Consumer packaged goods (CPG) companies spend enormous of time and money to optimize their penetration of brands within their relevant product categories. Each year billions of dollars are spent on everything from advertising to trade promotions by their marketing organizations on optimizing existing brands and introducing new ones. Each of these requires teams of individuals that analyze their products and categories along with having the insight from consumers and their demographics that they reach through broad set of retail channels.
I have spent a lot of time in the CPG market over the last couple of decades and been involved with the development of new methods and products to help their organizations operate smarter. The industry and more specifically the applications and analytics have been maturing but in many cases have not simplified the capability to apply predictive analytics and balance number of variables that must be applied to a model to determine the optimum trade spend and pricing. Determining the right path and actions for improving the profitability and cost effectiveness of marketing spend is no easy feat.
I have recently over the last three months had a chance to review M-Factor, an applications vendor that has served the CPG industry for many years and in the last couple has advanced their application to be easily procured in a software as a service (SaaS) manner where it can be accessed in an on-demand manner where CPG organizations do not have to worry about installing and configuring it within their IT organizations. M-Factor has advanced their analytic platform to not just apply predictive analytics but manage the program and portfolio planning for brand and category managers. Integrating the need to manage marketing investments by examining trade spending effectiveness and determining the optimal pricing of the products are part of the applications available today. Most important is that the analytics and visualization help provide direct guides for determining actions after evaluating scenarios and ROI on potential marketing spend to achieve specific goals and enable what we would call the process of performance management.
M-Factor has advanced their business with deployments with brands such as Coca-Cola, Kelloggs, Nestle, Ocean Spray and others as they realize the value of empowering analysts and managers with the capabilities they need. It is critical to realize that many market research departments in CPG organizations have helped perform these types of tasks but the skills and knowledge of using products like SAS and the latency in applying the number of iterations to seeking the optimal set of decisions on trade and promotions is too lengthy for today 7x24 global business environment. I think M-Factor could simplify some of the presentation of their analytics by rendering summary paragraphs of the scenarios that can be read and reviewed to understand the trade offs. This would help even further simplify the interactions with business management on critical decisions.
It is clear that M-Factor is contributing to advance the maturity of CPG organizations and fill a void by the larger applications companies Oracle and SAP who have not addressed the level of sophistication required. In addition they are addressing a need that IRI and Nielsen have attempted to address with their solutions over the years but they have not been able to move beyond their higher organizational priorities of selling analytic data and services. Beyond the fact that IRI and Nielsen must determine if they will invest into dedicated marketing and sales organizations to effectively promote their offerings but also provide how they can be data source agnostic and utilize predictive analytics. Most directly is the competition with organizations like JDA Software and DemandTec who have applied dedicated efforts to their applications in this segment and have been leveraging their historical presence in the market.
M-Factor is one of those investments that will help optimize your supply chain in CPG as I recently referenced as one of the top priorities that can leverage market information for more making more intelligent decisions in what I call Market Intelligence. By optimizing spend and price, CPG marketing and product organizations can do their best to contribute to the sales and revenue performance agenda that dominates most management agendas. If you are looking to advance the analytic and decision making sophistication of your CPG organization and be a whole lot smarter in engaging with the retailers, take a look at the scope of what M-Factor can do in your organization.