Packaged Goods Makers Embrace AI-Driven Marketing
Three leading packaged goods companies announced implementation of an AI-based software solution designed to optimize use of their respective promotions at retail.
Ocean Spray, General Mills and McCormick & Co. are all using the solution, which uses artificial intelligence to sense and monitor market conditions and develop an optimized portfolio that factors in promotional variables along with information inherent to consumer demographics, weather, market dynamics and competitor activity. The AI component lets the tool grow “smarter” as it gathers more information.
The tool, which is provided by trade promotion solution provider Eversight, also tracks promotional performance and compliance against plan.
“We continue to embrace new technologies to further customize and personalize consumer offers,” said Bill Simon, vice president of sales at McCormick. “[This is] one of many analytical tools we leverage to increase effectiveness and efficiency of pricing and promotions. We believe AI-based technology will help us deliver products that consumers love through promotions that resonate.”
“We deliver 100% of profits from our 700 farmer owners back to them,” said Yash Sikand, vice president of insights and planning at Ocean Spray. “[AI] will play a pivotal role in helping us with highly effective, meticulously designed, intelligent promotions that benefit consumers, retailers and family farms.”
The types of promotions derived through AI can involve anything from store-level price incentives to mobile coupons and social media campaigns. In addition to picking the ideal promotion for the product, along with the right time frame and target consumer base, AI can determine which variables work best.
“We send [varied] offers to [consumers], process the information and come up with the best promotional offer,” explains Eversight president David Moran. “Patterns typically show up more often than not. Sometimes, very subtle changes make a big difference.”
The multitude of scenarios created through the use of AI algorithms can also greatly speed up the learning process: optimal plans can be determined within one week, according to Moran. “Traditionally, it’s been hard to measure which promotions are effective,” adds Moran. “You probably have to run them 40 times. Then, it’s months before you learn if it’s effective.”
Increasingly, AI-based solutions are replacing or augmenting traditional trade promotion strategies, which rely on historical data and are often calendar-based. AI tools employ current information and can cross-reference millions of data points and consumer scenarios in a short period and on an evolving basis.
AI will have an impact on 25% of merchants, marketers, planners and store operations personnel in the U.S. by next year, according to IDC forecasts. It will improve productivity by 30% and results by as much as 20%, IDC predicts. Meanwhile, Gartner expects 85% of brand-consumer interaction to be managed by AI by 2020.