New Rules of Engagement in the Age of Voice-Powered Ecosystems

New Rules of Engagement in the Age of Voice-Powered EcosystemsO C T O B E R , 2 0 1 7

C O P Y R I G H T S A P I E N T R A Z O R F I S H | C O N F I D E N T I A L 3

A G E N D A

1 Intro: CPG’s Changing Landscape

2 AI-Powered Shopping

The Future of Effortless Shopping

The Operating System of the Home

3 The Impact of AI on CPG

Five New Imperatives

4 About the Authors


“ It’s probably hard to overstate how big of an

impact (AI) is going to have on society over the

next 20 years. It has been a dream since the

early days of science fiction to have a computer

that you can talk to in a natural way and actually

ask it to have a conversation with you and ask it

to do things for you. And that is coming true.

B Y J E F F B E Z O S , C H I E F E X E C U T I V E O F F I C E R , A M A Z O N


The rising prevalence of AI

in everyday life is a matter

of expectation and

evolution.

Consumer expectations:

• Zero friction

• Easy anytime access across all devices and

locations

• Predictive Personalization

• Relevant content, offers, and product

suggestions

Evolving technology:

• Gesture-based UI

• Connected home

• Voice-activated interfaces


CPG’s Changing

Landscape: The Beginning

of an AI-Powered World

O P P O R T U N I T I E S F O R I N N O V A T I O N

AI and the services that are built on it—such as voice AI and the connected home—are an opportunity to create

new business value and meet customers’ needs…or risk being disrupted by competitors

that do.

Google Home

Smart Mirror

Alexa

Apple Watch


A virtuous cycle centered around the

consumer access point.

What is the Ecosystem Business Model?

A network-effects-powered gravitational force generated by a combination

of supply, demand, and the means of transaction.

The power of ecosystem companies stems from owning the relationship

with the consumer (as Amazon does, for example) and subsequently

redefining the terms of competition. For CPG brands, this virtuous cycle

manifests itself in 4 ways:

1. Provide superior customer experience (CX) to attract consumers

through convenience, selection, network effects, UI, etc.

2. This data is leveraged in the CX, which again attracts more consumers.

3. More consumers means plugging more data and insights into what

makes a superior CX.

4. More consumers means more suppliers are drawn,or forced, into the

ecosystem — thereby also serving to improve the CX.


A I - P O W E R E D S H O P P I N G

A Future of Effortless Shopping and Automation


“ Products will flow to the household like

a utility, as electricity and water do. For

many products, the shopper will be a

bot, leaving customers with the sole

task of consumption.

B Y N I R A J D A W A R , P R O F E S S O R O F M A R K E T I N G , I V E Y B U S I N E S S

S C H O O L


A future of effortless shopping and

automation

We have already reached a point where consumers can simply announce

their need for a product and a home-based, virtual assistant will add the

item to a shopping list.

Looking to the future, predictive modeling and advanced analytics will be

able to anticipate the needs of the customer and proactively purchase

products with the required frequency and quantity.

With market conditions prompting unrelated companies to battle for the

same customer, success will go to those who leverage the pillars of:

• Consumer relationships

• Data-driven personalization

• AI-powered interactions


CPG brands must quickly embrace

differentiating strategies and disrupt newly

established terms of competition.

T H E O P E R A T I N G S Y S T E M O F T H E H O M E

• Google, Apple, Amazon, Samsung and others are racing to own this competitive

edge

• The winner will be uniquely placed at the center of consumer access to products

and services

• This will forever transform the relationships between retailers, consumers, and

CPG brands.

What about everyone else?

For those that don’t own an ecosystem, where does success lie? Should they:

Try to find a position on the “Smiling Curve” between high-volume, commoditized

products and premium, differentiated offerings?

Become a relevant player within different ecosystems?


T H E I M P A C T O F A I O N C P G

Five New Imperatives


Defining the new rules of CPG

Voice conversational user interfaces (UI) are at the heart of the massive

adoption of personal assistants, and will give power to our AI-enabled

assistants to manage requests, automate preferences, and determine the

flow of products in the home.

In order to meet these evolving customer needs, CPG companies must

expect:

1. Shoppers and consumers will be different species.

2. The classic marketing mix will be organized around the consumer

experience.

3. Machines will facilitate constant auction trading for CPGs.

4. Products becoming services—becoming platforms—powered by user

data.

5. CPG companies becoming responsive networks of value.


1. Shoppers vs.

Consumers

S H O P P E R S A N D C O N S U M E R S W I L L B E D I F F E R E N T S P E C I E S

Soon, devices in the connected home – and their bespoke operating systems – will do the shopping.

In doing so, they become less of a passive filter and more of an active household manager

The consumer’s role will only be to say “yes” or “no”

This doesn’t demand only new CPG marketing strategies, but also reimagined operational structures.


2. Classic Marketing Mix S O O N T O B E O R G A N I Z E D A R O U N D T H E C O N S U M E R E X P E R I E N C E

Artificial shoppers will respond to hard data, not classic shopping journeys or emotional brand narratives.

Consumers will become less tolerant of interruption and products that overpromise/underdeliver.

Rather, it will be the usefulness of services and quality of product experiences that will drive brand affinity and

justify higher price points.


3. Constant Auction

Trading

M A C H I N E S W I L L F A C I L I T A T E C O N S T A N T A U C T I O N T R A D I N G F O R C P G S

AI-powered purchase cycles lead to ultra-high-speed marketplaces. This dynamic becomes similar to an auction

market; for example:

How stock markets are being transformed by AI-powered, high-frequency trading

Amazon’s Marketplace Web Service API by which suppliers respond automatically to price changes in order to

remain competitive

This puts unprecedented pressure on pricing and margins. In response, CPG companies will need to understand:

Complex mixes of data points, preferences, social graphs, and product meta tags

How to influence algorithms rather than the human brain

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makes sense>


4. Products -> Services ->

Consumer Platforms

B R A N D S M U S T C R E A T E A C O M P L E T E C O N S U M E R S O L U T I O N

In order to give consumers a reason to stay with them, CPG companies must learn two things from ecosystem

companies:

How to become an integral, irreplaceable part of consumers’ lives

How to solve the direct-to-consumer relationship equation

The key will be offering a value proposition that stems from putting consumer data at the heart of the experience

by:

Creating services that do something helpful and add value expectations in the category

Merging connected products or additional digital layers with classic, physical products


makes sense>


5. Responsive Networks

of Value

C O M P E T I N G I N F U N D A M E N T A L L Y D I F F E R E N T M A R K E T C O N D I T I O N S

CPG brands must evolve their value networks to compete in fundamentally different market conditions. To do so,

they must:

• Leverage and evolve their biggest strengths – be it cost leadership, operational efficiency, or manufacturing

expertise

• Add new, core competencies such as agility and responsiveness

• Build capabilities such as automation and big data processing

• Establish key strategic partnerships and joint offerings around consumer wants and needs

• Introduce elements into incumbent systems


makes sense>


About the Authors: Pascoe Craig and Ramiro Amaral

P A S C O E C R A I G

Senior Account Director

SapientRazorfish London

[email protected]

Pascoe has worked with clients across a range of

sectors including automotive, technology, education, and

media. He is currently focused on the rapidly changing

CPG sector, working with global clients to reimagine the

role they play in the lives of connected consumers, along

with digital and data’s abilities to drive future value

across marketing, CX, and new business models. In a

previous life, he worked in organizational transformation

and communications in the public sector, supporting

large-scale modernization programs in social and care

services.

R A M I R O A M A R A L

Strategy Director

SapientRazorfish London

[email protected]

Throughout his career, Ramiro has championed a

customer-centric approach to brand and business

strategy across industries highly impacted by digital

transformation and new customer expectations (e.g.,

automotive, retail, CPG, telecom and technology). He’s

now focused on driving future thinking to business

transformation strategies, helping clients to understand

and anticipate the main changes that redefine the rules of

competition, and to envisage the best ways of shaping

powerful propositions and innovations with the customer

experience at heart.

mailto:[email protected]

mailto:[email protected]


SapientRazorfish is a new breed of transformation partner designed to help

companies reimagine their businesses for the connected world.

SapientRazorfish partners with consumer product organizations to strategize,

design and build differentiated, flexible, and compliant digital experiences

that inspire customers to reimagine their personal stories. With more than

12,000 people and 70 offices around the globe, our capabilities span growth

and business model strategy, newtproduct and service innovation, customer

experience, enterprise digital transformation, IT modernization, omni-channel

commerce, precision marketing, change management, digital operations,

digital innovation, data strategy and advanced analytics.

For more recommendations and analysis of CPG's

changing landscape, download the full whitepaper at

https://www.razorfish.com/NewRulessapientrazorfish.com

Copyright 2017 SapientRazorfish

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SapientRazorfish

https://www.razorfish.com/articles/2017/new-rules-of-engagement-in-the-age-of-voice-powered-ecosystems

New Rules of Engagement in the Age of Voice-Powered Ecosystems

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