IBM acquires DemandTec for $440M
DemandTec delivers cloud-based analytics software that enables businesses to examine different customer buying scenarios, both online and in-store. As a result, companies can spot trends and shopper insights to make better price, promotion, and assortment decisions that increase revenue and profitability.
The acquisition of DemandTec will extend IBM’s Smarter Commerce initiative by adding cloud-based price, promotion and other merchandising and marketing analytics to help companies better define the best price points and product mix based on customer buying trends.
“IBM Smarter Commerce is redefining how brands buy, market, sell and service their customers in ways that their customers want,” said Craig Hayman, General Manager of Industry Solutions at IBM. “Bringing science to the art of pricing and promotion is a big part of this strategy, and the combination of DemandTec and IBM will help marketing and sales executives in retail and other industries drive more revenue and increase profitability.”
Organizations are struggling to meet the demands of rapidly shifting customer buying patterns in the era of mobile and social networks. This new digital marketplace requires companies to be highly responsive to consumer demands on the fly. Whether it’s setting and executing the right pricing strategy or the ability to automatically adjust pricing based on online and offline data, being able to rapidly shift to market changes has become a key competitive advantage for global businesses.
IBM estimates the market opportunity for Smarter Commerce at $20 billion in software alone. Extending these capabilities to the cloud gives organizations immediate access to consumer information, providing instant return on investment.
By gaining a quick and accurate analysis of consumer trends, for example, a retailer can predict how consumers will respond to a price change before making that critical decision. A brand manager can adjust the marketing mix for a product to better drive sales in the grocery channel. A merchant and supplier can work together to understand how one shopper segment differs from another to craft the best merchandising plan. By understanding shoppers across channels, companies can adapt more quickly to rising customer demands.
“DemandTec has unprecedented capability to improve customers’ price and promotion tactics on a stand-alone basis and connect retailers and manufacturers for collaborative planning through the cloud,” said Dan Fishback, President and Chief Executive Officer of DemandTec. “IBM Smarter Commerce is the perfect fit for DemandTec. IBM is the only provider of price and promotion offerings within a rich solution set that supports companies’ buy, market, sell and service processes.”
DemandTec has approximately 450 customers worldwide in retail, consumer products and other industries. Retail industry segments served include grocery, drug, convenience, consumer electronics, office supplies, apparel, department stores, and quick-serve restaurants. Manufacturer segments include fast moving consumer goods categories such as food, beverage, and health & beauty. DemandTec also has a portfolio of 31 patents in the areas of pricing, response analysis, and promotion analysis.
DemandTec is based in San Mateo, Calif. and has more than 350 employees, with additional offices in Minneapolis, and international representations in London, Paris, and Bangalore. The acquisition is subject to DemandTec shareholder approval, applicable regulatory clearances and other customary closing conditions. It’s expected to close in the first quarter of 2012.
IBM is a recognized market leader in each of the categories within [slider title=”Smarter Commerce”] “The Forrester Wave: Comprehensive Integration Solutions, Q4 2010”, Forrester Research, Inc., November 9, 2010, “Gartner Magic Quadrant for Marketing Resource Management”, Kimberly Collins, February 1, 2011, “The Forrester Wave: B2C eCommerce Platforms”, Forrester Research, Inc., October 21, 2010, “Gartner Magic Quadrant for Enterprise Content Management”, Mark R. Gilbert, Karen M. Shegda, Kenneth Chin, Gavin Tay, October 13, 2011 [/slider] which was launched in March 2011. DemandTec will extend this leadership by enabling companies to use cloud computing services to gain insights about customer merchandising and pricing preferences to better market, sell and deliver the right product at the right place, and at the right price. DemandTec also expands IBM’s Software-as-a Service (SaaS) strategy by adding additional, subscription-based offerings to IBM’s SaaS solutions portfolio.
Consistent with IBM’s Smarter Commerce strategy, IBM will continue to support and enhance DemandTec’s technologies and clients while allowing them to take advantage of the broader IBM portfolio. DemandTec will be integrated into IBM’s Software Group, which is a key driver of growth and profitability for IBM.