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U.S. Consumer Goods: Putting Social, Mobility, Analytics and Cloud to Work

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For consumer goods companies, growth is expected to come from the new middle class in emerging markets and from increasingly targeted "micro-markets" in developed markets. By deploying social media, …

For consumer goods companies, growth is expected to come from the new middle class in emerging markets and from increasingly targeted "micro-markets" in developed markets. By deploying social media, mobility, advanced analytics and cloud technologies (SMAC) as an integrated stack, consumer goods enterprises can overcome economic, operational and competitive restraints, transform business models, unlock growth opportunities and strengthen the value of their business.

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  • 1. U.S. Consumer Goods: Putting Social, Mobility, Analytics and Cloud to Work By deploying SMAC technologies as an integrated stack, U.S. consumer goods companies can improve operational nimbleness, unlock operational efficiencies and grow opportunities – all amid the sluggish economic recovery, weak domestic growth, unabating cost pressures, tough private label competition and a significant shift in demographics and business models. • Cognizant Reports cognizant reports | June 2013
  • 2. cognizant reports 2 Executive Summary For the last 50 years, consumer goods (CG) manufacturers have enjoyed year-over-year growth in developed markets as the baby boomer population increased spending as their families grew. Today, growth is expected to come from the new middle class in emerging markets and from increasingly targeted “micro-markets” in developed markets. Winning in this environment will require new analytical and technical skills in several key areas: • Social media: The new way to build meaning- ful, authentic and relevant conversations with new and prospective consumers. • Mobility: The path-to-purchase is fast evolv- ing. Mobile engagement, whether with smart- phones in the developed world or feature phones in emerging markets, is compelling consumers to shop and check prices on the fly. • Analytics: To create value from “big data,” CG companies need to invest in “big insights.” • Cloud computing: Companies are increasingly looking for new, affordable ways to house infor- mation, including analytics-related data. Taken collectively, we refer to these capabilities as the SMAC StackTM . For the consumer goods industry, the case for putting the SMAC Stack to work is driven by two broad directional forces: macro industry trends and technology imperatives. These issues are exerting competitive pressures and creating new opportunities for CG companies. Even though spending by U.S. consumers is rising, a variety of factors (cost of living and employment challenges, among others) has reduced their buying power. This has forced many buyers to become increasingly value-conscious — a situation that is impacting businesses across the CG spectrum. The painfully slow economic recovery underway in the U.S. is adding to the challenges faced by many CG companies, par- ticularly those whose profitability has stagnated during the past few years. They continue to face cost pressures while competition from retailers’ private labels intensifies. Given diminishing growth opportunities in devel- oped markets, U.S. CG companies are venturing into global markets – adding complexity and cost to their operations. Furthermore, a significant shift in demograph- ics and business models is underway in the U.S. The 50-million strong, digitally-savvy “millenni- als” are expected to soon constitute the biggest segment of the domestic population. The rise of digital consumerism is also changing how CG industry conducts business. Many consumers now prefer to buy online and use coupons offered through digital channels. CG companies need to quickly adapt to these digital realities and forever- changed consumer preferences, while focusing on improving operational metrics and building competitive advantage. Moving in this direction will require quickly shift- ing strategies to improve operational agility and responsiveness. CG companies should consider investing in social, mobile, advanced analytics and cloud technologies (the SMAC Stack) as an integrated set in order to reap the full business benefits. This can have a multiplier effect on ben- efits, and serve as a foundation for breakthrough results in business performance. For example, using SMAC technologies, companies can improve customer engagement by delivering differentiable and valuable digital experiences. With social media, it is now same here easier to market directly to millions of customers – unique markets with varying preferences and tastes. Powerful analytics tools in conjunction with social media, mobile devices and cloud technologies can help CG marketers identify and target customers and customize campaigns at reduced costs. The SMAC Stack can also play an important role in driving operational efficiencies and handling complexity (i.e., product configuration, cross- segment marketing initiatives), especially for companies that are aggressively moving into global markets. For example, analytics, along with demand signal repositories,1 can help CG companies collect and glean deeper insights from operational data … quickly identify customer demand … and sync that demand with supply in real time to more effectively serve customers. And by using mobile devices and cloud technologies, companies can improve productivity by enabling employees to work from anywhere – multiplying improvements in operational efficiency. As this white paper demonstrates, CG com- panies that invest in the SMAC Stack stand a better chance of increasing efficiencies, deliver-
  • 3. cognizant reports 3 ing greater business value and unlocking new growth opportunities. Driving Forces The U.S. consumer goods industry is beset with several challenges. A slow economic recovery and competition from private labels is putting pressure on the bottom line. The emergence of the digital consumer (i.e., business conducted over digital media), commodity price volatility, shifting demographics and the expanded growth focus on global markets is making the consumer goods business more complex, and is negatively impacting operating metrics. With the significant shift toward digital transac- tions,2 the capabilities of the SMAC Stack can help CG companies make the strategic shift required to survive and compete. This starts with more effective customer engagement – driving sales through lower-cost, higher-profitability channels – and cascades across CG enterprises by improving operational efficiencies and providing more command and control for handling growing operational complexity. Slow Economic Recovery The U.S. economic recovery remains sluggish. IRI’s MarketPulse survey notes that even after four-plus years (the official end of the global recession), 22% of consumers still find it difficult to afford groceries. Yet the consumer-spending and savings rate has increased, albeit marginally, over this time frame.3 This is a positive sign for CG companies; it means consumers may have more to spend as confidence improves. Financial Performance Our analysis of the Top 504 CG companies in the U.S. reveals that they have successfully managed to lower their cost-to-income ratio from 2006 through 2010 – recording a marginal increase in 2011 (see Figure 1). During that time, the cost of goods sold constituted, on average, 66% of the Decreasing Cost to Income Ratio* 0.79 0.81 0.83 0.85 0.87 2006 2007 2008 2009 2010 2011 Figure 1 *The cost to income ratio of the top 50 U.S. consumer goods companies. The list comprises the top companies based on revenues for FY 2012 from each of the sub-categories of the consumer goods industry in the U.S. Source: CapitalIQ and Cognizant Research Center Analysis Break Up of Costs* Figure 2 *Break up of the costs of the top 50 U.S. consumer goods companies. The list comprises the top companies based on revenues for FY 2012 from each of the sub-categories of the consumer goods industry in the U.S. Source: CapitalIQ and Cognizant Research Center Analysis 0 100 200 300 400 500 600 2006 2007 2008 2009 2010 2011 US$Billions Cost of Goods Sold SG&A Tax, Interest, Other
  • 4. cognizant reports 4 total expense for the these companies (see Figure 2, previous page). Sales, general and administrative SG&A expenses constituted, on average, 31% of the cost of total goods sold from 2006 to 2011, although the industry managed to marginally reduce this expense from 2008 through 2011 (see Figure 2, previous page). Net profit remained relatively unchanged between 2006 and 2011 as total revenues and total expenses grew almost proportionately during that period (see Figure 3). Managing and Competing with Retailers The rise in value-seeking consumers is a direct aftereffect of the global recession. For instance, consumer resistance to price increases is pro- pelling private labels to grab market share from traditional CG companies by offering compara- tively cheaper products, albeit in select catego- ries. According to IRI’s MarketPulse survey, 50% of consumers are buying more private-label brands post-recession compared with pre-reces- sion levels. In 2011, private labels accounted for approximately 19% of dollar sales and 23% of unit sales across CG channels.5 Retailers are employ- ing their understanding of consumers’ buying behavior and using insights generated from the analysis of point-of-sale transaction data to pro- mote and push more high-margin private labels. CG companies are under pressure to deliver prod- ucts at lower prices, and manage retailers that seek products with everyday low prices. Con- sumer goods manufacturers also face a challenge to enure that their products secure appropriate shelf space in retailers’ physical and online stores. Flat Net Income Margin* US$Billions 0 200 400 600 800 2006 2007 2008 2009 2010 2011 Total Revenues Net Income Total Expenses Figure 3 *Net income margin of the top 50 U.S. consumer goods companies. The list comprises the top companies based on revenues for FY 2012 from each of the sub-categories of the consumer goods industry in the U.S. Source: CapitalIQ and Cognizant Research Center Analysis Global Growth is Heavily Dependent on the Non-OECD Economies Figure 4 Note: Calculated using moving nominal GDP weights, based on national GDP at purchasing power parities. Source: OECD Economic Outlook 90 database. % % Contribution to annualized quarterly world real GDP growth 8 2 4 0 6 8 2 4 0 -2 -6 -8 -4 -2 -6 -8 -4 6 2006 2007 2008 2009 2010 2011 2012 2013 OECD Non-OECD
  • 5. cognizant reports 5 Seeking Growth by Expanding Globally With mature markets such as the U.S. and the UK expected to grow slower,6 competition has intensified – putting margins under pres- sure. The need to grow the top line is leading U.S. CG companies to tap opportunities globally. This shift is clear from U.S. CG exports, which doubled from US$40.3 billion in 2005 to US$80.3 billion in 2011.7 Emerging markets such as Brazil, India and China are expected to drive global GDP growth. In fact, the Organization for Economic Coop- eration and Development (OECD) estimates that these countries will account for 75% of the global economic growth between 2012 and 2013 (see Figure 4, previous page).8 Rising Costs and Complexity in Operations Energy and commodity input costs for CG companies are rising. Weak economic conditions and volatile weather are undermining essential global commodity supply chains. Water, power and labor shortages are also expected to increase the cost of products. Streamlining manufacturing operations and containing energy costs, which account for 3% to 8% of total production costs, is crucial for CG companies that want to improve profitability.9 The planned expansion into global markets serving diverse customer segments with customized products is expected to result in unprecedented complexity in the supply chains that support them (see Figure 5). Demographics and the Rise of the Digital Consumer In the U.S., baby boomers are expected to account for 40% of spending, while owning 60% of the nation’s wealth, by 2015.10 However, the 50-million strong, digitally-savvy mil- lennials segment will consti- tute the biggest percentage of the U.S. population in the years to come. CG companies should therefore prepare to deal with consumers who are comfortable with digital and those who are not. Rapid innovations in tech- nology and social interac- tions have given rise to the digital consumer, who has different expectations and demands. Today, mobility and 24/7 social connectivity is allowing consumers to conduct a large part of their shopping over smartphones, the Internet and through social media, bring- ing about mobile commerce, or m-commerce. Value-conscious consumers are turning to digital media and tools that reduce their shopping bills. The 50-million strong, digitally- savvy millennials segment will constitute the biggest percentage of the U.S. population in the years to come. Drivers of Complexity in the Consumer Goods Supply Chain 3% 24% 28% 30% 34% 35% 38% 48% 49% 50% 51% 51% 51% 65% 72% Other Mergers and acquisitions Outsourcing to third parties New competitors in market(s) Compliance with government and trading partner mandates Distributed manufacturing operations and supporting capabilities Emerging markets Talent Pace of new product introduction and innovation Globalization of supply chain Managing supplier risk Increasing supply chain risk (economic, geopolitical, environmental) Increasing number of locations (customers, suppliers, internal operations) Product proliferation or variance (stockkeeping units/SKUs, excess product variant configurations) Customer demands, expectations and needs Figure 5 Source: Technology Trends Report 2012, Consumer Goods Technology and Gartner
  • 6. cognizant reports 6 (researching products, making use of coupons, the Internet and online deal sites) as an integral part of their money-saving efforts (see Figure 6).13 In 2012 alone, consumers saved US$3.7 billion using the 305 billion coupons distributed by CG marketers.14 Putting the SMAC Stack to Work The stack of social media, mobile, analytics and cloud technologies (SMAC Stack) can help CG companies in their efforts to react and stay ahead of ever-changing consumer behavior by improv- ing their operational metrics and thus building competitive advantage. Strategic Shifts Required to Survive and Compete To survive in this highly competitive and fast-changing business environment, CG com- panies must fast-track a shift in strategy, and overhaul their operating structures to be more nimble and responsive. A key pillar for companies treading such a path is an IT function that pro- vides the necessary tools and technologies for competing in an increasingly digital world. The SMAC Stack of technologies is ideally suited to serve CG companies in such a scenario. However, to reap its full benefits, companies should deploy them as an integrated stack. This can result in a multiplier effect (e.g., mobile inputs driving real- time analytics) and serve as a foundation for breakthrough results in business performance (For more insights, see our white paper “Don’t Get SMACked”). An IRI MarketPulse report says that newer gen- erations – those that are even more tech savvy than millennials – will increasingly leverage the Internet to seek deals and information on prod- ucts they want to buy. The report further states that the number of channels visited by shoppers will continue to decrease to be limited to those that offer them the best value.11 Business Models Embrace Digital The forces of technology are rapidly changing the contours of the CG industry landscape. The digi- tally-enabled world is driving businesses to pro- vide seamless service to customers across regions, time zones and business channels. CG companies need to examine how they can rewire their business models to adapt to the new digital realities of the mar- kets they operate in. Consumer preference for e-shopping is now influenc- ing the CG industry’s online strategy. Nielsen reports that online sales are grow- ing at a CAGR of 25%, and estimates that by 2015 they will contribute 5% of total CG sales – up from the 2% two years ago.12 According to the latest IRI MarketPulse Survey, more than two-thirds (69%) of consumers are making shopping lists to carefully plan their gro- cery shopping trips and save money. The survey adds that consumers have accepted digital media CG companies need to examine how they can rewire their business models to adapt to the new digital realities of the markets they operate in. How Consumers Save Money I visit online deal sites, such as Woot.com and Groupon I research products on Web sites I download coupons from couponing sites, such as SmartSource I download coupons from retailer Web sites I download coupons from manufacturer Web sites Digital Media Usage (% of Shoppers - Top 2 Box) 21% 24% 31% 35% 35% 21% 24% 33% 35% 42% 19% 23% 26% 29% 40% 0% 10% 20% 30% 40% 50% Q1 2013 Q1 2012 Q2 2011* Figure 6 * Not Asked in Q1 2011 Response base: n= 2000 for each of the MarketPulse Surveys (Q1 2013, Q1 2012 and Q2 2011) Source: IRI MarketPulse Survey, Q1 2011 - Q1 2013
  • 7. cognizant reports 7 Consumer goods companies have relatively less physical exposure to their customers since retail- ers are, most often, the endpoint in the value chain. Also, retailers have a head start in the adoption of social media. Having Web stores and digital touchpoints – such as a presence on social media networks and mobile apps that allow con- sumers to research, shop and share feedback on products – certainly helps. However, moving in this direction requires CG companies to rethink their IT strategy – focusing on leveraging new technol- ogies to not only reduce costs but also create new business capabilities. It is also essential for these businesses to manage and make effective use of the significant volume of social and customer data that is generated by customers using social media networks and mobile devices during their shopping expeditions. This calls for marketing and IT departments to collaborate seamlessly in order to deliver differentiable and valuable digital experiences to customers and gain sustainable competitive advantage. (For additional insights, read “Time for Consumer Goods Companies to Rethink Digital Marketing”.) Using the SMAC Stack to Engage Customers and Drive Sales For CG companies, the game has changed – from solely selling products to courting, engaging and converting customers into product advocates. As customers increasingly turn to digital chan- nels, companies must follow the same path to interact and influence them. Companies can start by deploying strategies that complement their traditional marketing efforts and by identifying which digital touchpoints are the most effective. It is here that social media, mobile, analytics and cloud technologies play a major role. Some points to consider: • Use social media to better engage customers and drive sales: According to a Bain report, companies noted that custom- ers who engaged with them over social media spent 20% to 40% more compared to those who did not.15 Similarly, McKinsey points out that a majority of consumers rely on referrals and look to user reviews when making their purchase decisions.16 Cost savings is another area where social media performs better than traditional media. Social media lowers the cost of marketing, enables targeted marketing, provides data to mine for insights and is a more effective customer retention tool. With many customers using social media for longer peri- ods of time, daily, it is a source of unfiltered, direct feedback on products and on customer needs (see Figure 7). CG companies can combine analytics and social media data to gain actionable insights from customers’ social interactions. These pro- vide key information about consumer needs and preferences, which can be used to inno- vate and develop new product lines specifically for certain customer segments. For example, Unilever partnered with London-based Face Co-creation and its online community to develop Axe Twist, a fragrance that changes throughout the day.)17 Similarly, Frito-Lay used social media to solicit new flavors for its potato chips that are tailored to local tastes.18 Benefit 8% 23% 28% 48% 84% 88% Reduction of returns Improvements in contact center operations Lead generation Additional sales revenue Brand protection Consumer insights Figure 7 Note: Multiple Responses Permitted Source: IDC Manufacturing Insights and Consumer Goods Technology, 2012 Expected Benefits from Social Media Investments
  • 8. cognizant reports 8 • Leverage mobility to market to millions of unique customers: Mobility is a powerful sales channel for consumer-facing businesses. Today, more and more people are relying on smartphones as their primary communica- tion, entertainment and infotainment device. Companies are finding that it is more effi- cient to send personalized offers and product recommendations over mobile phones to cus- tomers when they are in stores. This is impor- tant, given the fragmented media landscape. Also, according to published reports, con- sumers are more open to receiving targeted messages from trusted retailers. Marketers are finding that they no longer have unique markets, but customers in the billions, with specific needs and expectations. Using social media and mobile devices, CG compa- nies can target these niche markets and con- sumer segments with customized products. The pervasiveness of mobility and connectivity is invaluable, as it allows companies to keep in touch with customers anytime and anywhere. For instance, companies can leverage the in-store purchase behavior of a consumer (who picks up and scans a package of cheese in a grocery store) to send contextually-relevant messages (recommending a cracker that goes well with the cheese.) • Apply advanced analytics to engage with the right customer at a lower cost of interaction: Rapidly shifting consumer demographics create unique challenges for CG companies in developing and delivering products. In such a scenario, companies can use advanced analytics to accurately segment markets using the significant amount of con- sumer data that flows through their systems of record and engagement (i.e., social platforms). The ability of CG companies to fine-tune their promotions and pricing, and identify poten- tial markets and consumer segments, will be a critical factor in building and sustaining competitive advantage. Analytics is the right fit for companies wanting to gain such an advantage. With so much information flowing throughout the organization, analytical tools can help decision makers separate important data signals from “noise.” Similarly, robust analytical capabilities are valuable tools for reducing the complexity of dealing with diverse markets and unique consumer segments. Powerful analytical capabilities can help companies enhance awareness of their brands by engaging the right customer at the right place with the right product. These tech- nologies can also help streamline marketing activities and better measure ROI by allow- ing CG companies to analyze the performance metrics of marketing initiatives, track con- version rates of customers, and help opti- mize spending on leads by moving from pay- per-click to pay-per-leads. Titan Eye, for example, uses analytics to understand cus- tomer preferences and segment them accord- ingly to provide a targeted range of products (e.g., a city with a higher density of college students preferred fancy designer lenses compared with another city with more senior citizens). Further, it rolled out online eye testing (which proved to be a phenomenal success) using Facebook after finding that a large percentage of Titan Eye customers were between the ages of 12 and 30, and were most active on social media.19 • Deploy cloud technologies to cut market- ing and related operational costs: Functional areas such as marketing can leverage on- demand cloud-based technologies to reduce the cost of marketing campaigns through pay- per-use pricing models, while reaching out to diverse customer segments. These tools also allow them to develop, test and measure the effectiveness of campaigns easily at sig- nificantly lower costs. Software as a service (SaaS) and other cloud models help companies with global operations to reduce technology costs by optimizing, simplifying and increas- ing the agility of their IT operations. They also enable companies to easily afford best-in-class computing capabilities. Cloud technologies, which are finding increas- ing acceptance in many industries, can also improve CG companies’ global operations while significantly optimizing infrastructure, support and collaboration costs. General Mills, for example, used a cloud platform to launch an e-commerce storefront to bring its gluten-free product offerings to the market at half the cost and time compared with con- ventional IT approaches. In another case, Chiquita Brands International deployed a cloud-based HR system for 26,000 employ- ees spread across 42 countries and achieved
  • 9. cognizant reports 9 30% savings in upfront costs compared with traditional on-premise ERP systems.20 Driving Future Growth by Transforming Business Models Companies that continue to transform their business models to better serve the ever-evolv- ing digital consumer are better positioned for success. In its predictions for 2012, IDC Manufac- turing Insights expects IT organizations to make foundational investments in a master IT model that holistically embraces SMAC technologies to deliver more business value and better IT produc- tivity (see Figure 8, next page).23 As noted in our earlier “Don’t Get SMACked“ white paper,24 areas that have the most potential for CG companies to implement and benefit from the SMAC Stack are: Quick Take How Analytics and Mobility Can Drive Operational Efficiency, Productivity The top 50 CG companies in the U.S. have been unable to reduce the cost of their operations, which have continued to grow in tandem with revenues. Similarly, net profit margins have remained at the same level over the past five years. Companies expanding into global markets are further burdened by regional demographic diversity and complex supply chains. Improving operational efficiencies and employee productivity is therefore an imperative for CG companies, in our view. Solutions such as demand signal repositories combined with analytics help companies use downstream data to optimize key parameters such as cycle-time reduction, on-shelf availability of products and waste reduction initiatives. Demand-driven companies reap benefits that go beyond managing inventory to include stronger relationships with retailers, new product introductions and improved promotional capabilities. Demand-driven businesses function better than others in reducing supply chain costs, in perfect order performance and in managing inventory. According to Boston Consulting Group research, companies that use advanced demand-driven supply chains can reduce the inventory they carry by 33%, achieve 20% improvement in their delivery performance and significantly reduce their supply chain costs.21 • Analytics improve operational efficiency: Among the future success factors will be the capability of CG companies to serve demand rather than just build capacity to meet the demand. It is imperative, therefore, for companies to create scalable capabilities that flex with changing demand rather than invest purely in production capacities. Companies desirous of having such capability need exceptional data management tools and technologies, such as analytics that can allow them to glean insights from data gathered from mobile and social platforms in real time. Efficient and nimble supply chains can provide significant opportunities for competitive advantage. Given the advancements in analyt- ics, it is possible for companies to optimize and more efficiently run their complex supply chains. There is an increasing focus to continuously reduce operational costs to deal with resource con- straints and rising inputs costs. Here again, analytics can be deployed to identify inefficiencies. • Mobility enhances employee productivity: CG companies can tap into mobile capabilities to improve employee productivity by enabling workers to collaborate and work even while on the move. Employ- ees who are “mobile“ can use their own devices to stay connected to their teams, peers and custom- ers. Mobility can help companies bridge visibility gaps and improve employee efficiency and effective- ness by better managing resources — both people and assets — when there is less visibility or they are on the move. This approach could allow an analyst or field sales executive to act on insights rather than spending three-fourths of their time on data capture and dissemination. It could also improve operational excellence by proactively anticipating problems and opportunities by making critical data available in real time.22 This is especially applicable to employees working in retail merchandising, field service, warehouse operations, sales and marketing.
  • 10. cognizant reports 10 • The customer interface: Keep customers engaged through social media and mobile devices in real time and influence their behavior on their path to purchase. • The partner interface: As customers increas- ingly engage and interact with CG businesses over digital mediums, these companies can collect important information from custom- ers regarding their preferences and choices in developing new products. • The machine interface: Certain categories of consumer goods (e.g., refrigerators, air condi- tioners) enabled with connectivity technolo- gies such as Bluetooth can provide feedback on the machine’s usage and performance to both the manufacturer, who can use the information to improve the product, and the user, who can use it to understand her usage of the product. Consider a machine that can share critical performance data in real time with appropriate service engineers, who can fix issues as they arise to help ensure optimal machine performance. • The employee interface: The SMAC Stack, when integrated, allows employees to com- municate and collaborate from anywhere and at any time, thus helping to improve their productivity. Resource constraints and climate impacts are only expected to grow — driving consumer goods companies to center their growth strategies on sustainability. These businesses need to focus on making product lines cheaper to produce and sustain. They also need to effectively engage customers in supporting sustainable products. Driving such initiatives successfully will hinge upon companies’ ability to spot the right trends, preferences and insights from the consumer data that is now available. A report from EKN Research and Consumer Goods Technology says that among manufacturers with plans to run big data projects, 64% intend to do so in the next two years. Supply chain, customer development and marketing are the top focus areas.25 Undoubtedly, efficient data management will be a key driver of competitive advantage for companies in the future. The confluence of big data, social media, mobiles, analytics and cloud can help companies deal with the uncertain economic environment, alleviate cost pressures, improve operational efficien- cies and drive growth. As competition intensi- fies, companies with the skills to better segment customers, glean more granular insights and intelligence from customer data, personalize messaging and products, and develop efficient, effective promotional campaigns can gain an edge over the competition. IT Investment Priorities of Consumer Products Manufacturers Figure 8 Note: Respondents were asked to rank the emerging technology areas on a scale of 1 to 5, with 1 being not important and 5 being most important. n=355 Source: IDC Manufacturing insights' Supply Chain Survey, 2012 Emerging Technology Area Mean Score Big data/Analytics 3.6 Mobility 3.3 Cloud computing/Software-as-a-service 3.0 Social business tools 2.9
  • 11. cognizant reports 11 Footnotes 1 A Demand Signal Repository aggregates point-of-sales data, which after cleansing and integrating with internal and market research data can help companies to identify what’s selling, where, when and how. 2 According to Forrester, the number of U.S. consumers shopping online will reach 192 million by 2016, a 15% increase from 167 million in 2012. It also forecasts that e-retail share of total retail sales will touch 9% by 2016 up from 7% in 2012. “E-retail spending to increase 62% by 2016.” Internet Retailer, February, 2012. http://www.internetretailer.com/2012/02/27/e-retail-spending-increase-45-2016 3 “Merchandising Trends: Supporting the Value Proposition.” IRI Group, 2013. http://www.foodinstitute. com/iri/T&TJan2013.pdf 4 The list comprises the top companies based on revenues for FY 2012 from each of the sub-categories of the consumer goods industry in the U.S. 5 “CPG 2011 Year in Review: The Search for Footing in an Evolving Marketplace.” IRI Group, 2012. http://www.foodinstitute.com/iri/T&TFeb2012.pdf 6 A report published in 2013 by Economist Intelligence Unit and Mintel says that total spending in the five emerging markets (China, India, Mexico, South Africa and Turkey) is expected to rise by between 7.7% and 15.2% a year, on average, in 2013-16, while the spending growth in the U.S. and UK will average 4.5% and3.6% a year, respectively. http://www.asia.udp.cl/Informes/2013/EIU_Mintel_ Consumer_report_Jan2013.pdf 7 “2012 Financial Performance Report – Profitable Growth: Driving the Demand Chain.” Grocery Manu- facturers Association and PricewaterhouseCoopers, 2012. http://www.gmaonline.org/file-manager/ Collaborating_with_Retailers/Financial_Performance_2012.pdf 8 “OECD Economic Outlook, Vol. 2011/2.” OECD Publishing, 2011. http://dx.doi.org/10.1787/eco_ outlook-v2011-2-en 9 “Sustainable Energy for All: Opportunities for the Consumer Packaged Goods Industry.” United Nations Global Impact and Accenture, 2012. http://www.unglobalcompact.org/docs/issues_doc/Environment/ SEFA/4SEFA_CG.pdf 10 “Consumer 2020: Reading the Signs.” Deloitte, 2011. http://www.deloitte.com/assets/Dcom-Global/ Local Assets/Documents/Consumer Business/8664A_Consumer2020_sg8.pdf 11 “2012 CPG Year in Review: Finding the New Normal.” IRI Group, February, 2013. http://www.foodinsti- tute.com/iri/T&TFeb2013.pdf 12 “U.S. Grocery Shopper Trends 2012.” Food Marketing Institute, 2012. http://www.icn-net.com/ docs/12086_FMIN_Trends2012_v5.pdf 13 “MarketPulse: Key Trends – Tracking the Pulse of CPG.,” Information Resources Inc., May, 2013. http://www.iriworldwide.com/Portals/0/articlepdfs/MarketPulseKeyTrendsQ12011thruQ12013.pdf 14 “CPG Marketers Distributed 305 Billion Coupons in ’12, Flat From ’11.” Marketing Charts, January, 2013. http://www.marketingcharts.com/wp/direct/cpg-marketers-distributed-305-billion-coupons-in-12-flat- from-11-26532/ 15 “Putting Social Media to Work.” Bain & Company, September, 2011. http://www.bain.com/publications/ articles/putting-social-media-to-work.aspx 16 “The Decade Ahead: Trends that will shape the consumer goods industry.” McKinsey & Company, February, 2011. http://csi.mckinsey.com/Knowledge_by_topic/Consumer_and_shopper_insights/dec- adeahead.aspx
  • 12. cognizant reports 12 17 “Why Axe Bet on Consumers for Global Twist Launch.” Advertising Age, February, 2010. http://adage. com/article/news/axe-fans-evince-unexpected-subtlety-twist-launch/142270/ 18 “Social Media Are Giving a Voice to Taste Buds.” The New York Times, July, 2012. http://www.nytimes. com/2012/07/31/technology/facebook-twitter-and-foursquare-as-corporate-focus-groups.html 19 “Right Analytics Can Help Retailers Improve Sales.” CXO Today, May, 2013. http://www.cxotoday.com/ story/retailers-can-gain-by-doing-analytics-right/ 20 “Rethinking the role of IT for consumer packaged goods (CPG) companies.” Deloitte, 2012. http://www. deloitte.com/assets/Dcom-Vietnam/Local%20Assets/Documents/Industries/Consumer%20Busi- ness/Rethinking%20the%20role%20of%20IT%20for%20CPG%20companies.pdf 21 John Budd, Claudio Knizek, and Robert Tevelson, “The Demand-Driven Supply Chain: Making It Work and Delivering Results.” BCG Perspectives, May, 2012. https://www.bcgperspectives. com/content/articles/supply_chain_management_sourcing_procurement_demand_driven_supply_ chain/ 22 “Mobility in Consumer Products.” IDC, July, 2012. http://www.scmr.com/images/site/IDC_Mobility_ White_Paper.pdf 23 “IDC’s Top 10 Manufacturing Predictions for 2012.” Consumer Goods Technology, December, 2011. http://consumergoods.edgl.com/trends/IDC-s-Top-10-Manufacturing-Predictions-for-201277542 24 By Malcolm Frank, “Don’t Get SMACked: How Social, Mobile, Analytics and Cloud Technologies are Reshaping the Enterprise.” Cognizant Technology Solutions. November, 2012. http://www.cognizant. com/Futureofwork/Documents/dont-get-smacked.pdf 25 “Big Data in Consumer Goods.” Consumer Goods Technology and EKN Research, 2012. http://consum- ergoods.edgl.com/research/Big-Data-in-Consumer-Goods---Fall-201283905 References • “Optimizing Marketing Partner Performance and Value in a Digital World.” CMO Council, 2012. http:// www.cmocouncil.org/images/uploads/pdf/219.pdf • “Tech Trends 2012.” Consumer Goods Technology, 2012. http://consumergoods.edgl.com/research/ 2012-Tech-Trends-Report82531 • “Global power of Consumer Products 2012: Connecting the dots.” Deloitte, 2012. http://www.deloitte. com/assets/Dcom-Switzerland/Local Assets/Documents/EN/Consumer Business/Consumer pack- aged goods/ch_en_global_powers_of_consumer_products_2012.pdf • “How Consumer Companies Can Win Back the U.S. Market.” Boston Consulting Group, December, 2012. https://www.bcgperspectives.com/content/articles/consumer_products_go_to_market_strat- egy_how_consumer_companies_can_win_back_the_us_market/ • “Digital’s Disruption of Consumer Goods and Retail.” Boston Consulting Group. November, 2012. https://www.bcgperspectives.com/content/articles/retail_consumer_products_digitals_disruption/ • “Scaling Up Social Media.” strategy+business, August, 2012. http://www.strategy-business.com/ article/00130?gko=51a51 • “Mobility in Consumer Products.” IDC Manufacturing Insights, July, 2012. http://www.scmr.com/ images/site/IDC_Mobility_White_Paper.pdf
  • 13. About Cognizant Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process outsourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 162,700 employees as of March 31, 2013, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500, and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com for more information. World Headquarters 500 Frank W. Burr Blvd. Teaneck, NJ 07666 USA Phone: +1 201 801 0233 Fax: +1 201 801 0243 Toll Free: +1 888 937 3277 Email: inquiry@cognizant.com European Headquarters 1 Kingdom Street Paddington Central London W2 6BD Phone: +44 (0) 207 297 7600 Fax: +44 (0) 207 121 0102 Email: infouk@cognizant.com India Operations Headquarters #5/535, Old Mahabalipuram Road Okkiyam Pettai, Thoraipakkam Chennai, 600 096 India Phone: +91 (0) 44 4209 6000 Fax: +91 (0) 44 4209 6060 Email: inquiryindia@cognizant.com ­­© Copyright 2013, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners. Credits Author Aala Santhosh Reddy, Senior Research Associate, Cognizant Research Center Subject Matter Experts Johan Sauer, Assistant Vice-President, Cognizant Business Consulting, Consumer Goods Practice Design Harleen Bhatia, Design Team Lead Chiranjeevi Manthri, Designer • “CPG Lags in Social Media Investments.” Consumer Goods Technology, July, 2012. http://consumer- goods.edgl.com/trends/CPG-Lags-in-Social-Media-Investments-81270 • “U.S. Consumer Goods: The Case for Putting Analytics at the Core.” Cognizant Technology Solutions. February, 2012. http://www.cognizant.com/InsightsWhitepapers/US-Consumer-Goods-The-Case-for- Putting-Analytics-at-the-Core.pdf • “The Emergence of The Digital Marketing Service Provider.” Forrester Research, Inc., January, 2012. http://www.forrester.com/The+Emergence+Of+The+Digital+Marketing+Service+Provider/fulltext/- /E-RES61168 • “IDC’s Top 10 Manufacturing Predictions for 2012.” Consumer Goods Technology, December, 2011. http://consumergoods.edgl.com/trends/IDC-s-Top-10-Manufacturing-Predictions-for-201277542