Role of Analytics in Consumer Packaged Goods (CPG) industry.

1. Role of Analytics in CPG Industry
Adarsh A & Dinakar J
hello@perceptive-analytics.com
☎ 646.583.0001

2. Disclaimer
All the information, facts , figures and other data used in this presentation is collected from
different internet sources. Perceptive Analytics doesn’t make any warranties or representations
as to the accuracy of the data and assumes no liability or responsibility for any errors or
omissions. The sources of data are appropriately disclosed in all the slides. Appropriate
assumptions are made at places where sufficient data is not available, the fact of which is
disclosed in the respective slides.
Also, we do not claim ownership/copy right of any image that has been obtained from the public
domain. We have acknowledged sources of all the information as much as possible.

3. Introduction
* http://www.gmaonline.org/about/
Contribution to the economy
According to Grocery Manufacturers Association* data, the US CPG market is worth $2.1 trillion
and employs 14.7 million workers in the United States. The industry contributes $1 trillion in
added value to the economy every year.
13%
87%
Economic Contribution
CPG
Rest
15
0
5
10
15
20
Employment
Millions
# People Employed

4. Characteristics of the CPG industry
• High volumes
• Low contribution margins
• High stock turnover
• Extensive distribution channels
• Low switching costs for the consumer
• High market saturation
• Competitive prices
• Consumer behavior

5. Trends Across Sectors
Source: https://foodinstitute.com/images/media/iri/TTFeb2013.pdf
• Dollar Sales across categories increased
aided by inflation.
• Number of Convenience stores grew by
0.7% in 2012 and 1.2% in 2011
• Drug channel performance lagged
industry average in 2012

6. Trends – Economic
Source: GMA 2013 Financial Performance Report, Growth strategies – Unlocking the power of consumer
Net Sales growth rates slowed in 2012 for
both manufacturers and retailers amidst
slow economic recovery in the U.S.
Net Sales Growth Earnings Growth
Even though there was a decline in net
sales growth rates in 2012, earnings
growth rate increased for manufacturers.

7. Trends – Technological 1/2
Source: Winning with IT in consumer packaged goods: Seven trends transforming the role of the CIO: McKinsey & Company
Direct consumer
relationship
Focus on individual customer needs, regain brand loyalty and
improves product decision making process
Mobile and location
based services
Amplifies the direct-to-consumer marketing, reduces the cost of
product launches and helps in improving shelf space
Shift to predictive
analytics
Provides real time data from social media and other online portals,
refine the traditional decision making process

8. Trends – Technological 2/2
Source: Winning with IT in consumer packaged goods: Seven trends transforming the role of the CIO: McKinsey & Company
Demand driven supply
chain management
Use of technology minimizes inventory levels, improves service
performance and reduces stock-outs
Idea-to-product
accelerations
Helps in introducing new products faster and at lower costs

9. Trends – Geographical
Source: Trends that will shape the consumer goods industry – McKinsey & Co.
• 1 billion new consumers by 2020
• Increase in the middle income group - spending capacities of $10 and $ 100 per day

10. Role of Analytics

11. Pricing – Role of Analytics
http://www.deloitte.com/assets/Dcom-
UnitedStates/Local%20Assets/Documents/us_CPGExternalMessaging_071310.pdf
Lack of Visibility
into Profit Margins
Managing Channel
Partner Economics
Improving Trade
Spend Effectiveness
Better Consumer
Marketing
Data Dispersion
Issues
Provides insight into profit drivers at different levels of customer, brand
and markets.
How Analytics can help?
Inputs on where the trend spend is invested and corresponding return.
Compare across categories
Provides an integrated view of profitability across various channels of
the supply chain.
Insights into demand elasticity of pricing strategies, understanding
consumer behaviour in relation to price changes
Helps in understanding relationship between manufacturers and
retailers margins. Suggest strategies for improvement

12. Marketing Mix – Role of Analytics
Optimizing
Marketing Mix
Deciding on Trade
Spend Allocation
Rise of Digital
Consumer
Issues
Predictive analytics to determine effectiveness of each communication
channel, assess the viability and forecast the channel’s impact on the
sales revenue.
How Analytics can help?
Track impact of product launches in real time, develop customer
insights, collaborating with business partners etc.
Tracking various key performance indicators, calculate ROI for each
customer segment to budget and plan appropriately. Analytics models
can predict promotion performance, enable scenario analysis

13. Portfolio Optimization – Role of Analytics
http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture_CGS_Portfolio_Optimization.pdf
High
High Low
Low
DemandMeasure
Degreeof
Incrementality
Supply Measure
Degree of
Complexity
Action 1: Invest to Broaden
& grow
Action 2: Improve
consumer value or
transfer demand to
like item and eliminate
Action 3: Simplify
platforms, eliminate
items
Current
Position
New Item
Productivity
Cost
Improvement
Drivers
Item
Incrementality
(optimum
assortment)
Account (Item)
Cost to Serve
and Profitability
Marketing
Investment &
Demand
Analytics
Productivity Improvement Process
Using Demand Analytics the companies can foresee how a product is
going to perform and take appropriate action. See scenarios below:

14. Inventory Management – Role of Analytics
http://www.wns.com/Portals/0/Images1/Retail%20and%20CPG%20Brochure_new.pdf
Supply Chain Planning
& Forecasting
Sourcing &
Procurement
Fulfilment Services
Areas
Accuracy in forecasts, increases capacity utilization and inventory turns
through demand and capacity forecasting and better collaboration
between retailer and supplier
How Analytics can help?
Carries sourcing analytics , freight lane analytics, freight pay analytics
and customer analytics
Strategic sourcing and spend analytics to reduce procurement costs,
cycle time, better spend visibility
Returns & After-Sales
Management
Facilitates root cause analysis and returns fraud analytics leading to
reduction in returns rate and fraud rate

15. Conclusion
Consumer Packaged Goods Companies have to continuously innovate to remain competitive. The
rapidly changing consumer behavior along with shortening customer loyalty periods have thrown
new challenges at the CPG Companies. The companies are now looking at innovative methods to
reach the end consumer.
Some leading companies have already established separate analytics divisions to accurately identify
the product attributes that are valued by the consumers. Combining the consumer's view of the
product with in-depth analysis of the portfolio supply chain, the companies would be able to offer
the right product/service for right price at the time when needed by the consumer.
To conclude, CPG companies have to invest in analytics not to go ahead but to stay in the race.

16. www.perceptive-analytics.com

17. Analytics
Spreadsheet
Solutions
Our Services
17
Spreadsheet Applications
Contract Negotiation
Litigation Modeling
Decision Support Tools
Dashboards
Reporting
Simulations
Financial Modeling

18. Analytics
Spreadsheet
Solutions
Data Visualizations
Marketing
Marketing Mix Modeling Price Promotion Analysis Catalogue Optimization
Segmentation Web Analytics Churn Analysis
Risk Management
Credit Risk Management Liquidity Risk Management Capital Allocation Analysis
Collateral Management Fraud Detection
Supply Chain
Inventory Optimization Demand Analytics Distribution Network Optimization
Sourcing Analytics Freight Lane Analytics
Verticals
Consumer Packaged Goods
Retail
Healthcare
Banking, Financial Services and Insurance
Our Services
18

19. Our Clients
19

20. Contact us:
Adarsh A & Dinakar J
hello@perceptive-analytics.com
☎ 646.583.0001
www.perceptive-analytics.com
Location:
353 West 48th Street
Floor 4, New York City,
NY 10036