Market research has always played a key role in consumer marketing. Companies like IDC and Ipsos have built virtual empires based on traditional research methodologies that yield incredibly valuable information. But as the marketing world has gone digital, legacy methods such as focus groups and phone surveys don't cut it anymore. Modern marketing is highly data-driven, and we're not just looking for insight -- we need actionable insight, and we need it fast.
Traditional market research, while valuable, has always had its limitations. Sample size has always been one of the most obvious, because there is simply no way to reach out to and engage every consumer in a market. With a sample that represents one out of every 10,000 Americans, or even one out of every 1,000, insights derived from market research had to be extrapolated, and as such, it is impossible to target on an individual level based on that information.
Another, perhaps more significant, limitation is that market research is almost always self-reported (i.e., provided with a slant) and based on a set of predetermined questions. Whether it is a survey or a focus group discussion, the conversation is always guided by those questions, meaning the insight can never be truly pure. The old saying "do as I say, not as I do" resonates here -- how people behave and what they say are two different things.
Finally, the "freshness" of traditional research results in becoming increasingly problematic. Yes, certain demographic characteristics may be evergreen, but in an era of the 24-hour news cycle, the constantly connected consumer, and 3D printers delivering products on demand, how valid can a month old insight study be? Marketers need information in real time to make real-time marketing decisions.
The ability to tag and capture digital consumer interactions has ushered in a new generation of consumer insights, based on observation and behavior rather than research. The data from these interactions is generated and executed through advanced technology rather than lengthy studies, and for significantly less cost. Today, we have the ability to measure nearly every consumer interaction -- whether it's with mobile devices, display ads, websites or email -- almost any touch point can be accounted for, and we can do so in real time and at scale.
Consider an interesting evolution in consumer insights in the movie industry. As the film business came under attack from television in the early 1950s, rather than guessing what films people wanted to see, studios began to use focus groups to gauge opinions of movies before they came to market. Once the movie was released, studios could then examine box office numbers and post-viewing opinions to help determine what they should produce next. This was the norm until the next big disruptor -- home video -- came along. As Blockbuster Video and other rental outlets became popular, studios could also analyze the rental rates of those movies as another indicator of the popularity and profitability of actors and genres. However, a majority of this analysis happened after all of the money has been spent to make and distribute the movie.
Today, in the era of big data, Netflix has created a model that enables them to observe viewership patterns of programming in real time and use that data to actually create products like their original series "House of Cards" and "Orange is the New Black," both of which have been huge hits for Netflix. The difference here is that Netflix already had a good idea that they would be big hits, based on the behavioral data and insights analyzed in advance of production.
As the above example demonstrates, data-driven consumer insight has the power to completely change a business as well as an industry. After some initial success, Netflix floundered for a while when they could no longer afford to offer new releases at a low subscription price. Based on their ability to derive rich consumer insights in real-time, they were compelled to enhance their business model and begin offering exclusive original content. They have revised their status as a disruptor and are poised to once again become a heavy hitter of entertainment distribution. Comedian Aziz Ansari skipped over the Comedy Centrals and HBOs and took his new standup special straight to Netflix, because it is likely to receive the most effective exposure there.
Big data is disrupting legacy methods of doing business. Consumer insights are no longer gathered in a vacuum. Now, data infuses every aspect of an organization and drives overall business strategies. Brands no longer have to "guess and test" when it comes to distributing products and services, wasting time and money on products or programs that are not going to resonate with their customer base. Now they can examine a mass audience, and then target offerings to smaller segments based on the insights they have gathered at scale, reducing waste, and driving revenue.
The era of traditional market research and consumer insights is over; now is the time for market analytics. The strong research companies like comScore and Nielsen have already replaced their small sample research models with services that provide big data at scale through a combination of technology tags and panels.
So how do marketers adapt to the new era of big data and the evolution of consumer insights?
The major adaptation has to happen at the macro-level; organizations need to democratize consumer insights by not depending on large-scale research studies and instead embracing insights driven from daily consumer interactions across the web, mobile, and social dimensions.
Additionally, marketers need to seek out new and innovative sources of data that are applicable to their business goals, and then find the tools and partners that allow them to analyze that data and glean the insights that can help them inform future decisions. Gone are the days of waiting for quarterly consumer insight reports to publish -- consumer insights should be available hourly, not monthly.
Finally, because of the proliferation of easy-to-use analysis tools, and the easy flow of data, marketers need to break down the silos around research and insights and push the power to analyze and act throughout the organization.
Embracing the era of real-time, big data insights, and ensuring that the data you leverage is accurate, actionable, and agile can mean the difference between thriving and ending up as one of the three "Bs"– Blockbuster, BlackBerry, or Betamax.
Mark Zagorski is the CEO of eXelate.
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