AI market research and consumer insights in CPG (7 examples)

Understanding consumer behavior and market trends is crucial for success in the fast-paced world of Consumer Packaged Goods (CPG).

Traditional — non-AI-supported — market research methods often fall short of providing the real-time, actionable insights needed to stay ahead in a competitive landscape, resulting in the launch of products late and the risk of low product success rate.

This is where Artificial Intelligence (AI) revolutionizes market research and delivers deeper consumer insights.

Let’s explore how AI is transforming market research in the CPG industry and how companies can leverage these advancements to drive growth and innovation.

The evolution of AI-driven market research in CPG

Thanks to the capability of AI to process vast amounts of data quickly and accurately, manufacturers can gain real-time insights into emerging market trends based on many different data sources — e.g., past behavior, social media signals, or predicted future patterns. Automating this data collection and analysis therefore not only speeds up the research process but it can also provide a more comprehensive understanding of the market.

How exactly does AI improve market research?

Market research has always been a cornerstone of the CPG industry, helping companies understand consumer preferences, track market trends, and develop effective marketing strategies. Traditionally, this involved surveys, focus groups, and manual data analysis; methods that — while useful — can be time-consuming and therefore limited in scope.

1. Predictive analytics

AI-powered predictive analytics uses historical data to forecast future trends and consumer behavior based on common patterns. This helps CPG companies anticipate market shifts, plan product launches, or adjust the schedules and budgets of marketing strategies.

2. Sentiment analysis

Sentiment analysis uses natural language processing (NLP) to interpret and categorize opinions from sources like social media, reviews, and other online platforms. By understanding how consumers feel about their products, brands can tailor their messaging, improve product features, and address any negative feedback proactively.

3. Consumer segmentation

AI can quickly identify and create distinct consumer segments by analyzing demographic, geographic, and behavioral data. This allows CPG companies to create targeted marketing campaigns that resonate with specific groups, improving engagement and conversion rates.

For instance, an AI model might identify a segment of health-conscious consumers who prefer organic ingredients, guiding a brand’s product development and marketing efforts.

4. Identification of trends

AI algorithms can sift through large datasets to identify emerging trends and patterns. This capability is particularly valuable for spotting new market opportunities and staying ahead of competitors. For instance, AI might detect — based on social signals or popular content — a growing interest in plant-based foods before it becomes mainstream, allowing companies to capitalize on the trend early.

5. Real-time insights

Unlike traditional methods that need a significant “processing” time between data collection and the outcome of the analysis, always-on AI systems can provide real-time insights. This allows CPG companies to react quickly to changing market conditions, such as a sudden shift in consumer preferences or a new competitor entering the market.

6. Synthetic testing

AI can also create large-scale virtual simulations that mimic market conditions, in a process called synthetic testing, based on real-world data points — which would typically include insights into how consumers interacted with similar products in the past (purchase behaviors, preferences & demographic information), social media signals, or consumer feedback.

This approach significantly reduces the time and cost associated with traditional testing methods, as the validation of concepts can be done at a massive scale by using synthetic data generated by AI from the provided data. Thanks to that, synthetic testing can be used to explore a wider range of scenarios and provide deeper insights into potential consumer responses to new products or services.

7. Competitive intelligence

AI-powered competitive intelligence can provide CPG companies with actionable insights by continuously monitoring and analyzing their competitors’ activities.

For example, AI can track and compare pricing strategies across multiple channels, enabling companies to adjust their own prices in real-time to stay competitive. It can also continuously analyze consumer feedback on competitors’ products to identify opportunities for innovation.

If a competitor’s marketing campaign gains significant traction, AI can help dissect what made it successful using a wide range of publicly available data points, allowing CPG brands to refine their own strategies and proactively respond to market dynamics, ensuring they remain competitive and relevant.

The future of living audiences

Read more about living audiences

The concept of “living audiences” clearly represents a significant shift in how CPG companies will approach consumer engagement in the future: performing market research and validating concepts at much greater speed with high accuracy thanks to AI-generated data.

When the AI models become more integrated within the technological stack of retailers, they will offer increasingly precise insights into consumer behavior, allowing for hyper-personalized marketing efforts that are responsive to even the slightest changes in consumer preferences. What still requires additional data today to run these extensive simulations will inevitably shift towards predictive concepting, and be replaced by real-time sentiment analyses, instantaneous consumer insights, and that will propagate into autonomous pricing optimization and predictive sales analytics.

Benefits and challenges of AI-driven market research

Benefits

Speed and efficiency: AI significantly reduces the time required for data analysis, providing faster insights

Accuracy: AI can process and analyze vast datasets with high accuracy, reducing the risk of human error

Deep insights: AI offers a more detailed understanding of consumer behavior and market trends

Challenges

Interpreting AI insights: Translating complex AI-generated insights into actionable business strategies that non-technical stakeholders can understand

Integration with legacy systems: The integration of AI-driven insights has to be a part of a larger AI strategy

User adoption: The largest benefit of AI integration into market research is helping the existing teams in their daily operations, speeding up their work and improving their outputs. Current employees have to be trained to adopt and effectively use AI tools as a “co-pilot”

Implementing AI in CPG market research

AI is transforming market research in the CPG industry, offering deeper, real-time insights into consumer behavior and market trends. By leveraging AI-driven analytics, CPG companies can enhance their decision-making, create more effective marketing strategies, and stay ahead of the competition.

As AI technology continues to evolve, its role in market research will only become more significant, furthering the need to set a comprehensive AI strategy.