Trade promotions around the world, with a 2 minute survey (fun)

How do trade promotions differ around the world?    They are an out-sized phenomenon in the consumer products industry.   They come in many forms, require much attention, greatly impact manufacturer/retailer volume and profitability, and help...

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Heavy lifting, discrete locations

Have you every operated a fork lift?   It’s fun. Imagine that you are.   You’ve got your pick list, either paper or electronic, and drive into the depths of the warehouse to collect the goods.   Often times these are full pallets of...

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CP business challenges on display in Instanbul

  Recently I had the good fortune to work a bit in Istanbul, Turkey.   While there a really nice fellow name Ihsan guided a few of us on an impromptu market visit of local grocery shops and supermarkets.   Formats include hard...

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Actionable Business Insights Thru Analytics – Supercomputer Not Required

  There is a new world’s most powerful supercomputer. IBM’s Sequoia topped the most recent ranking of the world’s best. With over one and a half million processor cores it clocks in at 16.32 petaflops or 16.32 quadrillion floating operations per second.  I did a little internet searching for estimates of the processing power of the human brain and found figures ranging from around 1 to 20 petaflops.  One petaflop is one quadrillion FLOPS.  Calculations do not equal cognition but these are not fanciful numbers.  So right about now you are living through the point in which a single computer is passing the total computational ability of a single human brain.  Historic! Impressive as this is, in the world of consumer products the issue is not so much about raw computational capability but rather about acquiring, selecting, and using the right information for the business operations' needs.  Both computers systems and human brains need useful information to work with.  For people these are experiences and memories.  At consumer products companies, systems running demand signal repositories (DSRs) bring together a range of data sources for business insights, from which a company can turn insights to actions. DSRs make use of relevant, clean, and harmonized data.  The quest for insights and market success are driving manufacturers beyond internal data such as ERP and enterprise planning systems to external POS, customer loyalty, syndicated and social media data sources, just to name a few.  Some are already held within a CP company and underutilized and some are available but not yet acquired.  Tapping these various data streams type and applying them to manage, improve and optimize planning and operational business processes for better marketplace success is the goal.  Advances in computational capacity are impressive and important.  But don’t forget that plenty of data exist which can be handled by but much more modest machines such as high-performance Netezza appliances. The application of business analytics practices to these data can uncover valueable insights and give guidance for the CP company’s business processes, helping deliver better marketplace performance.  Happily, you don’t need the world’s fastest supercomputer for that! 

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China in the Top Spot

  Happy New Year to you!   That’s the Chinese New Year I mean.  It was November 30, 1988 when I first went to China, taking the old 4-hour train from Hong Kong up to Guangzhou.  Back then, Shenzhen was just a wide spot on the way barely noticeable after crossing the HK/SW border.  On the train ride it struck me that I kept seeing three things:  people, bicycles, and working buffalos on farms.  The roads in central Guangzhou were nearly devoid of individual cars as people peddled en masse.   A mere six year later I returned and took the same train route.  Looking out the window I thought ‘This kind of looks like California now’.  Over the years I kept seeing bicycles, buffaloes and farms replaced by factories, residential towers, automobiles, trucks of all shapes and sizing carrying goods out for export, modern retail outlets, and newly advertised familiar and not so familiar brands.     You probably know that China is an export behemoth and world’s second largest economy.   Increasingly though, it has become a huge internal market itself.   Just for fun I did some internet searching and found these areas where China is the world’s #1 producer or consumer or nearly so.  These quickly turned up:  crude steel in 2011 (44% of global total)*, gold production in 2009 (13% of total)*, automobile production in 2010 (24% of total)*, beer production in 2009 (25% of global total)**, and apple juice concentrate production in 2008***.  In luxury goods purchases the China market was #2 in 2010 with 25% of the global total and is expected to take top spot in 2015.  Also of note, three movies grossed over US$1B worldwide in 2011 and for those China accounted for 5% to 13% of ticket sales****.  I found lots of other example where it takes #1, or is #2 with a trajectory to #1 apparent (some fast food restaurants, certain tablets, etc.).      China has affected the world’s supply chains (apparel, toys, electronics, etc) and direction of capital investments enormously.  Increasingly - where it creates the most revenue for any single market P&L - how companies plan and allocate their market strategies, brand building, promotion dollars and people deployment will be more and more influenced.      How will this affect your business and what should you be doing now?  Or in five short years?   In the meantime . . . Kung Hei Fat Choi!  Wish you a prosperous New Year!     Sources:  *Wikipedia, **topfiveofanything.com, ***Indexmundi.com/USDA, ****boxofficemojo.com    

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Watson – Knowledgeable and More

    Many of you know about Watson.  Created by a team of clever IBMers over a few years, last Spring Watson handily defeated two Jeopardy champions at the game.   If you saw it, you know the story and what Watson was able to do:  listen to the query, make sense of it and understand how to tackle the problem, search a store of information equal to roughly one human memory, identify potential answers gleamed from the information reviewed, calculate a level of confidence with each answer, and then, if Watson was confident enough to risk some winnings by offering an answer, activating a buzzer for a chance to respond.   The questions had a single correct response, such as ‘What is O’Hare Airport’ or ‘Who is Nikola Tesla’.      Yesterday, Watson impressed again.  At the opening day of the National Retail Federation’s annual Big Show, attendees had the pleasure of seeing Watson in action, playing against two intrepid and good-natured human competitors.  Watson won, but that’s not the story.   Among the categories was one for which the answer was a combination of a titles, such as Who Framed Roger Rabbit at Rest (Who Framed Roger Rabbit + Rabbit at Rest) or Million Dollar Baby It’s You (Million Dollar Baby + Baby It’s You).   This is a difficult problem, and was fun and surprising to see.    On TV last year Watson showed himself (permit me to invoke a gender based simply on name and voice) to be very knowledgeable.  He clearly knew quite a lot.  Would I have considered his behavior a reflection of intelligence?  Well, maybe.  But mostly to the degree that he was interpreting a complicated or even tricky query before picking up different clues to find and evaluate the quality of potential answers.  This is still very impressive to anyone who has seen it.  Yesterday Watson was creating an answer for something that doesn’t even exist.  That’s even more impressive, and to my mind a stronger example of intelligent behavior.  Could yesterday’s performance be considered creative?    Watson did create a solution that didn’t exist within its store of information, but the clues were such that they probably pointed at one correct answer.   So what did he look like?  Knowledgeable, yes.  Intelligent, more so than what I noticed before before.  Creative?  Not yet, but the potential seems to be there.  I'm interested to see what he does next.     

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Trade promotion summit – good materials online

 IBM was a sponsor and presenter last month at the Promotion Optimization Institute's important industry event The "Predictive: Path to Promotion Optimization Summit.  POI is the key industry body in the world of trade promotion for cons...

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IBM publishes Trade Promomtion Optimization white paper

 IBM has released just TODAY a new white paper on Trade Promotion Optimization.  This paper shares the insights of IBMers working with consumer products companies around the world with a common focus on Trade Promotion Optimization transforma...

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Who Do You Love More – M or R ?

  Most of us like coupons, or a price reduction at the grocery or retail store, especially for the things we want to buy anyway.  Most of the time that discount is paid for largely by the company who designs and manufactures packaged food, beverage, paper, personal care, or related products.   Let’s call them ‘M’.   M ‘spends’ a lot of money for that – discounts which add up to the equivalent of 10% to 20% or even more of revenue, depending on what data source you look at.  M must love you; that is a lot of investment they are throwing out to shoppers and consumers, albeit broadly and without distinction.  The retailer – let’s call them R - helps by making extra space, or advertising the sale in their weekly circular, but most of the ‘money’ comes from M.  So maybe M loves you more than R. Or maybe not.  Recently I received an envelope from the retailer where I do most of my shopping.  I wasn’t too excited, expecting it to be another version of R’s weekly circular or maybe highlighting some particular items from M companies on sale to everybody.  But lo and behold it was a offer for me and me alone.  The envelope held sixteen separate coupons for items which I had purchased at the store in the past, some recently and some a few months prior.  Of the sixteen, six were for R brand or private label and the other ten were for goods from a number of different M companies.    Food, juice, fresh vegetables, toothpaste, canned goods, a deli product, a cleaning product and other things were all included. I was touched.  R had obviously taken data gleamed form my loyalty card, done the work to get support from a number of M companies, and then sent a truly meaningful offer just for me.   Now, I suppose that the M companies are footing part or most of the bill for the coupon discounts, so they still love me and I appreciate that.  But R made it all happen.  And R is offering me coupons for their own brands too.   That got me thinking.  R is now able to show their love for me as an individual.  Maybe you get these coupons and your local R loves you too, for the person that you are. Recently I have been using those loyalty points programs with a couple of M companies.  But that is a hassle, since I need to find these complicated codes and type them in manually.  I know that M is trying to deepen our relationship but it feels a bit difficult.  Plus, the relationship is still built around their product(s) and not about me in all my dimensions as a buyer of goods.  Contrast that to R who made it easy for me.  I did nothing differently but R is showing how much more they love me now.  They even brought M along for the date.   And the relationship is centered around me.  So maybe R loves me more.  But wait.  Maybe M truly does love me more, but they just can’t show it since so many other things intervene.  I’m so conflicted.  Love deserves reciprocation but I have only so much economic loyalty to throw around and I’m feeling confused about how to allocate it.  So who do you think loves you best, M or R?  And who do you love more? 

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Dual Persona Smart Phones

  Have you used your own mobile device to make telephone calls for work?  Or access email?  Or store sensative information or run business applications?    The BYOD (bring your own device) concept is increasingly topi...

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When Will You Talk With Your Can Of Beans?

  Do you talk to your mobile phone?  Not that way.  I mean using speech as a user interface.   Lately I’ve been playing with that.  It has been a few years since I had bought a mobile phone, so when I signed up for new cell phone service I chose a very good device.  It offers an option for spoken instruction and data input, which is not new.  You talk to it, it records the the sound it hears, analyzes and offers a text which can be accepted.  I’ve done this with emails, for example.  Yesterday I was using the navigator function and spoke my destination, which it understood without a problem.  As I drove off to the destination the device spoke to me, providing directions as the location function followed my movements. Perhaps you have tried speech recognition software with your PC.   Probably you’ve been greeted by a machine when calling ‘customer service’ over the telephone.  Some of you interact with your vehicle using voice.  Many of you saw Watson on Jeapordy.  So I will posit that speech as a user interface is basically mature and its growth is less a matter of better technology and more a matter of adoption. Go back to my device.  If you bought the thing without service it would cost US$500.  It can do a lot more than recognize and respond to my speech, so I’ll make a guess that capability alone would cost US$100.   Throw in Moore’s Law, which posits that technology doubles, or costs half, roughly every 24 months.   Now consider, would a consumer goods manufacturer be willing to add 2 cents to the COGS for a can of beans (or package of macaroni, or bottle of beverage) in order to add a meaningful speech driven user interface?  I think so, if the functionality were rich enough.  Like explaining the product, making suggestions for what to buy along with it, or giving preparation instructions.  How long would it take to drive that US$100 cost down to 2 cents?   About 12 halvings meaning 24 years.   So in 2035 you might be having a conversation with your can of beans.   Personally, I intend to live that long. If the product cost $5 or $10 or more, then the manufacturer might be willing to spend 10 cents for such functionality.   What might you talk about?  “Let’s walk through the preparation instructions and tailor it to your tastes.”   “Hey, that drier was pretty hot.  If you keep doing that I am going to shrink and wear out faster.  Let me tell you some things about cotton.”  “I think you already took one of the pills inside me earlier today, are you sure you want to open me again?”    You might hear that in 20 years. You can choose your own numbers and growth rates and calculate years.  It is even more fun to speculate about what the use cases might be, and how you or your children might be interacting with your pantry some day.       

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IBM at the “Predictive” Path to Promotion Optimization

  IBM will participate in and present at the "Predictive" Path to Promotion Optimization Summit  taking place November 6-8 in Chicago.  This will include findings from our upcoming Chief Marketing Officer Study, which is t...

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