How Artificial Intelligence is Reshaping Consumer Packaged Goods companies [Part 1]
Artificial intelligence (AI) is not only here to stay, but has already been implemented across a wide array of industries. AI has manifested itself in the automotive industry in the form of self-driving cars, and in consumer products companies in the form of voice-activated assistants like Siri, Cortana and Alexa. Whether we like it or not, AI is being implemented into our daily lives at a rapid pace, in many obvious and not so obvious ways.
Artificial intelligence offers huge benefits for consumer packaged goods (CPG) companies across three key areas of the value chain: retail, operations and supply chain. But while CPG leaders recognize the value that AI can deliver, many struggle to find tangible return-on-investment (ROI). Without a clear path to ROI, it’s difficult for CPG companies to validate the necessary funding for AI projects and see through implementation.
There is often a disconnect between business and IT decision makers that complicates AI adoption. There is sometimes a lack of company-wide understanding on how to use AI, or agreement on how it will impact the ultimate customer experience. Another area of AI that concerns CPG organizations is the use of chatbot automated software that replaces human-to-human interactions.
A good example of this is an airline company that doesn’t want to use chatbots to access its passenger information because it doesn’t “trust” the bot to interact with customers the same way that human agents do. The company fears that the use of bots could compromise the brand promise to their customers. Many CPG companies feel the same.
CPG companies are exploring AI solutions despite these concerns about chatbots’ ability to engage “on brand.” It’s an opportunity to improve efficiencies and drive increased productivity. Here is an example of how AI supports the retail part of the value chain.
Integrating Data into Retail decision-making with AI
Some CPG companies are focused on automating their stores. Other companies are already using AI and machine learning to support a variety of key retail and marketing activities focused on consumer experience. Some companies are using AI in analytics initiatives focused on loyalty, segmentation, next best offers and customer lifetime value.
Artificial intelligence is a tool that helps retail marketers understand buyer behavior across different segments and consumer lifecycles. AI is being used to analyze spend projections to reevaluate budget priorities. AI also helps companies integrate basic retail information with buyer behavior and marketing spend data to make targeted, more informed decisions.
Asking customers to share data through loyalty and rewards programs allows retailers to AI to segment prospects, and make purchase recommendations, both online and in the store. AI and machine learning also help marketers improve their communications with customers because these systems continually learn from past behavior.
Armed with a better understanding of consumer behavior, retailers are leveraging AI technology to drive customer engagement using technologies such a conversational commerce, image-based search analytics and mobile app integration. Food and beverage stores have evolved to experience centers where customers are engaged through mobile apps to deliver customer loyalty programs, product and labeling information, and assisted selling. Pepsi and Coke offer apps allowing customers to create bar codes for their drinks and scan them at their vending machines for added convenience.
Refining AI technologies for future success
I expect CPG companies to continue adopting and refining AI technologies, extending their value to predictive and prescriptive models. AI is expected to assist CPG companies with everything from choosing the best location for new retail outlets to innovative offerings to meet the needs of tomorrows customers. Customers will also benefit from AI in retail, from improved product quality and availability to personalized help based on their specific preferences.
