The hype of Generative AI is evident, and new applications and opportunities are discovered every day. In 2024, businesses that can experiment with AI and embed it into their processes will set the road towards new, exciting possibilities.
What you need to know about Gen AI in the CPG industry
2023 was the year of Generative AI, and 2024 will be no different. With the interest in this technology growing increasingly, businesses are experimenting and trying new ways to embed Gen AI in their processes, to stay ahead of the curve and be at the forefront of the revolution.
The CPG industry is leading the way: globally, Generative AI in CPG is expected to grow in value from USD 39.2 million in 2022 to USD 283.5 million by 2032, with a staggering CAGR of 22.5% in 10 years.
However, most companies still struggle to understand this technology and how to best implement it to create value and drive growth. While it is true that Generative AI requires specialized knowledge, skills, and resources and comes with challenges and risks, it remains one of the most promising factors for success across industries.
Here is a guide on how to employ Gen AI in CPG and the benefits it can bring.
1. Businesses will have access to more data for CPG Analytics
Data is at the center of today’s businesses. As noted by Forbes, in the era of big data, it’s even more crucial to access accurate, reliable data to generate insights. CPG Analytics on high-quality data has the power to guide decision-making and truly impact your business, but how do you obtain the right data? Unfortunately, it is easy to incur suboptimal data, which can lead to skewed outcomes and wrong decisions:
- Missing data
- Inaccurate data
- Outdated data
- Duplicate data
- Unformatted data
Here is where Generative AI can help. Currently, CPG companies rely mainly on distributors and retailers to collect data, but the advent of Generative AI in CPG offers a new opportunity: AI can collect and analyze enormous amounts of online data and offer CPG insights. It can gather more data, simplify CPG Analytics, and ensure high quality by performing accurate data cleansing.
2. CPG AI opens the door to higher personalization
Personalization matters now more than ever, as it drives performance and better customer outcomes.
A McKinsey report found that fast-growing companies drive 40% more of their revenues from personalized products than slower-growing companies, and 76% of consumers get frustrated with a brand when they can’t find a customized experience.
How can your business leverage the power of personalization to drive growth? CPG AI is the answer, allowing consumers to generate personalized options easily and quickly. With Generative AI, tapping into the revenue stream of personalization becomes easier than ever.
3. Improve marketing strategy with personalization
Personalization applies to marketing, too. Statista considers personalization marketing one of the most indispensable strategies worldwide for B2C and B2B, able to prove much more effective than conventional marketing. In particular, 51% of marketers believe improved customer experience to be the number 1 benefit of personalization marketing.
Generative AI is extremely valuable in personalization marketing, making writing content and interacting with consumers online easier and quicker. Today’s consumers expect content, ads, and interactions to be highly personalized to their industry, segment, and role, and companies can use Gen AI to analyze their target audience and create the perfect marketing content.
However, most businesses already using Generative AI Services in CPG for their marketing strategy don’t delegate the whole workload to Artificial Intelligence. During a March 2023 survey among marketers worldwide, only 4% of respondents said they do not edit AI-generated content before publishing it. The majority (53%) make minor edits, 39% make major edits, and 5% change the content completely.
So, what are companies supposed to do with AI-generated personalized marketing content? The key seems to be always supervising the work and adding some human touch.
4. Smarter factories and improved production
Generative AI in CPG has the power to transform the production side of the industry as well. Plants and factories are becoming more automated, leading to big technological improvements that allow businesses to gather more data, have everything under control, and save time and resources.
In the coming years, we are likely to see a proliferation of high-tech smart factories leveraging the power of artificial intelligence to achieve levels of efficiency unthinkable before.
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5. Generative AI as a Service for Product development
Product development is an area that can benefit greatly from Gen AI, especially in the CPG industry. Fueled by consumer data (like feedback, user behavior data, and market response) and CPG Analytics, it can propel innovation and increase efficiency in the design process.
Here are some ways Gen AI can boost product development:
- Collecting consumers’ feedback and data
- Identify prototype strengths and weaknesses through CPG Analytics
- Identify room for improvement
- Allow real-time feedback loops
- Accelerate idea generation
- Automate and streamline design iterations
- Optimize resources
Generative AI can be applied for new product development and improvements in existing products. Embracing an AI-driven approach such as with GenAI Consulting supports businesses in navigating the difficult landscape of fast prototyping by fostering innovation and reducing time-to-market; ultimately, it can be the vector of success in an increasingly complex and competitive scenario.
6. Anticipating the market: how to switch from reactive to predictive
Businesses already use data analysis to anticipate market aspects (like demand), but AI-powered CPG Analytics can dramatically boost their predictive capabilities. Generative AI can provide deeper, more accurate insights to anticipate trends and even create them; it can improve inventory management and logistics, optimize resources, and lead to more strategic marketing campaigns.
Companies can significantly enhance their data analytics capabilities by adopting AI, making the difference between merely surviving and thriving.
7. Improve customer experience with Generative AI
Generative AI as a Service can be applied to one of today’s most important aspects of business: customer experience.
Seeing that customer experience is such an important factor, how do you enhance it and make it a value driver? The answer, once again, can be Generative AI. Unleash CPG Growth with Generative AI- Download GenAI Primer.
The CX (customer experience) landscape is changing rapidly to adapt to macroeconomic shifts and evolving consumer behavior and preferences. In this scenario, companies must transition to dynamic contact center operations fueled by Artificial Intelligence. Early adopters are already getting positive results by embedding GeneAI into their customer service, completely transforming the customer experience. Read more about Generative AI Customer Use Cases.
CPG AI applications are several and of high impact and have the potential to transform your business and be the differentiating factor between failure and success. There is plenty of room for Generative AI in the CPG industry, and early adopters are gaining an important competitive advantage in a winner-takes-all market. Businesses are now at a crossroads: leap AI and digitalization, or be left behind?