PHOTO BY MICHEILE HENDERSON ON UNSPLASH
When I ask CPG executives what their most pressing problem is right now, they always reply the same thing: doing more with less.
Budgets have been cut, teams have decreased, and growth is becoming more difficult to come by – especially as the economic future grows increasingly unclear. Yet, customer preferences and requirements are evolving quicker than ever before. That appears to be an impossible puzzle. Is that correct?
Being a software engineer by trade, it’s probably obvious that I believe technology holds the key to solving this conundrum. Big data and artificial intelligence, in particular, are primed to disrupt market research and product innovation, in my opinion.
I’ve seen and heard firsthand how CPG executives have used technology to eliminate inefficiencies in their innovation processes during the last six months. Below are the three most notable places.
1. Extending the life of market segmentations
Market segmentations are hugely important in strategic new product development. They help direct where to play, and where not to play. But they’re also incredibly challenging and costly undertakings. They require cross-functional input, senior buy-in, considerable delivery time, and a lot of cash.
With budgets being slashed this year, many companies are in a similar situation: their segmentation is ageing and losing relevance, but they don’t have the funds to commission a fresh analysis. Because market research studies are fundamentally static, they will always meet this issue.
This is when technology comes into play. CPGs are increasingly investing in dynamic segmentation, updating previous studies with third-party data sources such as social to bring them up to date and extend their lives. Without a question, moment-in-time studies have a role in CPG innovation. Nevertheless, understanding the causes of customer behaviour necessitates the use of a predictive, real-time, continuous growth framework. Moreover, when paired with artificial intelligence, social data is particularly capable of offering this forward-looking insight of consumer requirements.
2. Kick the concept testing habit
Let’s go back to the basics. What is the role of concept testing in the innovation process supposed to be? Well, ideally, after the marketing and innovation teams have created a new product idea based on their strategic market research, the best concepts are tested with consumers to validate purchase appeal. That’s how it’s supposed to work.
However, the rise of ‘overnight’ concept testing has led to more and more concepts being tested and re-tested. It’s increasingly used as a creative, iterative tool, rather than for validation, wasting time and money on costly testing when both are in short supply.
Technology can help here, too. Concept creation is part science and part art. By injecting predictive and actionable data earlier in their creative process, operators can drive out waste and create ideas that sail through the concept testing process.
3. Stop chasing data for data’s sake
I’ve never heard of a CPG brand complaining about a lack of data. Furthermore, they are drowning in hundreds of market research studies and data sources, many of which are contradictory or uninteresting. A colossal amount of money is squandered on data that confuses and adds noise rather than clarity.
Thus, as much as I love data and technology, I’m not advising CPGs to invest in every single shiny new dataset or platform that crosses their desk. Not at all.
Finding a source of consumer information that can act as a red thread throughout your whole business and innovation process is critical. You need consumer intelligence to let teams (insights, marketing, R&D, etc.) collaborate and make data-driven choices more quickly.
The best data allows you to define a distinct customer demand state and link it to the product and marketing concepts required to activate it. If you succeed, you will save hundreds of thousands of dollars and cut months off your launch timetable.
CPGs will confront a difficult task in 2023, and digital transformation will not be a cure. Clients are already changing their working methods and even team structures to accommodate more agility and efficiency in this new environment.
But, I believe that the correct technology may enhance results and reduce waste at every point of the innovation stage gate process. In particular, social data is vastly devalued and underused. It’s a low-cost source of intelligence that can alter how CPGs detect, interpret, and respond to customer behaviour.
Every day, your target audience is on social media talking about the goods they want, the things they won’t purchase again, and the things they wish they could buy but can’t find on the shelf……yet! Using this data will be critical for successful and efficient innovation in 2023 and beyond.
Source: Steve King FOR Forbes
