IBM Scoops Dannon for Big Data

About $83 billion is lost each year in the U.S. as a result of poor customer experiences—roughly the GDP for the entire country of Kenya. In order to ensure its potential profits are not part of that fearsome loss, The Dannon Company announced its partnership with IBM at the latter’s Smarter Commerce Global Summit in Nashville.

The yogurt purveyor is using IBM for “pricing and promotion to help them better calibrate prices to marketing conditions,” said Alisa Maclin, VP of marketing for Smarter Commerce.

At $7 billion, the yogurt market in the U.S. is hugely profitable and highly competitive, which is why the Dannon sales team needs to focus its attention on “executing [its] promotional plans” rather than spending its time attempting to forecast yogurt needs at various retailers in real time, said the brand’s CIO Timothy Weaver.

According to Weaver, IBM’s predictive analytics tools, including the Strategic Trade Planning and Customer Trade Planning solutions, have allowed the brand to thus far increase its accuracy in forecasting and inventory planning from 75% to 98%. In this way, Dannon can work “with retailers across the country to make sure their shelves are filled with the precise product volume and promotions for each store location to meet shopper demand,” said Craig Hayman, IBM’s general manager of industry solution.

Brands have increasingly used analytics to optimize inventory. Although not previously in the direct purview of C-suite marketers,
procurement and supply chain management does have a direct impact on customer experience.

According to IBM’s first-ever study surveying 1,100 chief procurement officers across 22 countries (the results of which were announced at the Summit), there is a notable correlation between procurement performance and profit margins that suggests procurement can, under the right conditions, enhance a brand’s competitive advantage. The study found that brands with top performing procurement and supply chain strategies had 22% higher profit margins than lower performing procurement organizations.