for conference room-based focus groups For consumer goods companies, launching collaborative product development initiatives, or

"crowdsourcing" input on products, are more important than ever given the lack

of breakthrough products in recent years These multi-dimensional efforts deliver a number of unique benefits for companies:

• The agility of the digital marketing platform allows for easier distribution and consumption of a wider variety

of marketing messages and collateral, increasing awareness and eventual purchases

• The digital fingerprint left by Web access, mobile phone use, etc provides accurate and immediate data on consumer engagement levels, the analysis of which can help companies better predict what will resonate with consumers

• The data extracted from such engagement can be easily shared across brands, thus reducing duplicative research efforts, increasing consistency and quality of consumer data to develop a more precise picture

of consumers, and driving down the overall cost of marketing

Our work with clients shows that companies may not undertake all the upfront planning and strategizing necessary to ensure efficient execution and impact of digital marketing and their integration with non-digital channels The following handful of leading practices will lay a solid foundation for digital efforts:

Accenture Research

Aims to Identify Cross

Channel Links for CPG

Manufacturers

In 2010 Accenture,

comScore and dunnhumby

launched an initiative

to evaluate if consumer

goods manufacturers brand

websites and consumers’

online activities drive

purchases in stores The

cross-channel research

draws upon participating

manufacturers’ sales data,

as well as comScore’s

panel of nearly two

million consumers as well

as dunnhumby’s loyalty

card scanner data from

sixty million household

Taken together, this allows

the research team to

draw conclusions about

correlations among brand

websites, in-store behavior

and purchases for 300,000

households Preliminary

findings are expected in

late 2011

1 Develop a digital vision that

anticipates using a range of digital

assets and channels, including Web

publishing, mobile, social media,

location-based screens and signage,

search, analytics and eCommerce/

mCommerce While companies

may not use all of these channels

and capabilities all the time, the

platform should be open and flexible

enough to support innovation

2 Focus on assessing Web presence

first Many companies no longer

recognize the power that their

websites have, and give this mature

digital channel short shrift Yet Web

landing pages are among a prospect’s

first encounter with many companies,

and it takes only eight seconds of

viewing a page (on average) for

someone to decide to stay on or

move off a site In our experience,

conversions from consumer to buyer

can increase by 200 percent by

optimizing and personalizing the

landing page experience, making

these tasks critical (See sidebar)

3 Make sure the digital strategy

is governed globally to ensure consistency and efficient leverage

of assets, but includes localization and regional strategies to ensure targeted, relevant consumer experiences (see Figure 3)

4 Tightly integrate online and offline marketing channels, data, measurement and metrics Only with a consistent approach and comprehensive view of results can companies make rational allocation decisions that optimize the traditional and digital media mix

5 Finally, streamline the number of people involved in setting, developing and executing digital strategy A

"too many cooks" problem can lead

to fragmented, inconsistent, delayed creative and delivery Assessing the contributions of and streamlining personnel in lead digital agencies, niche technical and creative agencies, and (yes) even traditional IT consulting firms can clarify creative development

and speed execution—speed and relevance being primary drivers

of digital marketing success

Executing a digital strategy that reflects these best practices will require many companies to enhance core enterprise technology and analytics capabilities, as well as acquire more specialized capabilities As shown

in Figure 3, a range of capabilities and alliances needs to be brought together to develop, deliver, measure and evolve digital strategies and manage digital channels to best effect Many companies mix internal and outsourced capabilities throughout their journey toward the agile, intelligent marketing digital represents

Figure 3: Driving digital strategy with global governance and local control

Constituent-ready Assets

Optimization

Content and Functionality

Global Content Repository

Global teams produce core

product content and

functionality

Global

Repository

Regions

Regional teams produce tailored/adapted content relevant to local segments

Constituents

Personalized experience

Local

Local teams manage interactions

Global

Teams

Global

Teams

Local Teams

Continuous automated feedback and learning system to improve content quality and targeting

Regional Repositories

Constituent-ready assets

User generated content Globally relevant

local content

Constituents Constituents Constituents

and channels

Regional Teams

Regional Teams

Source: Accenture

Laying a solid foundation for digital strategies requires companies to think holistically about their entire marketing strategy and incorporate digital solutions and capabilities to enhance overall returns on marketing investments While digital channels have the ability to offer a wide variety of creative and rich consumer experiences, companies need to ensure that every touchpoint—digital or not—has a purpose and adds value A holistic marketing strategy that integrates all platforms from conception through the end of campaigns will allow companies

to extract the most from each platform

For further reading:

Are you ready for the digital revolution?, Tim Breene and Brian

Whipple, Outlook, No 1, 2011

Engagement to Go: Using Digital out of home to drive customer relevance, Accenture Interactive

Point of View Series, 2011

Achieving High Performance in the Digital World, Accenture Interactive:

Insight Enabled Interactions, 2010 http://www.accenture.com/us-en/Pages/ insight-achieving-high-performance-in-the-digital-world-summary.aspx