The roadmap to Hyper-Personalization: uncovering new CPG sales opportunities with AI and digital omnipresence

These are very challenging times for Consumer-Packaged Goods (CPG) companies. As McKinsey recently observed, “The CPG industry is accustomed to the momentum of strong, reliable underlying market growth. That period is behind us (!).”  
The profound transformations in the digital landscape – which accelerated during the COVID-19 related lockdowns of 2020 – have served to distract consumers’ attention, allowing smaller brands to muscle in on the territory of the larger CPG companies by leading on ‘better for you’ positioning. In a separate study, McKinsey analyzed Nielsen data to show that between 2016 and 2020, only 25% of the growth of CPG was driven by leading brands, with 45% of growth being captured by small and medium-sized brands and 30% captured by private labels (!). 
As a result, CPG brands are losing relevance. Interbrand’s global ranking of brands illustrates this fall from grace – the number of CPG brands in the top 50 has declined from eight in 2002 to only two in 2022.

Touchpoint

Online customers are becoming increasingly important to CPG companies: they not only offer significant growth opportunities and more detailed customer insights, but they enable the delivery of personalized experiences that improve customer satisfaction and loyalty.

CPG leaders are discovering that the combination of AI and digital omnipresence can analyze vast amounts of customer data – including purchase history, preferences, and online behavior – to uncover opportunities for new sales. By better predicting customer needs, CPG companies can optimize marketing campaigns, enable omnichannel selling, and enhance their overall business performance. The rapid evolution of Generative AI is accelerating this shift toward hyper-personalization. Beyond traditional analytics and segmentation, Generative AI enables organizations to dynamically create content, adapt customer interactions in real time, and simulate customer responses across channels.

Digital omnipresence and the power of data and AI can transform the business model for CPG companies by delivering an exceptional, personalized customer experience.

Revolution, not evolution

CPG companies need to respond to this threat by accelerating their own digital transformation. As Catalina Research notes, “neither brands nor retailers have a complete picture of consumer behavior at scale across all platforms and media channels.”

CPG companies are simply not embracing digital transformation with sufficient urgency. As McKinsey points out, CPG companies are “evolving, but they need to be revolutionizing. For example, digital advertising, which was almost non-existent 20 years ago, now represents 75 percent of all advertising spend. But for CPG companies, that figure is only 50 percent.

The problem is not lack of data: CPG marketers now have access to 20-500 consumer touchpoints, up from 10-200 touchpoints only a few years ago . However, this data is largely historic – looking back at past behavior rather than analyzing information in real time, so limiting their ability to take the actions necessary to drive new sales.

The field of vision is also somewhat restricted, focusing on data in their own MarTech stack when technologies like CDP (Customer Data Platforms) can aggregate data from across the digital landscape.

However, the new skills and ways of working that CPG companies need to develop can be accelerated by GenAI. According to McKinsey, “The ability to identify sustainable growth pockets and make the most of them is critical and may be a source of sustainable competitive advantage for those who excel at it.” Ultimately, it envisages a time when AI-powered marketeers achieve real customer intimacy and make decisions based on locally-relevant data.

Making AI do the heavy lifting

The key to strengthening your digital presence is the ability to use AI and digital omnipresence to identify, aggregate and leverage customer data quickly and easily. This will enable CPG companies to increase revenues from existing marketing budgets by enhancing sales opportunities through leveraging data-driven insights and engaging with customers across multiple touchpoints. In practice, this means personalization is no longer limited to predefined segments or journeys, but can continuously adapt based on real-time context, behavior signals and predictive AI models.

1. Make mass hyper-personalization operational

AI can analyze vast amounts of customer data, including purchase history, preferences, andbehavior patterns, to create the most personalized customer service possible. By understandingindividual customer needs, CPG companies can offer tailored product recommendations that aremore likely to resonate and convert into sales.

AI algorithms can optimize pricing strategies in real-time based on demand, competitor pricing,and consumer behavior. This ensures that CPG companies can maximize their sales potential byoffering the right price at the right time.

2. Enhance Customer Engagement

Digital omnipresence ensures that CPG companies are present across various platforms, suchas social media, e-commerce websites, mobile apps, and in-store experiences. AI can helpcreate a seamless and consistent customer experience across all these channels, increasingbrand loyalty and driving sales. Increasingly, this is powered by integrated customer data and activation platforms that connect enterprise data, AI decisioning and omnichannel execution in a single operational flow.

AI-powered chatbots can engage customers in real-time, answer queries, and providepersonalized product suggestions. This not only improves customer service but also boosts salesby guiding customers towards relevant products.

3. Improve Demand Forecasting and Inventory Management

AI can analyze historical sales data, market trends, and external factors like weather or economic conditions to forecast demand more accurately. This helps CPG companies optimize inventory levels, reducing stockouts and overstock situations, which can lead to lost sales or increased costs.

With AI, CPG companies can streamline their supply chain operations, ensuring that products are available where and when they are needed. This reduces lead times and improves the overall efficiency of the sales process.

4. Identify New Markets

AI can analyze social media, reviews, and other digital platforms to gauge consumer sentiment towards products and brands. This insight can help CPG companies identify emerging trends and new markets to target, uncovering opportunities that may not be immediately obvious through traditional methods.

By leveraging geolocation data, AI can help CPG companies identify regions with unmet demand or potential growth. This allows for more strategic market expansion and targeted sales efforts.

5. Optimize In-Store Experiences

AI can be used to optimize in-store experiences through smart shelves that track product placement and customer interaction. By analyzing in-store behavior, CPG companies can adjust product placement, improve merchandising strategies, and offer personalized in-store promotions.

AI-power Augmented Reality (AR) and Virtual Reality (VR) can create immersive in-store experiences that engage customers and drive sales. For example, virtual try-ons or interactive product displays can enhance the shopping experience and encourage purchases.

6. Enhance Product Development

AI can process and analyze large volumes of consumer feedback, product reviews, and market data to identify gaps in the market and consumer needs. This information can guide new product development or the improvement of existing ones, ensuring they align with consumer preferences and have a higher chance of success in the market.

AI-driven simulations and modeling can accelerate the product development process by predicting how new products will perform in the market, allowing CPG companies to iterate quickly and bring products to market faster.

7. Implement Data-Driven Sales Strategies

AI can help CPG companies deliver targeted ads to specific consumer segments based on their online behavior and preferences. This increases the effectiveness of marketing campaigns and drives higher conversion rates.

By analyzing purchasing patterns, AI can identify opportunities for cross-selling and upselling, suggesting complementary or premium products to customers during their purchase journey.

Mind the expectation gap

AI and digital omnipresence empower CPG companies to uncover new sales opportunities by providing deep customer insights, optimizing operations, enhancing customer engagement, and enabling the creation of personalized, seamless experiences across all digital and physical touchpoints.

However, understanding the potential of AI and realizing it are two very different things. Many CPG companies are struggling to overcome the complexities attached to operationalizing GenAI services: these include security, infrastructure modernization, and aggregating and cleaning structured and unstructured data. In addition, compliance issues relating to data privacy and sovereignty are proving particularly thorny and may require expert assistance. Orange Business is not only a Tier One connectivity provider but a global systems integrator, the world’s leading cybersecurity services company, and a pioneer in the deployment of AI services – we are currently helping some of the world’s largest CPG companies bridge the gap between Gen AI Proof of Concepts (PoCs) and fully-scaled production-grade services.

While it will be key to lean into GenAI opportunities, the basics remain critical—always starting with the consumer, generating brilliant creative, using the right channel mix and sufficient spend to engage the consumer with relevant messages. This holistic approach will help CPG companies stay competitive and grow their market share in a rapidly evolving industry.