Regional tastes across China vary, so products popular in one area may have a lukewarm reception in another. How could Mengniu Dairy fine-tune its marketing to whet appetites nationwide?
Mengniu Dairy empowered regional offices with the deep insight needed to tailor their marketing promotions to suit local tastes, with a solution designed by IBM and built on SAP Business Warehouse.
Liftssales and profits, putting the company on track to hit its bold growth targets
Up to 77%less time required for reporting
Up to 30%shaved off time to access third-party market data
Business challenge story
Serving hungry consumers
Consumers in China are developing growing appetites for dairy foods. Mengniu Dairy is positioning itself at the forefront of this trend, setting an ambitious target to reach annual revenues of RMB 100 billion by 2020.
To achieve its goal, the company is aligning its marketing approach more closely with consumer preferences. But China is massive, and tastes between different regions vary substantially. How can Mengniu Dairy ensure that its marketing is always on-point to whet local appetites and grow sales?
Xiaoqin Zhao, Chief Marketing and Information Officer at Mengniu Dairy, begins: “In the past, our marketing strategy was set by the company headquarters, then executed by regional offices. We recognized that we were missing out on a valuable opportunity: employees in regional offices have a deep understanding of local trends, tastes, channels and consumers. If we could harness their knowledge and empower them to design and execute their own promotional activities, we could create marketing campaigns that truly resonate with consumers.”
Despite devolving control over marketing, the head office team needed to retain visibility of activities and sales nationwide. What’s more, to support their campaign decisions, regional employees required hard data on local sales. The company set out in search of a solution that could meet both of these aims.
Crafting a recipe for success
Mengniu Dairy engaged IBM® Services to design and build an end-to-end approach and system for marketing management and analysis. The solution would enable the regional teams to analyze and understand local sales data, and fine-tune marketing promotions to help serve and grow their consumer audience.
As a first step, IBM consultants helped Mengniu Dairy to adapt and cleanse the master data from the source systems. This task involved changing workflows and the approach to data management, as well as analysis and reporting. IBM recommended and deployed SAP Business Warehouse powered by SAP HANA as the central information repository, providing a robust, reliable source of high-quality data and analysis.
The solution automatically collects and collates data, and delivers analysis by sales, area, store, costs and much more. Regional teams can drill down into the data, and use the insight to design focused marketing campaigns to suit local consumer tastes.
Managers view reports using Smart BI, while analysts study the data using SAP Analysis for Microsoft Office. SAP Business Warehouse powered by SAP HANA acts as a central data hub, giving the company headquarters visibility of activity nationwide.
“There were several reasons behind our decision to work with IBM,” remarks Xiaoqin Zhao. “For starters, IBM offers a wealth of experience and significant resources in China, and can demonstrate a proven track record of successful SAP implementations. Also, we have been working with IBM for a long time, starting with a major SAP ERP implementation several years ago, and we consider them one of our key strategic partners.
“As always, working with IBM was a pleasure, and the IBM team was highly professional. IBM is different from other implementation companies, because it displays strong dedication to a project and its outcomes. For example, in this project we sometimes needed to work overtime in the run-up to key milestones, and the IBM team was always there with us.”
Xiaoqin Zhao continues: “SAP is another strategic partner for us. We are adopting SAP solutions across our business, because they offer comprehensive functionality and superb reliability to support our growth ambitions.”
By infusing marketing with local trends, Mengniu Dairy is stepping up sales volumes.
“In the past, it was difficult for employees at the company headquarters to keep their fingers on the pulse of the market, because they didn’t have relevant sales data readily available,” explains Xiaoqin Zhao. “Now, all that has changed. Thanks to the SAP solutions deployed by IBM, our regional offices can gain even deeper insight into shopper behavior in their local area – including the quantity of products sold in each supermarket, the percentage of products sold, and the average spend per consumer.”
SAP Business Warehouse powered by SAP HANA is helping Mengniu Dairy learn more about its customers. Xiaoqin Zhao explains: “We have discovered that fruit-flavored milk drinks are popular among consumers in South West China: a region where strong-flavored beverages are often served to guests at weddings. Travel north of the Yangtze River, and you will find that people enjoy drinking plain milk. Folks in Eastern China usually prefer high-end goods, while consumers north of the Yangtze River tend to be more price-conscious.
“With rich insights into local tastes, we can craft promotions that will tempt consumers and grow sales. What’s more, we can make sure that we deliver products only to areas where they are likely to sell. We can even customize certain products to cater to local preferences.
“Because we have rapid insight into sales, we can experiment with new approaches to marketing, halt campaigns that prove ineffective, and scale up ones that are capturing people’s imaginations. Regional offices are driven to succeed, because they have greater accountability for sales in their respective territories. The growth achieved puts us on track to reach our ambitious growth targets.”
With Mengniu Dairy’s previous reporting solution, employees had to wait around 30 seconds for their reports to generate. Now, reports are available in between 7 and 15 seconds, representing a time saving of up to 77 percent.
Additionally, Mengniu Dairy used to purchase reports on consumer purchasing habits from a third-party provider, which arrived 17 days after the end of the relevant month. Now, Mengniu has integrated its SAP Business Warehouse powered by SAP HANA solution with the third party’s database and can generate the reports internally far more rapidly, cutting time-to-insight by up to 30 percent.
Thanks to a pioneering project with IBM Services, Mengniu Dairy has also become one of the first companies in China to create a marketing calendar.
Xiaoqin Zhao continues: “Promotional activities are typically divided between online campaigns run by the marketing team – such as via social media – and offline campaigns driven by the sales team, including multi-buy deals, leaflets, and in-store stands. If your sales and marketing teams operate independently, the events simply won’t match up. To create a real buzz around a brand and maximize sales, you need to coordinate the online and offline events to generate a synergy.
“Working with IBM, we have developed a marketing calendar detailing both our online and offline events for the next year, helping to coordinate the two sides of the coin. Having a clear overview of all events will also help us to work out how budget has been spent, and how much remains, so that we can better plan resources.”
In the past, Mengniu Dairy tracked revenues from each event using spreadsheets, then compiled the results and sent them to managers. The process was time-consuming, labor-intensive and error-prone. Now, the company records the information in SAP – a much more efficient process.
Mengniu Dairy has found another valuable use case for SAP Business Warehouse powered by SAP HANA in its finance department, where the solution is replacing manual ways of working. Switching to SAP enables staff to produce invoices and reports much more quickly, and delivers granular insight into costs – allowing teams to see, for example, the return on marketing campaigns. As a result, the company has been able to reallocate two staff members from data compilation to higher-value work.
The SAP Business Warehouse powered by SAP HANA implementation fits into a broader transformation at Mengniu Dairy, aiming to boost efficiency, remove operational bottlenecks, and grow the business cost-effectively.
Xiaoqin Zhao concludes: “For several years now, we have been working to transform our business, embracing efficiency, digitization and automation. IBM and SAP are valued partners on this journey, equipping us with the know-how and tools needed to realize our dreams.”
Yuan Chen, Director of the Data Analysis Department at Mengniu Dairy, remarks: “The Mengniu Marketing BI project is one of the most representative examples of the close cooperation between Mengniu and IBM. Throughout the implementation, the project has been promoted in the room-temperature, low-temperature and iced-product divisions of our company, and we are on schedule to introduce it in other departments soon.
“We have already integrated all of our internal operational data sources – such as inventory data, sales volumes, order tracking, financial data and market performance – as well as third-party data into the SAP solution. We have built a new situation room to support decision-making at a division level, and through the new project, we expect to improve operational efficiency by over 45 percent.
“The Mengniu Marketing BI project is an important part of our big data blueprint and the first target for our big data campaign. Our aim is to lay a strong foundation for gaining deeper intelligence around finance, production and sales, store analysis, consumer tastes, branding and competitive environments.
“Our Mengniu Marketing BI solution runs on the ultra-high-performance SAP HANA database,” continues Yuan Chen. “By building models and displaying the findings via a user-friendly interface in Smart BI, we can identify the individual needs of our customers. SAP Analysis for Microsoft Office enables users to analyze data from many dimensions in a self-service manner, empowering front-line staff to make better decisions while replacing manual work and unleashing greater productivity.
“Our marketing intelligence is based on actual business needs. Now, data is updated every hour, whereas before, our analysts compiled each day’s data and sent it to managers at the end of each working day. With updates on business operations several times a day, business leaders at all levels can keep a closer eye on their business processes and hitting their targets.
“We will continue to tap into the value of the data to guide our marketing efforts and to support managerial decision-making. We will continue to develop and implement a full set of comprehensive analysis reports for subsidiaries and regional managers. In future, we plan to integrate with additional third-party sources of consumer behavior data, and enhance our big-data analytics capabilities, adjusting our models and calculations in line with business and market changes to optimize our marketing strategy.”
Fei Gao, Group Vice President and General Manager of the Room Temperature Business Division, says: “To realize our strategy and meet our business-development goals, we must harness the power of technology. Solutions such as SAP Business Warehouse not only help us run our business more efficiently, but also help us to make better-informed business decisions.”
Zhiyuan Yan, General Manager of the Sales Management Center, Room Temperature Business Division, adds: “In the new market environment, Mengniu needs to improve its analytical capabilities using BI tools to help enhance its strategy and achieve its business-development goals.”
Shuangli Chen, General Manager of the Management Center of the Low Temperature Division, concludes: “Now Mengniu’s main trading system has been completed, we need to use our BI system for big data analytics and applications to gain insight into rich sales opportunities and to support our management decision-making.”
China’s leading supplier of dairy products, Mengniu Dairy has been listed in the Rabobank Global Diary Top-20 for seven years running, and in 2016 it was listed as the tenth largest dairy enterprise in the world. The company employs more than 40,000 people and operates 33 production centers and 56 factories, generating annual revenues of more than RMB 50 billion (USD 7.57 billion).
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