McKinsey-on-impact-of-social-technologies-on-CPG-industry
CPG companies, McKinsey says, were amongst the earliest to embrace social media to enhance their marketing and customer engagement. However “most companies are still defining the role of social media in the marketing mix [and] because most companies lack methods for estimating the value contribution of social technology, they continue to work in trial and error mode.”
Notwithstanding this, the commitment of some companies to social media has been huge. The report notes that, back in 2011, Coca Cola was devoting 20 percent of its marketing budget to social media.
While marketing and sales might be the areas to benefit most by exploiting social media, McKinsey’s sees social technologies contributing significantly to the internal efficiencies of global CPG companies. “The potential of social technologies to improve the ability of large, multinational CPG companies to coordinate activities and share knowledge across many brand and geographic organisations and across corporate functions has big implications,” it says.
McKinsey estimates that by becoming ‘networked’ and using social platforms to reduce e-mail use, provide faster access to information and increase collaboration, the CPG industry could improve the productivity of its interaction workforce by 20 to 25 percent, resulting in improvement equal to two to three percentage points margin. “Internal communities, forums and news feeds can speed up the processes of launching virtual teams, finding experts and sharing knowledge.” it says.
Another area where social technologies can offer quick and significant payback is gathering feedback on new products. McKinsey points out that 75 percent of new CPG products in the US fail and only three percent achieve profitable longevity. It says that Social platforms are a powerful source of more detailed and timely information than other research methods and that companies can raise the survival rate of new products by using social technologies to derive richer consumer insights about changing needs.
Another use is rapid market research, an important advantage in a sector where speed of innovation is key to success. The report says that, “by continuously testing ideas with consumers on social networks, one company reduced from nine months to three months the time to bring a new variation to market.”
There are many more valuable insights in the report. Its CPG section is available hereand the full report, here.
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