Ram (Ramakrishnan M): We have been hearing a buzz around “Emerging Markets” for quite some time now. What are your observations, w.r.t. CPG Industry in these Markets? Have the expectations been met?
Imran (Imran Saeed): The Emerging Markets started to deliver a few years back. Hence there was a hype generated that the future growth would be delivered through these markets. When the economic slowdown hit the Developed Markets, however, the ripple effect on these Emerging Markets was worse than expected. Hence, these markets are slowing down. The future outlook certainly seems promising for the Emerging Markets. Markets like China, Brazil and India will be a large part of the future growth. Hence, CPG Industry needs to continue making significant investments here to be successful.
Ram: With respect to adoption of Analytics by CPG firms in the Emerging Markets, what are some of the interesting opportunities or challenges being seen?
Imran: When the Emerging Markets were doing well, ‘Analytics’ was looked at as a “good-to-have” option. With the slowdown and the absence of easy-double-digit-growth, every decision is being critically assessed and re-assessed. Hence, there is a stronger tendency to be data-driven with every decision. Also, it helps to leverage data (and not manual intervention and intuitive decisions) in justifying the lessening slow growth. Hence, analytics usage has become more important.
With the increasing adoption of analytics, some challenges naturally present themselves. One is lack of “clean data”. Since firms have not yet established robust systems to store, clean, retrieve and re-use data in an effective way, the starting of an analytics journey is always difficult.
The second issue is lack of skill. Are people able to ask the right questions around data? Are they working on the right set of hypotheses? Are they able to slice and dice data in an appropriate manner? Is the DNA of a typical data scientist easy to find?
The third issue is lack of belief. With a history of managing through intuition and instinct (and achieving great growth), are people able to adapt to data-driven decision-making? Is there really a commitment on using analytics to be more confident about decisions?
The beauty of the Emerging Markets is that they are evolving at an amazing pace. The consumers are evolving very fast; hence the need to respond fast to the trends – through the use of data – keeps everyone on their toes. Hence, the fourth challenge is the need for speed.
Ram: Data seems to be an issue with every market. Is there something unique about the Emerging Markets scenario?
Imran: In my earlier years of analytics assignments, I worked more with Developed Markets. And there, the challenge was an abundance of data and making sense of everything together in a coherent manner.
In Emerging Markets, as things have been evolving at an extremely rapid pace, organizations and the systems have not evolved fast enough – from a data perspective. They have not perfected their processes….to be able to capture, clean and store their data… for effective analytics. In fact, a lot of data is not at all stored.
Also, with the growth and evolution, there is a lot of churn. People are changing; firms are changing; even processes are changing. When people move, they are literally taking the data with them; for due to lack of robust systems, critical data is often seen to be residing on people’s laptops and minds.
With explosion in the digital/social space, a lot of unstructured data is getting captured; people are yet to clean that and make a concrete sense of the insights lying underneath.
Lastly, with the rapid evolution and growth, everyone is saving data in their own way, in their own systems – further leading to confusion and challenges.
Ram: Can you talk more about the “belief” issue – in moving from gut-feel to data-driven decisions?
Imran: We have been working on Analytics assignments in Emerging Markets for more than 7-8 years. What we have noticed is that they are not able to believe in Analytics because it is often a black box. It is almost akin to voodoo – you throw data, someone plays a trick, and voila you have magical results. If you have been working all your life relying on your experience and gut-feel, you have a natural need to learn more about the black box, understand the logic beneath and then slowly accept it. It is a natural journey for any Manger. The good part is that once people understand how analytics works, they are able to adopt and “run” very rapidly.
Ram: It was interesting to hear you mention about digital and social activity. P&G has made some bold moves by re-directing more than 30% of its ad-spend to digital. How is the action evolving in Emerging Markets – is it early days, or are you already seeing significant steps?
Imran: It is certainly a big question for CPG marketers in the Emerging Markets. Many a time, they do want to learn from and adapt to the lessons from the Developed Markets. Digital is a great example where they are doing exactly that – following Developed Markets. From a CMO’s perspective, when evaluating returns from every $ spent in Digital (vs. other media), the story is strongly in favor of Digital. The cost involved in digital activity is so low that hypothetically everyone wants to evaluate how much (if not all) the money should be spent on digital. However that may be a hurried interpretation of the data. One needs to take a measured view of impact from other media as well as the combination effect of TV + Digital or Print + Digital, which has massive implications on your ROI. Also, unlike TV (for example), the saturation effect in digital can come very soon. Hence you need to be careful of your spend.
Firms need to ask themselves – what is the role of Digital for me? Can I get more sales, or improve brand equity, or gather more insights on consumer behavior? Compared to traditional research methodologies such as surveys or focus groups, analyzing consumers’ digital footprint throws up a lot more and richer insights.
Ram: Thank you for your time. We will discuss the topic of Millennials the next time.
Authored by Ramakrishnan M – Associate Director – Absolutdata.