Oracle OpenWorld 2015 - CPG and the cloud: three companies, three strategies
- Summary:
- Kellogg’s, Unilever and Clorox discuss how the cloud is helping them address a number of growing challenges in the consumer packaged goods industry.
Along the way, however, companies in this sector will have to contend with significant shifts in consumer behaviours and market responses. A recent report from strategy&, part of management consultancy firm PricewaterhouseCoopers (PWC), outlines some of these:
In both developed and emerging markets, there is a wider variety among consumers now than at any time in the recent past. Growth is evident both at the top of the market (where more consumers are spending for higher-quality food and other packaged goods) and at the lower end (where an increasing number of consumers are concentrating on value). But the traditional middle of the market is shrinking.
To add to the challenge, individual buyer behaviour is more “pluralistic”, they say. Many of us now make multiple weekly shopping trips, some of them to mainstream supermarkets, some to discounter chains like Lidl or Aldi, some to local convenience stores and some online. And in order to get our attention, CPG companies must market their brands across many different media, from the Web, mobile and social sites to radio, TV and print. As strategy&’s KB Shriram points out, each of these…
...has its own requirements, audience appeal and economics, needing specialised attention.
At Oracle OpenWorld this week, IT leaders from the CPG industry discussed how a range of technologies are helping them tackle three key challenges.
Data-driven media planning
First up was Tracey Lewis, digital analytics and e-commerce lead for the Kellogg Company (Kellogg’s), maker of Corn Flakes, Pringles and Pop-Tarts among other well-known brand names.
When it comes to advertising these brands effectively, she said, the age-old mantra of getting the ‘right message, to the right person, at the right time’ still prevails - but getting the marketing mix right across a huge range of digital and print media is tough.
The company’s strategy here is referred to as ‘purchase-based targeting’ - the targeting of marketing messages according to an individual customer’s established buying behaviour and preferences. Or, as Lewis put it:
Moms buy Pop Tarts - we know that. But who else buys Pop Tarts? There are also college kids - so if we only send our messages to Moms, we’re missing a huge group of other customers. Purchase-based targeting, for us, is about finding those holes in our media planning strategy.
Data sources include information captured from Kellogg’s website, the Kellogg’s Family Rewards programme, the company’s internal CRM system, some direct-response programmes around brands like Special K and data from retailers and from Datalogix, the marketing analytics firm that Oracle acquired in December 2014.
Much of the analytic heavy-lifting required to demonstrate that this approach is working, meanwhile, is carried out using Oracle Data Management Platform (DMP), based on the BlueKai technology acquired by Oracle in February 2014 and now part of Oracle Marketing Cloud.
This work is helping Kellogg’s to develop a more programmatic, automated approach to media buying. More importantly, campaigns based on purchase-based targeting, according to Lewis, deliver a return on ad spend that is four times better than plain demographic targeting.
Sustainable logistics
For many CPG companies, more channels to market mean more trucks on the road, delivering to more retail sites. At Unilever, director of logistics IT delivery Rejin Surendran has implemented Oracle Transportation Management (OTM) to revamp the company’s transportation strategy with a view to improving customer service, reducing delivery costs and also cutting CO2 emissions, in line with the company’s wider corporate social responsibility strategy.We are a large SAP shop. The reason we chose Oracle Transportation Management is that if you look at any of the analysis of this area, OTM is one of the clear leaders here. But we had to think carefully about this. We also had to think carefully about using cloud: every product we ship to customers passes through OTM so it’s really mission-critical application and we had to be really sure that it would work.
The results, however, have been impressive. The total number of kilometers travelled by delivery trucks has been reduced by 17 percent. Average truck loadfills have improved by 10 percent. And carbon emissions are down 10 percent.
Customer insight
In recent years, many CPG companies have focused on their ability to ‘sense and respond’ to consumer trends, primarily through the application of big data technologies. It’s not an easy trick to pull off, according to Shawn Goodwin, director of marketing technology at The Clorox Company, maker of household cleaning products:
This isn’t the world we’ve lived in historically. We’re in a huge transformation, in a world of trying to move from mass marketing to the extreme of one-to-one messaging across a wide range of channels. It’s a struggle.
Cloud technologies could potentially be a big help here, though, he adds.
We’re still thinking this through. To me, the issue is about how we combine our own first-party data with second- and third-party data from partners and providers to get that 360-degree view of the customer. To date, there hasn’t been a scalable location for all that data to go so we’re building an integrated infrastructure so there will be a place for it to go, and we’ll be building it in the cloud. That’s the journey we’re on.