a supplement to consumer goods technology magazine

a s u p p l e m e n t t o c o n s u m e r g o o d s t e c h n o l o g y m a g a z i n e

s t u d y s p o n s o r s :

2011 sales and

marketingreport

2013 sales and

marketingreport

Consumer goods Companies drive dramatiC Changes in tpm, downstream data, direCt-to-Consumer selling, retail exeCution and more

p r e s e n t e d b y:

2013 sales and marketing report | cgt | S M 3

edit noteat idC manufacturing insights, we believe the adoption of technologies are driv-ing dramatic change in how consumer goods companies manage sales and mar-keting, with the greatest business improvements combining these technologies. Fundamentally, it’s about satisfying key business priorities such as profitability and productivity at the same time we change the way we work. We know con-sumer goods companies are adapting the way they interact with consumers, serve their retail customers, and make decisions based on more and more varied data sources. that means sales and marketing must change. the good news — we already see the evidence of that change, and we’d like to share some examples with you in this year’s 2013 sales & marketing report, produced in partnership with CGT.

—kim knickle , PraCTiCe D ireCTor, emerGinG aGenDa; SuSTainabil iTy; aoVC, iDC manufaCTurinG inSiGhTS

sm04 Progress rePort an overview of the complex issues that consumer goods companies face in today’s marketplace.

sm 08 trade Promotion management Cg companies finally have the tools and business processes in place to progress toward trade promotion optimization.

sm12 downstream data Consumer goods companies are receiving the data that they need, but technology and analytics are not keeping pace.

sm16 direct to consumer the complex relationship between the consumer and consumer goods manufacturer plays out in social media, mobility and e-commerce.

sm20 retail execution Consumer goods manufacturers take on more responsibility for their in-store presence.

sm22 s&oP Consumer goods organizations recognize the appeal of integrated planning to improve overall business responsiveness.

sm26 emerging markets it is imperative that consumer goods manufacturers “listen” to various market signals to meet nascent market needs.

C o n t e n t s

TECHNOLOGY GROUP

www.edgellcommunications.com

printed in

the u.S.a.

MeMber

MeMber

2011 SaleS and

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2013 SaleS and

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Publisheralbert guffanti [email protected]

editorialexecutive editor: Kara Romanow [email protected]

editor: Alliston Ackerman [email protected]

assistant editor: Alarice Padilla [email protected]

salesassociate publisher: Diana Masurack Mann [email protected]

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corPorateCeO/Chairman: Gabriele A. Edgell [email protected]

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Founder: Douglas C. Edgell, 1951-1998

corPorate officeEdgell Communications 4 Middlebury Boulevard Randolph, NJ 07869-1111 (973) 607-1300 • Fax (973) 607-1395 www.consumergoods.com

S M 4 | cgt | 2013 sales and marketing report

figure 2: americas crm applications revenue by segment, 2012–2015 ($m)

reVenue 2012 2013 2014 2015 2012-2015 Cagr %

Marketing automation 2,244.5 2,415.3 2,613.9 2,826.7 8%

Sales automation 3,374.8 3,664.7 3,965.9 4,254.4 8%

Customer Service 1,911 2,071.1 2,236.1 2,415.1 8.1%

Contact Center 3,892.4 4,069.3 4,257 4,452.3 4.6%

Source: idC Manufacturing insights and idC 235420, 2013

figure 1: u.s. consumer Packaged goods it spending, 2012–2015 ($m)

type OF Spend 2011 2012 2013 2014 2012-2015 Cagr %

application Spend 3,677 3,960 4,307 4,710 8.6%

CrM application Spend 324 349 380 414 8.4%

Source: idC Manufacturing insights it Spending guide Mi235802, 2013

Today’s consumer goods (CG) manufacturers are exploring new ways to understand and engage with consumers, both as a means of increasing the success of their products in the market as well as enhancing the power of their brands. As a result, sales and marketing processes are improving and adapting, incorporating new technology and be-coming more productive even as CG companies in-troduce new products, operate in new markets and try to create an edge for their businesses. “Easier said than done” is the phrase that comes to mind.

Our research finds CG manufacturers are bal-ancing complex issues, like serving the empowered consumer, working to the accelerating pace of busi-ness, and bringing new products to current and emerging markets. Thanks to the Internet and mo-bile devices, consumers have ubiquitous access to information to make more informed decisions and purchases. They purchase products and services through multiple channels and expect seamless customer service across those channels. They are less brand loyal and far more selective than ever before. And, today’s consumers are willing to use new technologies to enhance their experiences.

Consumers expect products that are personal-ized to their needs, so one product rarely serves a global market. CG manufacturers have to be able to engage with, influence and learn from consumers across all channels to both increase the success of their products in the market and maintain the pow-er of their brands. CG manufacturers are looking for ways to speed their businesses — for example, as they bring new products to market and in their ability to provide more targeted promotions with greater frequency. There is a new customer persona in the market today, what IDC refers to as the “5I shopper”. They are instrumented with mobile de-vices, they are informed with access to the Internet on their devices, they are interconnected in social communities, they are always in place in stores or wherever else they might be, and finally, they are immediate in their ability to take action. These are the customers that must be envisioned.

progress reportCg manuFaCturers Work Hard to understand and engage Consumers

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Increasing the effectiveness and productivity of sales and marketing in today’s market is partly the result of investments in customer relationship management (CRM) applications. IDC research shows that applications spend and CRM spend specifically show healthy growth from 2012 to 2015 (see Figure 1). Within the CRM segment, customer service applications have a slightly higher compound annual growth rate (CAGR) between 2012 and 2015 than that of marketing and sales automation application investments (see Figure 2). These investments should ultimately bring to sales and marketing greater au-tomation, more consistent processes and easier access to relevant information.

In addition, we expect investment in enabling technologies such as Big Data and analytics, cloud, mobile and social software to play an important role in improving sales and marketing’s productivity. While each of these technolo-gies separately can bring value, focusing on the intersection of these technolo-


gies yields some combinations that deliver even greater value to the business (see Figure 3).

For the rest of this report, we move beyond the specifics of singular technologies and explore how CG manufacturers are finding opportunities for improved sales and marketing across a variety of business functions and technologies, including:• Where opportunities exist for CG manufacturers to con-

tinue their progress with Trade Promotion Management to increase the level of optimization;

• How complementing Downstream Data with other data and Big Data analytics can drive demand visibility and customer service improvements;

• How Direct-to-Consumer initiatives emphasize personal-ization and the consumer experience by leveraging social and mobile;

• Where Retail Execution is playing a critical role in aligning brand expectations and mobile capabilities;

• How integrated planning capabilities for Sales and Opera-tions Planning better represent the perspective of sales and supply chain;

• Where sales and marketing efforts can have the greatest impact in Emerging Markets.As in years past, we’ve based our analysis in this report on

ongoing conversations and research with IDC Manufacturing Insights clients, IT and vertical industry business priority and spending data, as well as our 2012 Sales & Marketing Survey results with CGT. We expect to see continuing progress in all of these areas as they are among the key initiatives that will enable future sale growth, improved customer service performance and greater productivity through sales and marketing.

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figure 3: the intersection of social, mobile, big data and cloud technologies

progress report

SOCial MObile

ClOudbig data

Promotion and/or Transactional Analysis

Consumer Engagement/Experience

Social Networks

Promotion Campaigns

Online Communities

Showrooming

Sentiment Analysis

Location Patterns

Transactions

Location-based Promotions

Field Sales Execution

Socialytics


In past years, we’ve repeatedly commented that the effective management of trade promotion funds remains a challenge and an opportunity for many — if not most — CG manufacturers. But this year, we believe it’s time to take a different tact; the tools and established business processes are now in place to make sub-stantial progress — and improvement — against trade promo-tion improvement goals (see Figure 4). There is a “perfect storm” if you will, of business focus and awareness, intent and will to make changes, and the data and technology to make it happen.

Based on the trends we see from 2010 to 2013 regarding im-pediments (see Figure 5), we can draw some broad conclusions:• The number of companies without impediments has more

than doubled over the three-year period.• Two specific impediments we’ve asked about have declined

significantly in terms of being a problem, and an increasing number of respondents have an effective tool in place.

• There remains a lack of clarity on where and with whom the responsibility for trade promotion management should rest, a fact that we also hear more broadly from consumer products companies. But, beyond the impediments listed, what else are compa-

nies doing to improve trade promotion performance? As they were last year, the results are very encouraging. We’ve argued for years that the real improvements to TPM will be found in

better collaborative efforts, internally between sales and the supply chain as well as externally with retail customers. That notion comes through loud and clear in this year’s survey results. And we are pleased to see that a significant number of companies (52.6% to be exact) view technology as a key enabler for trade promotion management and optimization improve-ments (see Figure 6).

So, where does that leave us? Over the last year, we’ve discussed the topic of TPM with

many consumer products companies to get a sense of the matu-rity of the subject and the degree to which we will see companies moving into true collaborative trade promotion optimization. In Figure 7, we present the result of those discussions with an evolving maturity model to describe the various stages of TPM.

In Phase 1, we tend to see companies asking the question “how are we performing against the trade funds budget?” with cost control, basic spend management tracking/report-ing, no purpose-built IT tools, and simple/traditional KPIs for revenue, volume and spend.

As companies move to Phase 2, the question evolves to “how did our trade promotions perform?” with a move to home-grown or stand-alone IT tools, simple/traditional KPIs for revenue, volume, spend and ROI capability against key promotions post-event.

trade promotion Managementtools and business proCesses are in plaCe to aCHieve optimization

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Focus and Awareness

Intent and Will

Data and Technology

tOdayin the paSt

Focus and Awareness

Intent and Will

Data and Technology

Lack of: AlignmentAvailability, Access

figure 4: tPm Past versus Present

S M 1 0 | cgt | 2013 sales and marketing report

In Phase 3, the question becomes “how will our trade pro-motions perform?” with further refinement to home-grown or integrated IT tools, ROI capability against key promotions pre- and post-event, and pre-event simulation and what if scenario analysis.

Evolving to Phase 4, while asking “how will promotions drive desired business results and performance?” we see direct linkage to business goals, performance management tracking and reporting, integrated vendor IT tools, and ROI capability against all promotions pre- and post-event.

Finally, in Phase 5, we see a truly collaborative process, with full technology enablement with a performance focus with

corresponding KPIs, advanced pre- and post-event analysis, manufacturer/retailer joint collaboration with a comprehen-sive customer focus and supply chain involvement (data re-positories, service-level integration).

The reality is that there will be common elements to the phases as companies move from left to right, but the progres-sion from basic spend management to true collaborative op-timization also reflects a fundamental shift in capability. The maturity model also illustrates the progression from ”basic” to “best-in-class”; and while one company may take a different path from another, the important thing is that companies are making progress; and the data shows that they are!

figure 5: impediments to effective Promotional assessment • note: Multiple responses permitted

81.6

73.7

68.4

52.6

21.1

81.6%

73.7%

68.4%

We are collaborating internallyto design better promotions.

We are working with retail customersto design better promotions.

We improved the way we analyze the results so we can design better promotions.

52.6%

21.1%

We are using new technologies for trade promotion management and optimization.

We are using new channelsfor trade promotions.

STRATEGY

Source: IDC Manufacturing Insights and CGT, 2013 0 20 40 60 80 100

figure 6: strategies to improve trade Promo-tion Performance • note: Multiple responses permitted

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trade promotion Management

figure 7: trade Promotion management maturity model

large enterprise

Small & Medium enterprise

Source: idC Manufacturing insights, 2013

basic Spend Management

phaSe 1

reactive rOi driven Management

phaSe 2

predictive rOi driven Management

phaSe 3

performance Value driven Optimization

phaSe 4

Collaborative Optimization

phaSe 5

iMpediMent 2013 2012 2011 2010

the data from promotions is either difficult to get or inaccurate.

42.1% 39% 48% 62%

the forecast baseline is difficult to define so promotional lift is debatable.

36.8% 58% 27% 56%

We do not have an effective tool in place. 36.8% 13% 55% 56%

there are no impediments; this process is a core competency for us.

26.3% 21% 18% 12%

tpM is a sales activity. 15.8% 4% 18% 8%

Source: idC Manufacturing insights and CGT, 2013


24.8%

15.5%

14%

Deciding what data is relevant(what data to keep/store and what data to discard)

Cost of technology infrastructure

Not having enough or the right analyticsstaff to analyze the data

14%

13.8%

Not knowing how to decide which technology is best/mostappropriate technology for different types of Big Data analysis

No challenges to report

10.1%

7.8%

Lack of business support and/or business unitsdo not understand the benefits of Big Data

Not having enough or the right ITskills to manage Big Data projects

CHALLENGE

Source: IDC Global Technology and Industry Research Organization IT Survey, 2013

24.8

15.5

14

14

13.8

10.1

7.8

0 5 10 15 20 25

For 2013, one of IDC’s central research themes is the notion of supply chain resiliency. As we wrote in IDC Manufacturing Insights’ 2013 Supply Chain Predictions, the pace of business continues to accel-erate, demand is more volatile than ever and sup-ply complexity continues to grow. In this context, the proliferation of products and services is putting pressure on the manufacturing supply chain to be more responsive and resilient, in support of both service and cost performance. The result? Manu-facturing supply chains must embrace resiliency and become “massively multidimensional”. But, to do this requires CG manufacturers to collect, understand and effectively act upon volumes of detailed data, thus the underpinning notion of “extreme granularity”.

Although the forms and sources of data that im-pact the CG manufacturer are varied and continue to change and evolve over time, the reality remains that a significant source of valuable data comes from downstream sources, principally retailers. Yet, we continue to hear from manufacturers that they do not do a particularly good job of leveraging retailer data — or, at least, they could be doing better!

The good news in 2013 is that most companies are getting the majority of data they need through the various sources available to them. In Figure 8, we summarize the IDC/CGT Sales & Marketing Survey responses on how data is received, how much of it is received by a particular source, and the overall contribution to data access.

What’s becoming increasingly clear is that CG manufacturers continue to leverage multiple av-enues for their data needs; and the diverse sourcing of data approach is unlikely to change in the near fu-ture. CG manufacturers can testify to the fact that the technology tools and analytics available to them are not keeping pace with the growth in available data.

Although the term “Big Data” suffers from the inevitable hype, it’s a useful lightning rod to begin the conversation about the growing volumes of data, the analytics capabilities necessary to process this data and the actionable insights that result. In the

downstream dataCg Companies get tHe data tHey need, but CHallenges persist

figure 8: method for receiving downstream data for Products

figure 9: biggest challenge when it comes to big data

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MethOd reCeiVe data in thiS Way

% OF data reCeiVed

% reCeiVing MajOrity OF data in thiS FOrMat

We receive data from a 3rd party provider

100% 51% 69.4%

We receive data directly from retailers.

89% 31% 22.2%

We receive the data we need from retailer portals.

78% 19% 2.8%

We do not receive data. 25% 27% N/A

Source: idC Manufacturing insights and CGT, 2013



36.4%New Customer Acquisition

38.6%Customer Retention and Service

34.1%Cost Control or Reduction

36.4%Optimization of Operations

34.1%Risk Management

25%Workforce Optimization

DRIVER

36.4

38.6

34.1

36.4

34.1

250 5 10 15 20 25 30 35 40

37.2%

31%

28.7%

Analysis of operations-related data(depends on your industry)

Analysis of transactional data from sales systems

Analysis of online customer behavior-related data(clickstream analysis, web logs, social networking data)

20.2%

15.5%

Analysis of machine or device data

Service innovation (developing or planning to developa new service to clients based on Big Data analysis)

9.3%Non-analytic workload like using Big Data to run

OLTP systems, web sites or e-mail applications

DRIVER


37.2

31

28.7

20.2

15.5

9.3

0 5 10 15 20 25 30 35 40

CG industry, this conversation usually starts with downstream data. Despite the ubiquity of the term, there continues to be a varied response from manu-facturers on what Big Data actually means. Although we’d characterize Big Data as all of the following, CG manufacturers primarily see Big Data as just “big”:• Very large amounts of data – 21%• Real-time streaming data – 12%• Multiple varieties of data – 15%• High performance computing – 8%

Perhaps more importantly, though, is how com-panies view their challenges when faced with large volumes and varieties of data, like downstream data. In a recent IDC survey, CG companies ex-pressed both data-driven challenges and technol-ogy challenges (see Figure 9). Broadly, the responses fall into three areas, with the remaining 13.8 percent claiming no challenges: • How do I decide/communicate which data is

valuable (34.9%)?• Organizationally, how do I manage data

(21.8%)?• Technically, how do I manage data (29.5%)?

In the same survey, we also asked CG manufac-turers about the business drivers for using Big Data technologies and approaches (see Figure 10). Of the six responses, two (analysis of online customer behavior and analysis of transactional data from sales systems) relate directly to sales and marketing while the latter relates directly to downstream data. Bottom line: We expect downstream data to be a material driver for Big Data technology investments, and those compa-nies that make such investments will position them-selves to drive greater value from that data.

Lastly, when asked about the top drivers for implementing business intelligence and analytics solutions, customer-related issues represented two of the top three responses (see Figure 11). Customer retention and service clearly relates to the ability to derive value from downstream data sources and both improve forecasting performance and delivery of agreed service levels to retail.

As we began this discussion, if complex, mas-sively multidimensional supply chains remain the norm (and there is little reason to think they won’t),

figure 10: drivers for using big data technologies and approaches • note: Multiple responses permitted

figure 11: drivers for implementing business intelligence/analytics solutions • note: respondents selected their top 3 drivers

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downstream data

then managing the extreme granularity of those supply chains will be a critical capability. We’ve used the topic of downstream data to anchor this discussion of big data and analytics because it is so important to CG companies, but frankly, the same arguments apply to many more data sources.


55.8%

51.2%

31.8%

Gather feedback from customerson products and services/

engage customers more deeply

Increase awareness of productsand/or services

Keep up with competitors

30.2%

30.2%

Help employees be more effective

Identify partners or prospects

26.4%

24.8%

Share knowledge withinyour organization

Use the latest technologies

22.5%Respond to customer questions or

complaints/improve the qualityand speed of operations

17.8%

9.3%

Moderate conversations about productsand services on social media sites

Generate revenues through direct sales

DRIVER


55.8

51.2

31.8

30.2

30.2

26.4

24.8

22.5

17.8

9.3

0 10 20 30 40 50 60

41%42%

33%39%

33%28%

11%19%

7%14%

Yes, through 3rd-partyInternet sites

Yes, through our own Web site

Not currently, andno plans to do so

Yes, through our ownphysical retail outlets

Not currently, but plan to doso in the next two years

STATUS

Source: IDC Manufacturing Insights and CGT, 2013

41 42

33 39

33 28

11 19

7 14

0 10 20 30 40 50

2012 2013

The complex relationship between the consumer and CG manufacturers continues to play out against the backdrop of social business, mobility and e-commerce. The urgency to create a “single version of brand” is present for CG manu-facturers as they are increasingly threatened by private label growth and seek to deliver a consumer experience when, where and how the consumer dictates. As such, manufactur-ers continue to explore direct-to-consumer commercial chan-nels, and they have increased this position in 2013 (see Figure 12). Despite the moderate gains in direct selling activities for CG manufacturers, IDC Manufacturing Insights believes that in the end, the direct-to-consumer relationship is not about sales transactions, but rather making sure CG manufacturers are engaging with consumers in a meaningful way to support and promote the brand.

A primary component of the manufacturers’ consumer engagement strategy is through social software. Increasingly, manufacturers are turning to social channels, like Facebook, Twitter and Pinterest, to enrich and cultivate the consumer rela-tionship with the brand. Common objectives include capturing customer feedback and helping customers understand the full breadth of a brand offering. In fact, our research shows that the top two drivers for using social software by CG manufacturers are to gather feedback from customers and increase awareness

direct to Consumerinitiatives empHasize personalization and Consumer experienCe

figure 12: selling Products directly to consumers • Note: Multiple Responses Permitted

figure 13: top drivers for using socialnote: Multiple responses permitted

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of products and services (see Figure 13). Manufacturers are intensely focused on using social media to deliver a cohesive brand message and empowering more effective employees.

Part of the reason behind CG manufacturers’ interest in using social channels and software to engage directly with consumers and establish a single version of their brand lies in the changing nature of the consumer’s approach to shopping. The retail market is in the process of making a tremendous shift toward an omnichannel orientation, mainly to meet the customer’s interest in buying goods when, where and however they choose. No longer is it viable for delivery channels to be


independent of one another. Therefore, CG manufacturers are interested in developing a consistent consumer experi-ence across all channels, and meeting the consumer wherever they are in the buying process. Applying social software to the consumer relationship can yield tangible results for CG manufacturers (see Figure 14).

CG manufacturers have made investments in multiple initiatives that are ultimately targeted at understanding the customer and improving the business. This focus on the cus-tomer experience is permeating the organizational structure, including adding a member to the C-Team, often called the Chief Experience Officer or Vice President of Customer Expe-rience. Much of the work being done in this area still revolves around tactical customer journey mapping, and internally focused evangelizing. However, social software is a promising enabler of the optimized customer experience, and over time, these pieces need to and will come together.

Another opportunity that exists for CG manufacturers to di-rectly reach the consumer comes in the form of mobile devices. Mobile device proliferation is staggering, and consumers are bringing their devices into the store to assist and sometimes

complete the buying process. According to the most recent Pew Internet Project statistics, 31 percent of consumers own a tablet computer, 45 percent own a smartphone and 87 percent own a full feature phone. CG manufacturers have the opportunity to reach consumers directly via mobile devices and deliver their social channel initiatives to consumers through the mobile platform. The results are a connection with the consumers that transcends the traditional relationship, and enables the consumer brand owner to follow and support the consumers along their path to purchase, adding value and enhancing the customer experience using social and mobile together.

figure 14: consumer goods companies reach customers with social Projects

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direct to Consumer

“the direct-to-consumer relationship is not about sales transactions, but rather making sure Cg manufacturers are engaging with consumers in a meaningful way to support and promote the brand.”

Market FaCtOrS• “Right now” customer• Brands weakened by private label• Omnichannel shopper

SOCial ObjeCtiVeS• “Single Version of Brand”• Cultivate direct relationship• Support customer along path to purchase

SOCial OutputEstablish a customer community that will:• Capture voice of customer• Create feedback loop

SOCial tOOl• Community Management Platform• Integration with CRM,

Customer Service Center

CuStOMer experienCe


48.3%14.5%

19.4%

6.5% 11.3%

0 percent1 percent to 24 percent25 percent to 49 percent50 percent to 74 percent75 percent to 99 percent

11.348.314.519.4

6.5



4.822.611.321.839.5

22.6%

11.3%

21.8%

39.5%

4.8%

0 percent1 percent to 24 percent25 percent to 49 percent50 percent to 74 percent75 percent to 99 percent

CG manufacturers continue to take increasing re-sponsibility for their in-store presence and to max-imize their success in the store. Retail execution means manufacturers can ensure their products are in stock and placed properly, whether on the shelves or with the correct facings on end aisle displays. This also gives manufacturers the opportunity to own and protect their brand closer to the consumer at the same time as they increase their customer service levels and enhance their relationship with retailers. Certainly, this means that CG companies can extend their role to be more about category management and superior execution performance, benefitting both the supplier and the retailer.

Another trend that makes in store retail execu-tion so critical is the ongoing focus on productivity. Across our manufacturing research, we’ve seen an increasing emphasis on productivity throughout the organization, and sales and marketing is not immune from that emphasis on working more ef-ficiently, driving more sales with minimal uptick in costs. Productivity in the store means that sales reps can shift their emphasis from compliance-type tasks to activities that focus more on sup-porting what the retailer is trying to achieve. This also means that sales reps have more time in the store with store management and can spend time on value added rather than administrative tasks. Ideally, sales reps should be able to negotiate and capture future orders while conducting more pro-ductive inventory, merchandising management and category management tasks.

From our perspective, an obvious driver of pro-ductivity is technology. For this function in particu-lar we see mobile devices and mobile applications as key enablers for the more productive field sales force. According to IDC’s most recent Smart Con-nected Device Tracker, shipments of smartphones and tablets continue to accelerate dramatically (see Figure 15). Also, the data shows that the adoption of smartphones and tablets among the salesforce is more prevalent in CG than in other industry (see Figures 16 and 17). This is most likely due to the

retail executiontHe ConneCted devise plays a CritiCal role in aCHieving suCCess in store

figure 15: smart connected device market by Product category, shipments, market share, 2012 (shipments in millions)

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prOduCt CategOry

2012 unit ShipMentS

2012 Market Share

2011 unit ShipMentS

2011 Market Share

year- OVer-year Change

Smartphone 722.4 60.1% 494.5 53.1% 46.1%

tablet 128.3 10.7% 72 7.7% 78.4%

portable pC 202 16.8% 209.1 22.5% -3.4%

desktop pC 148.4 12.4% 154.8 16.6% -4.1%

total 1,201.1 100% 930.4 100% 29.1%

Source: idC Worldwide Quarterly Smart Connected device tracker, February 20, 2013

figure 16:

Percent of sales workforce with a corporate liable smartphone

figure 17:

Percent of sales workforce with a corporate liable tablet


retail execution

simple integration of the connected device into the work tasks of the CG field sales representative with clearly visible results. For example, information-supported productivity enables them to review the planogram and a photo of the ideal shelf or display, thereby allowing the rep to eliminate the types of mistakes that often go unseen, such as lost sales due to brand switching and hidden out of stocks or voids, when products are completely missing from the shelf.

While in the store, they may also check order status to know when out of stocks will be fixed by knowing when the store can expect to receive their order for that item. On the spot, the rep may be able to suggest alternative items that may be available sooner and then place an emergency order for an item or a temporary replacement.

Using the “connected device”, the mobile-enabled sales rep can also handle new situations and more custom requests during their visit, working with store managers at both an indi-vidual and aggregated store level. CG Manufacturers should be able to point not only to greater in-store efficiencies and higher service levels for their retail customer, but also higher levels of merchandising compliance, promotion compliance and on-shelf availability. Perhaps even more importantly, the results of those outcomes resonate with management because of the direct financial ramifications — achieving volume, revenue and profitability targets.

We also know that retail execution provides the CG manu-facturer with a tangible link to the consumer experience and visibility right to the shelf. Manufacturers need to recognize the role they play in ensuring that consumers not only return to stores but also complete their purchases in the store. This will require flawless in-store execution on the part of manu-facturers. We believe that mobile devices and, by extension, role-based mobile applications should be part of that process and certainly are part of the productivity improvements to the process. Today, we’re talking about the mobile component of retail execution, but we also think it’s relevant to consider the contribution Big Data could make in helping field sales reps make decisions on the spot with their mobile devices. The CG connection to the retail customer and the shelf must be as close to real time as possible, and we envision an intelligent retail execution process when field sales reps can influence or “cor-rect” the shelf in such a way that out of stocks and voids are minimized while sales performance increases for retailer and manufacturer. Behind this process will be analysis of demand data, stock/inventory availability and profitability data.

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2013 SaleS and

MarketingrePort

Sales and Operations Planning (S&OP) tends to be the responsi-bility of the supply chain in most CG companies — both when things go well and when they go badly. Yet, the “S” in S&OP stands for sales, so it’s a fair question to wonder about the role of the sales and marketing organizations in facilitating the process.

Certainly the view of planning is changing in many orga-nizations — moving from a disconnected set of individual activities to a continuous business process essential to the performance of the business. A significant number of manufac-turing supply chain organizations still plan through multiple, independent business processes and disconnected IT tools, re-sulting in extended planning horizons and inadequate service delivery. Fortunately, this is changing. There’s no question that an integrated planning capability is more agile than a collection of best-of-breed tools, and in 2013, we see CG organizations increasingly recognize the appeal of integrated planning stack to improve overall business responsiveness.

S&OpCg Companies seek integrated planning Capabilities

figure 18: s&oP responsibilities

reSpOnSibility taSk

Supply Chain/SalesPerform a strategic assessment to determine the importance of speed and responsiveness in your business based on KPI priority

Supply Chain

Do a capability assessment of your planning organization. Clearly define areas where there are opportunities for better process and IT tools integration

Supply Chain Be clear about the maturity level of your planning organization and the extent to which best-of-breed versus integrated planning makes sense

Supply Chain/Sales

Invest in an integrated planning suite based on company priority and importance. Consider one step at a time, beginning with the application area that drives the most immediate benefit

Source: idC Manufacturing insights


figure 19: s&oP Planning

2011 SaleS and

MarketingrePort

2013 SaleS and

MarketingrePort

S&Op

Integrated supply chain planning and the ability to drive consensus planning (through the S&OP layer) beyond the supply chain are extremely appealing. While many CG com-panies have acknowledged the importance of integrating supply chain, customer (sales) and financial planning, we also would like to see integrated business planning align to product planning — both with currently available product line and the planned innovation (see Figure 19).

Indeed, while supply chain planning vendors continue to have principal discussions with the supply chain about integrated plan-ning, the sales organization is a very close second, and ultimately, both sales and supply chain representatives will collaborate more closely throughout the entire S&OP process, with some examples in Figure 18 of their individual and joint responsibility.

IDC Manufacturing Insights expects that CG companies will embrace the notion of an integrated planning suite and

will invest accordingly. Indeed, we are already seeing traction from planning vendors in the supply chain management space in selling integrated planning capabilities to the marketplace — both to the supply chain and to sales.

“Certainly the view of planning is changing in many organizations — moving from a disconnected set of individual activities to a continuous business process essential to the performance of the business.”

CuStOMer planning

prOduCt planning

FinanCial planning

• Demand Sensing

• Demand Forecasting

• Supply Planning

• Fast Planning/MRP

• Production Planning

• Factory Scheduling

• Order Management

• Warehousing

• Transportation

deMand Supply FulFillMent

Sales & Operations planning

analytics

inventory Management & Optimization

network Optimization


emerging MarketsteCHnology inCreases tHe impaCt oF sales and marketing in neW markets

2011 SaleS and

MarketingrePort

2013 SaleS and

MarketingrePort

It’s old news that CG manufacturers are faced with the chal-lenges of operating in a global market and constantly exploring new, emerging markets. So why are we including emerging markets as a topic in this report? Primarily because of the con-tinuing challenges of rethinking and refining sales and market-ing; what’s tested and true in established markets may not work in emerging markets, and CG manufacturers want every dollar invested in sales and marketing to be as productive as possible.

We’ve all heard the mantra that companies must act lo-cally to serve local markets, referring to the need to fine-tune programs and products to each market. Take a look at recent financial reports of leading CG companies, and it won’t take long before you’ll see references to emerging markets as the reason why their financial results were so successful, or in some cases, dipped.

There’s a lot riding on emerging markets these days. Often what we focus on is where manufacturing operations should be located, related to what our IDC Retail Insights colleague recently wrote about the fulfillment challenges retailers face

in emerging markets. This complexity all factors into what we call a profitable proximity decision (see Figure 20). And, we also know that identifying the correct channels and retail partners is part of the equation. But, it’s worth focusing just on sales and marketing for a change, and technology’s role in increasing the effectiveness of sales and marketing in new markets.

What becomes critical as CG manufacturers move to emerg-ing markets is understanding the demand so that planners can be sure to have the right assortments in place. For sales and marketing, it is imperative that they tune to the various market signals to hear and interpret how the demand is shifting, and ensure that the right product is in place to meet the needs of these nascent markets. Using technologies to support this “lis-tening” will help sales and marketing make the right product and promotion decisions. CG companies have underestimated the complexity of this effort, and even more importantly that their presence has to be tailored to the emerging market along with the right product. Only then can CG companies fully leverage the opportunities that await them in new markets.

figure 20: delivering in emerging markets

national ‘Fulfillment’ Organizations

regional ‘Supply’ Organization

• Suppliers

• Factories

• Warehouses

• 3PLs


• Suppliers

• Factories

• Warehouses

• 3PLs


• Suppliers

• Factories

• Warehouses

• 3PLs

COrpOrate Shared SerViCeS

lOgiStiCS SaleS & MarketingWarehOuSeS

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