Commentary

Internet Of Things: Ready For Prime Time In Consumer Packaged Goods

As with many seemingly overnight sensations, the Internet of Things (IoT) —  the digitization of everyday objects —  has been a long time coming. More than three decades ago, thirsty students at Carnegie Mellon University famously connected a Coke machine to the Internet, in order to see whether it had drinks in stock, making it one of the first popular examples of the IoT in action.

The example is prescient, because the consumer packaged goods (CPG) industry is a key source of IoT-related innovation, turning science fiction into reality — and marketing is often taking a lead position on this. Remember the personalized adverts in Minority Report? In 2015, at least one global CPG brand plans to roll out sensor-enabled smart shelves for grocery stores that are able to determine the gender and age of passing customers and then display targeted adverts. But this is far from the only example consumers can expect to encounter in the year ahead, as CPG marketers get up to speed on IoT’s potential.

In the year ahead, IoT-related investment will focus on two distinct areas. The first is within stores, with a clear aim of increasing sales and bolstering consumer loyalty, as the above example suggests. Consider shopkick, a mobile app that rewards shoppers with points called “kicks” when they enter a specific part of a store, or interact with promoted items, by using location based information via their smartphone. This enhancement of a standard consumer interaction can help unlock discounts on a product if the consumer buys it during that visit, or simply boost awareness of a specific brand. Another example comes from a global drinks manufacturer that has used smart packaging innovations to turn bottles of its premium drinks into a personalized consumer gifting and loyalty experience.

A second major area lies outside of stores, where IoT can help marketers increase user convenience and provide a differentiating experience. One example is the Egg Minder, a connected device that enables consumers to see via an app how many eggs they’ve got left at home, and how fresh they are. Or Vitality Glowcaps, a connected pillbox that reminds patients to take their medication, while automatically ordering refills—and alerts their doctor as to how well they’re adhering to a prescription.

Brand-specific interactions could go much further, while also helping to gain a more granular understanding of the needs and usage patterns of their consumers. Consider a smartphone app that is aware of how many calories a consumer has just burned at the gym, offering up a sports drink promotion, for example. Think this is unlikely? Our 2014 State of the Internet of Things study shows that nearly half of consumers either already own or plan to purchase a smart watch or fitness device in the next five years, ensuring a mass-market platform to use.

Marketing is the lynchpin

So how to get there? The key element is a strong digital foundation within the business, which remains an aspiration for many CPG companies. But what marketers are increasingly realizing is that they hold a unique position to drive their organization’s embrace of IoT-related services. Of course, marketing can’t do it alone. First, they need to collaborate with IT to ensure the integration of relevant systems, to enable seamless (and secure) communication with both internal and external partners as part of opening up these new channels. As shown in our recent CMO-CIO study, there’s certainly room for improvement in how marketing and IT are collaborating.

Without seamless systems and processes, IoT can easily cause the non-working costs of marketing to rise steeply, which few marketing budgets can handle. Secondly, they can work with both R&D and strategy to proactively set out the overall consumer experience journey, while also considering how such efforts will fit into the company’s broader innovation strategy. The IoT has been a long time coming, but in 2015, CPG marketers will realize it’s ready for prime time.

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