Key Points
  • The uniqueness of the current economic environment is driving new trends in CPG. Consumers are migrating to value retailers, smaller packages and are selective while buying premium products
  • Marketing executives are faced with tough decisions to stay competitive in a marketplace that is more fragmented and where the competitive bar has been raised substantially
  • Companies that are doing best are spending smartly on analytics to drive strategic and tactical plans
  • For CPG companies, large research firms have become costly. In setting up a center of excellence of analytics, they can, in effect, take work that they are outsourcing back in-house at a lower cost

Josh: Hello Brian and welcome to the WNS business insights podcast series.

Brian: Hi Josh. Good to be with you.

Josh: So Brian, we have seen a lot of companies come out with their financial results. Some have been good and some have not been so good. Can you give us a sense of what are some of the trends that are shaping the CPG industry today?

Brian: Well Josh, the uniqueness of the current economic environment is driving very unique trends in CPG today. You are seeing consumers migrate to value retailers and groups. The obvious beneficiary is Wal Mart. We’re seeing consumers move towards value brands such as the retailers’ private labels contributing to double digit growth in many categories for these brands. We’re also seeing consumers move back to smaller packaged economies to reduce their absolute dollar spend per shopping trip. Consumers are still willing to invest in premium quality products, but they are more selective while doing so today. Therefore in some instances, those brand products that fall in the middle in terms of quality and value are getting squeezed and are losing unprecedented share in some regions.

Josh: Brian in an environment where consumer spending is probably near an all time low, what are some of the strategies that the CPG companies should be adopting to weather this storm and how can research and analytics help?

Brian: Well, companies are cutting budgets across the board under the extraordinary economic downturn. Marketing executives are faced with tough decisions to stay competitive in a marketplace that is more fragmented and where the competitive bar has been raised substantially. The companies that are doing best are spending smartly on analytics to drive strategic and tactical plans. By that I mean they are ensuring they maintain the information key to read ‘key drivers’ of demand while cutting their budgets back. A perfect example of where we are helping CPG companies is in the area of price elasticity analytics. We have several clients that have increased their price elasticity work in terms of frequency while reducing some of the peripheral variables that they do not use consistently. In other words, doing more for less. This is enabling them to stay current on whether their consumer is more or less sensitive to price, thus enabling them to react more quickly to taking price action while minimizing risk. Another example is in the area of global analytics. Smart CPG companies are viewing the entire market when looking for opportunities like never before. There are still opportunities to be in transitional emerging markets to offset some of the loss in core and developed markets where some are suffering significant declines. They need to continue to invest in research needed to develop in these areas. If they do this, they will not only reduce the current risk, but reap the greater returns as the economy recovers.

Josh: I know WNS has been at the forefront of setting up analytics centers of excellence for CPG companies. Can you help our listeners get a better understanding of the benefits of an analytics centre of excellence?

Brian: Excellent question Josh. As I stated earlier, CPG companies are cutting back budgets like never before. Therefore, much of what they are doing with large research firms has become cost prohibitive. In setting up a center of excellence of analytics, they can in effect, take work that they are outsourcing back in-house at a lower cost. The way we work is we have a lean on-site staff that interacts day to day with key decision makers at the CPG company. They become an extension of the company in knowing the strategic initiatives and the issues that the organization is struggling with. Back in Bangalore, we have a large staff of highly skilled analysts, statisticians and researchers dedicated to their analyst operations. This gives the CPG company the ability to interact on projects day to day while benefiting from the cost savings that the off shore provider can deliver. This results in a smarter spend and a greater management oversight on projects, enabling them to maintain research critical to navigating through these extraordinary times. This also sets up a resource that can be quickly scaled up and down as budgets expand and contract.

Josh: Brian, I’ve heard a lot about the concept of automation of analytics. Can you give us a sense of what this is all about?

Brian: Yes, this is a very hot topic in CPG today, in particular with marketing mix modeling. Having a tool that gives you real time diagnostics in trade and media drivers of sales and knowing what the return of investment is critical for being competitive today. We’re seeing substantial shifts in the effectiveness of TV verses other media vehicles such as digital or online media. Additionally, we are seeing shifts in what moves the consumers to purchase a shelf or online or absolute dollar spend in some instances trump how many units or what the value is of the overall deal. There are some off-the-shelf solutions out there that have been put in use by several CPG companies but there are inherent issues with automated solutions, and the fact is that during the sales side, these issues are not always fully vetted. For example, validations to match outliers in many instances do not match what is needed for every category or sub category. So the models may hold up with sample data used in development, but issues arise once scaled in production. What we do we offer a custom solution gives consistent delivery and a battery of tests on outputs to ensure that they hold up our sample. We work in a manner where the client is involved in every step of the way. We are able to do this at a cost which our client can work with very easily, which as we discussed, is very important right now.

Josh: Can you give us some examples of how CPG companies are leveraging outsourcing to survive and grow?

Brian: Well, I alluded to the ‘Center of Excellence’ model earlier in our discussion Josh. This model enables us to be brought in anywhere along the continuum of research from conception to final deliverable. So it enables the client to take components of work that may drive undue costs and turn them over to us. For example, a client may have five studies they have done. They have the data and the final presentations from each study. Rather than commission another study, to take the hypotheses that may have been developed separately in these studies and bring them together, they commission us to perform what we call the meta analysis to bring consumer themes together to validate specific hypotheses utilizing the data that they have already purchased. An added value is that they can create an ongoing information database from this data as well. This gives the company more mileage out of each study on increasing their utility within the organization. Also, as I alluded to earlier, we are a resource that can be scaled very easily as client budgets change without the pain the client would experience in-house or in some instances having to get out of a contract from an expensive researcher. It really empowers the company to swiftly make changes at a time when the market changes daily.

Josh: Thank you Brian for an insightful and a very topical conversation. I am sure we will be hearing a lot of discussion and debate on what should and shouldn’t be done by the CPG industry to come along the corner in these challenging times. For more information on how CPG companies can leverage outsourcing or other business insights on how you can improve your business performance, please visit us at

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