The tidal wave of artificial intelligence (AI) that has hit the payments, commerce and financial services industries has necessitated a new definition. Because AI enables and accelerates the shift from analog and manual to automated digital processes, AI and digital transformation belong in the same sentence. And one of the sectors that has been at the forefront of this new cycle of transformation is consumer packaged goods (CPG).
As brands navigate this new terrain, the strategies that once defined the industry are being reshaped by the capabilities and insights provided by digital tools and platforms. This transformation has not only changed the way products are marketed, but has also redefined consumer engagement, data analytics and the overall marketing mix for FMCG brands. AI in the FMCG sector is not part of digital transformation.
“AI and ML (machine learning) are revolutionizing many aspects of our business, from supply chain management to personalized marketing,” said Kellanova digital and information manager Lesley Salmon.
“Machine learning algorithms help us analyze large amounts of data to optimize inventory management, demand forecasting and production planning. We also use generative AI to improve customer engagement through personalized recommendations based on consumer behavior and preferences.
If the Kellanova brand doesn’t sound familiar, that’s because it’s a global snack brand recently created by Kellogg’s, including Pringles, Cheez-Its, and Nutri-Grain. In a recent interview, Salmon detailed the full suite of digital tools the brand uses for everything from employee collaboration to personalized offers driven by data analytics to improving e-commerce conversions.
She was careful to point out that AI has added new capabilities to data analysis and provided a continuum for the brand as it develops research into eating habits and continues to pursue direct-to-consumer sales opportunities. customer (D2C). According to harvard business review, 24% of brands across all categories added a D2C channel in 2023; 55% of them were in the CPG category.
Salmon is just one of several CPG executives looking to add some spice back to the D2C market. Mondelez, Coca-Cola and Colgate-Palmolive are among those joining, all believing that digital transformation and data gleaned from digital marketing efforts continue to change strategies and tactics.
“The shift to D2C, supported by data-driven insights, heralds a significant transformation,” says the analytics firm. Quantzig. “Freed from the confines of traditional supply chains and intermediaries, CPG companies are now harnessing the power of data analytics and AI to build direct connections with consumers. This transition is not just about adapting to digitalization; it’s about revolutionizing customer experiences, product offerings and market strategies. In the era of digital transformation of consumer products, the company is blazing a trail through uncharted territories, fundamentally redefining consumption, production and customer relationships.
While digital transformation offers opportunities for CPG marketing, it also presents challenges. The digital landscape is extremely competitive, with competition moving from prices and products to algorithms, consumer preferences and technological advancements. Brands must remain agile and continually adapt their strategies to stay relevant and engaging.
For example, Mondelez’s use of AI is focused on improving data to inform consumer engagement, overall business decisions, and adding insights into promotions and loyalty programs.
“Ultimately, our approach to AI in marketing is expected to generate significantly higher returns on marketing investment at a fraction of the cost of traditional creative,” said Gustavo Valle, president of Mondelez for North America. “We are also developing capabilities with AI models to act as brains and transform and adjust our marketing more broadly across various dimensions. »
Valle’s approach has been adopted by several other brands. At Coca-Cola, financial director John Murphy claims that data is a “never-ending optimization” for updating marketing and market information.
Colgate-Palmolive Director of Analytics and Digital Diana Schildhouse talks about building a “data culture” in the company. Unilever uses AI-powered digital data and processes to change everything from product design to marketing to supply chain. It combines R&D and supply chain data with manufacturing simulations to respond more quickly to real-time trends and market changes, developing innovations faster than the analog world would allow.
“I strongly believe that science and technology will play a central role in helping to innovate for a better future,” says Alberto Prado, head of digital R&D and partnerships at Unilever. “The combination of digital and cutting-edge science allows our teams to advance in their field not by years, but by decades. »
