The evolved approach to improving cpg performance
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The document discusses how AI-driven intelligence can enhance performance in the retail consumer packaged goods (CPG) sector by optimizing SKU management and merchandising strategies. It highlights the importance of understanding customer behavior and improving product bundling, promotional investments, and inventory management to increase revenue and market basket value. The author emphasizes a shift from traditional analysis tools to a more integrated and proactive approach to decision-making in a complex marketplace.
The evolved approach to improving cpg performance
- 1. IMPROVING RETAIL CPG PERFORMANCE THROUGH AI
- 2. www.companyname.com Simplex Intelligence.ai What does the network of 4,000 SKU’s really look like? Category blurring and fracturing. Products with little to no differentiation, tightly crammed into overlapping categories, sub-categories, spilling out across the long tail of orphaned SKU’s. Understanding this market reality is the first step to controlling it. 2 TODAY’S MARKETPLACE IS COMPLICATED
- 3. www.companyname.com Simplex Intelligence.ai Today’s modeling and BI tools paint a false and incomplete picture of reality. This gap in insights is what causes brands to miss performance goals. Current marketing and merchandising strategies focus only on SKU sales frequency. Reporting mechanisms compare how individual products sell against other items in the same general category. The BI tools of today provide a limited picture of how products co-exist in the marketplace. 3 CURRENT PERFORMANCE ANALYSIS IS INCOMPLETE
- 4. www.companyname.com Simplex Intelligence.ai Customers become shoppers when they choose to be receptive to the ‘idea’ of buying and begin browsing. Shoppers become buyers when they see what they want quickly and easily. Predicting these behavior transitions and their catalysts leads to high value market baskets. Customers can also be hunters. They skip browsing and go straight to buying. This behavior is connected to destination or need based purchases. Both consumer behaviors exist in the marketplace. To increase revenue, you must know how to merchandise for the market basket, not sell a SKU. 4 CONVERTING SHOPPERS IS GROWING HARDER
- 5. www.companyname.com Simplex Intelligence.ai Simplex Intelligence focuses exclusively on CPG and retail categories that benefit from AI-driven intelligence. Our ‘applied intelligence’ approach delivers results across 5 categories. SKU Rationalization & Optimization Remove products that don't belong within the merchandising and inventory mix. Identify the high value products by characteristics and attributes which are missing. Merchandising Mix Optimization Identify maximum value items which belong in high value market baskets. Determine which product mixes drive the highest incremental revenue and margin. Recommend improvements in how products are grouped and displayed on and offline in order to drive larger, more profitable market baskets. Pair-wise Product Recommendations Visualize which products are best bundled together and the timing necessary to increase market basket value. Promotion Investment Optimization Improve in-store and on-line ROAS (return on ad & promotion spend) by changing the promotion investments. Improve non-monetary promotions through smarter assortment management. Demand Planning Provide direction on market to store level optional inventory and purchasing decisions, per category and SKU in order to meet current and near future demand and consumption patterns. 5 BETTER CONVERSION REQUIRES SMARTER TOOLS
- 6. www.companyname.com Simplex Intelligence.ai Using the Simplex approach, product performance shifts from individual SKU performance to market basket groupings. Clusters and circles represent products that perform well together. Products that separate from the clusters indicate poor performing SKU’s. Visibility of the network of market baskets allows for improved merchandising, product recommendations, promotional programs and demand planning. Simplex Intelligence’s predictive SKU Optimization, Merchandising Mix, Product Bundling and Pairing Recommendation solutions remove decision friction and fuel new revenue growth. 6 VISUALIZE SKU & MERCHANDISING PERFORMANCE
- 7. www.companyname.com Simplex Intelligence.ai Finding the promotional ‘investments’ which drive sales lift versus drift requires seeing the landscape differently. To improve the results, it is important to understand what products respond best to varying investments and when an increased spend delivers a diminishing return. Some products and market baskets don’t react to promotional investment at all while others stop responding at certain levels. Making significant improvements in ROAS requires better analytics and intelligence tools. Simplex’s Promotion Investment Management solution is a smarter alternative than the current tools. 7 IMPROVING RETURN ON PROMOTION INVESTMENT
- 8. www.companyname.com Simplex Intelligence.ai With today’s growing SKU count, managing supply chain and inventory effectively is a growing problem. Unexpected safety stock excess or out-of-stocks are today’s chronic reality. For many, this is due to a lack of accurate predictive sales and consumption intelligence. Simplex’s demand planning intelligence predicts consumption patterns in the near future. This intelligence can inform ERP backbone systems, inventory tracking software or instead deliver the actionable intelligence directly to the professionals who need it most. 8 PREDICTIVE DEMAND PLANNING
- 9. www.companyname.com Simplex Intelligence.ai With the complexity of today’s retail and CPG landscape, making proactive, predictive decisions using traditional BI tools is virtually impossible. Understanding how products actually exist and interact with one another allows for marketers, merchandisers and inventory management professionals to move from reactive to proactive decision making. Proactive decisions, using smarter tools leads to reduced friction, higher revenue and increased margin. To win in today’s chaotic and challenging environment requires an evolved approach. You have to know more to sell more. 9 SIMPLEX INTELLIGENCE IS YOUR ADVANTAGE