Retailers, CPGs Need To Iron Out Demand Chain

Shopping-food-thinking-BWhile supply-side excellence is pretty much a given these days, CPG companies have a long way to go to even out the way the demand chain works, according to a new report from PwC. Increasingly digitized functions and the deluge of Big Data may be making that fragmentation worse, not better. And while those marketers may genuinely believe they are consumer-focused, consumers disagree: One-third of Americans feel that brands habitually let them down.

The consulting company says that in addition to its constant tweaking to improve the supply chain, marketers would be better served by focusing on three essential questions in order to strengthen demand:

  • Which segments do we underserve or not serve at all?

  • How can we better deliver brand promise?

  • How can we offer value in a different or better way?



While those may seem basic, the report cites CMO Council findings indicating that 80% of marketing execs say their company’s demand chain is inherently ineffective, in part because ownership of that chain becomes less clear all the time. Effective strategies require working across a company’s departments, including marketing, IT, executive report, sales and R&D.

And while awareness of Big Data is high, only 47% of retail execs say they understand how it might help their businesses. “And only 5% of retailers have, or are in the process of creating, a Big Data strategy,” it says.

But such a strategy pays off, for both marketers and retailers. E. & J. Gallo Winery, for example, has created cross-functional teams to create “demand sensing,” which the report says can analyze data to “create a virtual wine shelf design schematic for retailers.” Its introduction has helped turn wine into the first- or second-highest profit generators in the same stores.

Overall, it says companies that are the farthest along in evening out demands are those that create a consistent experience and are constantly developing a better understanding of their customer, providing a superior customer experience, using insights from consumers to make innovations and improvements, and finally, defining and measuring the impact of those changes.

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