NEWS

Dec 13, 2024

Instilling a predictive decision making culture will shape Australia’s corporate future - and marketing’s viability

Hamish Mogan

The escalating global chaos is creating upheaval in Australian boardrooms, forcing C-suite leaders to wrestle with determining what metrics to prioritise and which decisions to make. With the consequences of making incorrect choices increasingly severe, leaders find themselves in a state of decision paralysis, as they strive to manoeuvre through the shifting global terrain with limited tools and resources at their disposal.

Looking ahead to 2025, the need for predictive insights to inform decision-making processes is becoming increasingly crucial. No longer can organisations solely rely on past results; they must anticipate and adapt to the unpredictable forces shaping the global economy.

These catalysts are becoming increasingly common; reiterated by the daily waking of uncertain news teetering on  the brink of hot wars to the top of almost any social feed - becoming commonplace for already uncertain Australians. This, in addition to elections, natural disasters and economic disruptions, is driving significant turbulence directly at Australian businesses - hitting consumer-facing brands navigating through shrinking margins and changing consumer behaviours - the hardest.

With 32% of consumers prioritising value for money when they buy, and 19% favouring promotions, these increasingly tech-savvy consumers know how to shop around online for deals, meaning brands are compelled to rethink their strategies to capture attention and drive conversions; building a causal effect where organisations are ignoring brand-building due to opaque, immeasurable, investment pathways - creating a spiralling cyclical behaviour that is hard to pull out of.

The Reserve Bank of Australia's recent insights further underscore the challenges faced by sectors heavily reliant on discretionary spending. From retail to entertainment, businesses are grappling with reduced demand as households adjust their budgets in response to rising living costs - per capita, retail spending in Australia has contracted for the last eight quarters and is now 2.5% lower than June 2023 and 6.3% lower than June 2022. This sustained decline signals not just a shift in consumer behaviour but a huge challenge for businesses, forcing them to reach for multiple levers - many of which are done so with uncertainty - in response: from pricing to tactical channel allocations, to survive and thrive in a hypercompetitive environment.

Industries with high operational expenses, such as manufacturing and transportation, are encountering mounting challenges as input costs rise, squeezing profit margins. This is further exacerbated by the ongoing escalation of operating costs driven by factors like surging energy prices, inflation, and disruptions in the supply chain. Meanwhile, retail businesses are struggling to navigate the surge in expenses related to utilities, wages, and rents to sustain profitability.

To thrive in this volatile environment, corporate leaders are turning to predictive analytics and scenario planning as essential tools to unlock new opportunities hidden within their data. By leveraging novel modelling techniques and simulation technologies, businesses can explore multiple decision pathways, anticipate market trends, and test strategies without the need for real-world trial and error.

For instance, in a scenario where a company faces declining margins and intensified competition, simulation tools can help evaluate the impact of various strategies - from running promotions to ramping up marketing efforts. This proactive approach empowers decision-makers to iterate quickly, measure outcomes, and adjust their course of action swiftly to stay ahead of the curve.

The shift towards a predictive decision-making culture is reshaping the corporate landscape in Australia. By embracing tools that enable rapid simulations and scenario analysis, organisations are equipping themselves to navigate through uncertainty and drive innovation with confidence. 

We anticipate that, in line with Allied Market Research’s predictive analytics CAGR growth (growing from $US10.2bn in 2023 to over $US63.3bn by 2032), operating systems like Prophet will become standard practice across Australian organisations - enabling more agile and smart decision-making to drive sustainable competitive advantage. 

As the landscape continues to evolve, the ability to measure impact with precision has never been more critical. Businesses that integrate sophisticated mathematics into their measurement strategies will gain deeper insights, make more informed decisions, and uncover opportunities to simply make them better - all the way to the bottom line.

This article appeared on AdNews here.

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