In FMCG, different products can display very different demand characteristics, making categorizing them for segmentation challenging. One way to segment products is the ‘Animal Farm’ method whereby products are assigned an animal identity that best represents their demand behavior. This intuitive way of categorizing like products lays the groundwork to apply appropriate forecast models and tailored demand management approaches. In this article, we will delve into each method’s intricacies, from establishing a solid foundation with statistical forecasting to the nuanced art of forecast value-add. In so doing, I aim to provide insights into how companies can navigate their vast data and product landscapes with structure, precision ...

From Issue: A Spiral Into AI Mediocrity: AI is Not Taking Your Job Anytime Soon
(Spring 2024)

Animal Farm Segmentation: Tailored Strategies for Portfolio Management