5 Opportunities CPG Category Analysts can Pursue with Data Analytics
Bedrock Key Takeaways:
With data analytics, CPG category analysts can elevate their impact on their company’s bottom line by accomplishing the following tasks:
- Find the right shelf placement strategy to optimize sales
- Investigate Distribution voids and new channel distribution
- Analyze competition within a product category.
- Collaborate cross functionally to achieve actionable insights
- Highlight the best recommendations to sales executives.
Here’s a fun fact about premium chocolate: In the past year, its average price has increased by about 10%, yet overall dollar sales are up 14%. That means consumers are willing to increase the dollar size of their basket by switching to premium products. It’s a sign of a healthy category, and a strong overall market.
As a category analyst, this is an optimal story to sell your brand at shelf. A premium product brings more dollars to the category and diversifies the shelf to attract more consumers.
Generally, the CPG industry thinks that data analytics is all about crunching sales numbers to determine prices and promotions. But that’s not the whole picture. Data analytics is one of the most powerful tools in a CPG salesperson’s toolbox to drive sales. It’s about presenting data in a meaningful way so your buyer can do two things:
- Show how your product can deliver category growth. It benefits both yourself and the retailer
- You start to build trust with your buyer as being the vendor that always has a pulse on the business. Data analytics is the new relationship based selling.
In today’s CPG market, data analytics isn’t just about reporting — it’s also about finding powerful insights. With that in mind, here are five opportunities analysts can capitalize on with the right tools and data sources…
Opportunity #1: Start at the shelf
Every CPG industry opportunity always starts on shelf. What does the customer see when looking down the aisle? What promotions are currently available? What value can you find between differently-sized products? These insights might seem miniscule in the grand scheme of category management, but a manufacturer who leverages them effectively will find long-term success.
At shelf, opportunity isn’t just about having one best-selling product. Sure, that’s an impressive accomplishment, but manufacturers have entire SKU portfolios to think about. Some items are driving category growth while as others are lagging the category. As a category analyst, your job is to find incremental sales opportunities that increase the performance of your entire product line, and the category it’s in. It’s finding the story of why your product is better than all the other 100+ products on shelf that drives your business.
Such an insight could take a number of forms. From a shelf-based perspective, it could be as simple as relocating items to eye level or having multiple facings of your product. CPG studies have consistently shown that high-performing items from any product category are placed within eyesight. This often means the most valuable shelf locations attract consumers of average height — roughly 5’7” or 5’8”.
A category analyst always try to tie insights to distribution. A manufacturer has a portfolio of products they want to sell across the marketplace. If they have one product across all stores then their distribution could be 100%. What about all the other products? The objective is to get into as many stores with multiple products as possible.
In this scenario, the next ideal opportunity would be to expand your shelf presence by introducing more items. If your current item has $4 million in sales, you can pitch additional items that increase the overall productivity of the category. This approach lets you make a case for incremental gain, not just for your brand, but for the retailer as well. A category analyst always wants to look for opportunities to benefit the retailer, not just themselves.
Opportunity #2: Look to diversify your market distribution
Once you’ve identified opportunities at shelf, the next step is to diversify your sales channels. All the product insights gathered at the shelf level can be applied at a larger scale to determine where it’s possible to increase overall marketplace performance.
Data analytics is an essential tool for finding avenues to enter a new market. The key here is to identify promising distribution voids — retailers who don’t carry your product — that offer room for expansion. Be on the lookout for stores or chains with gaps in their product categories that serve your key consumer demographics. Remember to consider category and retailer benefit as well, just as you did when pitching shelf opportunities.
Opportunity #3: Analyze the competition
While researching marketplace opportunities, pay specific attention to your competition within your category. In most cases, you’re entering a market where other brands have already established themselves and are looking for prime shelf space.
To succeed, you must present your best data-driven story versus similar competitors. Analyze certain metrics where your product is outperforming competitors. Focus on these insights as the main key to reveal how your product ultimately drives growth for the category. Most importantly, remember that the goal is incremental growth — perhaps you can’t compete against the top market brand just yet, but you can edge out other competitors in the category. It’s a small step that will put your brand on shelves and gives you room to grow.
Opportunity #4: Collaborate internally to optimize sales strategy
At this point, you’ve identified your shelf opportunities, distribution opportunities, and competitive advantages. Now it’s time for category analysts to work cross functionally with marketing, finance and supply chain to generate a brand strategy for pitching to retail buyers.
The primary opportunity is to create a single, data-driven story that highlights the best elements of your product line. What are your profit margins? What do your items add to the category? What can you offer the buyer that the competition does not? And perhaps most importantly, what are the costs of working with you? What makes your brand worth the risk?
Marketing is entirely distinct from sales analysis, so you’ll need to work closely with your team on a new strategy. Use data analytics tools with built-in visualizations to generate charts and tables that help your presentations deliver in a clear and concise visual language. By the end of this step, you’ll have optimized everything from previous steps into a digestible narrative that presents your brand in the best light.
Opportunity #5: Recommend insights to sales executives
Category analysts don’t only justify insights to retail buyers — they also need to report findings to company leadership. These reports may not require as much optimizing as your marketing presentations, but for your plan to be approved they require just as much attention.
Remember, this isn’t simply about creating a report that summarizes your findings. You must be able to justify how a specific strategy promotes incremental growth for the brand. It’s crucial to present your findings as actionable insights that benefit the company on all levels, from the shelf to your entire distribution chain.
At every step, data analytics empowers category analysts to find insights, create strategies, and leverage competitive advantages. Platforms like Bedrock Analytics excel on these fronts, streamlining day-to-day reporting tasks and allowing you to focus on the best opportunities for your brands. Let us help you find that initial insight that drives your CPG story across entire sales decks.