4 Ways AI Is Personalizing CPGs To Meet Consumer Preferences

How do you like your sandwich? Grilled or toasted? With, or without chicken? How much mayonnaise do you ask to be put in it? Which lettuce do you prefer – Romaine or Iceberg?

Welcome to the personalized world of consumer-packaged goods (CPGs). Be it food, beverages, cosmetics or cleaning products, consumers today are buying experiences instead of products – a fact validated by a September 2023 Forbes Advisor article which states that “46% of customers will buy more when given a personalized experience.” Willing to pay extra for such “delightful” experiences, consumers today are vocal about their preferences, which is propelling CPG companies towards knowing, understanding, and caring about consumer sentiment; far more than ever before.

All the available data is pointing towards one inference – CPG companies will gain long-term loyalty and competitive advantage only when they build an emotional connect with consumers; severe economic obstacles, supply chain hurdles, and price sensitivities notwithstanding.

The AI, CPG manufacturer/ retailer, and consumer correlation

It is common knowledge that businesses are now utilizing artificial intelligence- and machine learning-powered advanced analytics tools to gather, evaluate, and utilize consumer data in real time. However, did you know that as high as 86% of consumers approve of brands using artificial intelligence (AI) to meet consumer preferences and increase engagement?

Truth be told, this figure should not come as a surprise. After all, which consumer would not feel delighted to receive advertisements, product information, and purchase suggestions specific to his/her liking and requirement? This is exactly what CPG companies and retailers are leveraging AI for – to personalize content faster, more intelligently, and more effectively given that all personalization processes are data driven.

How is AI personalizing CPGs to satisfy consumer demands?

Through the previous sections in this blog, we’ve spotlighted the role AI is playing in helping CPG businesses deploy personalized marketing at scale. Even as we write this piece, machine learning algorithms are analyzing copious volumes of consumer data – browsing habits, transaction records, social media engagements, and demographic details – to identify preferences and usage patterns. AI interprets this data to reveal valuable insights and discern trends, giving businesses a comprehensive view of customer preferences, forecasting behavior, and segmenting their audience with greater precision.

Against this milieu, we found AI personalizing CPGs (to meet consumer preferences) in the following four ways –

1) By enabling predictive analytics and behavioral insights:

A notable advantage of AI in personalized marketing lies in its ability to forecast customer behavior based on criteria like time taken to complete a transaction, selection/rejection of a particular shipping option, abandonment of an online shopping cart, and so on. By scrutinizing past interactions and behavioral trends, AI algorithms can predict customer needs and preferences. This helps businesses to proactively engage customers with fitting offers, recommendations, and content. While this predictive approach heightens customer satisfaction, it simultaneously augments the likelihood of conversions and repeat business.

2) By revamping customer journey mapping:

CPG-manufacturing companies are, more often than not, extremely decentralized and matrixed. However, by analyzing extensive consumer data, AI algorithms can pinpoint touchpoints across the organization where personalized interactions (when inserted into the purchasing journey) can boost conversions and enhance customer satisfaction. From initial brand awareness to post-purchase follow-ups, AI-driven marketing strategies ensure that customers encounter pertinent messages and experiences at every stage of their journey.

3) By restructuring customer segmentation:

AI will let CPG manufacturers and retailers employ affinity marketing tactics, including grouping users with comparable characteristics that imply a connection. How, you ask? – Simply because AI’s capacity to swiftly process and comprehend data will facilitate the identification of patterns and similarities among shoppers. This will radically transform the way companies reach and sell to consumers.

4) By providing personalized experiences through hyper-personalization:

AI-driven personalization elevates marketing efforts by facilitating hyper-personalization. Through AI, businesses can provide highly individualized experiences to customers in real time. This spans from personalized product suggestions and tailored email campaigns, to dynamic website content and interactions with chatbots. AI empowers businesses to establish unique and pertinent touchpoints, thereby enriching customer engagement and contentment.

In conclusion

Personalized marketing will advance as AI progresses, helping CPG companies forge closer bonds with their customers, increase conversion rates, and secure long-term success in an increasingly competitive market. Clearly, redefining customer interactions and remaining on top of one’s game in today’s ever-evolving marketing landscape requires embracing AI’s potential fully.

That said, it is imperative to address ethical concerns and uphold data privacy standards despite the substantial advantages AI-driven personalized marketing offers. Businesses must ensure transparent data usage, secure customer consent, and prioritize data security to establish trust and retain customer loyalty. Striking the right balance between personalization and privacy is crucial for ensuring a positive customer experience.

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