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Microbrands and Macrostrategy in Market Research

A piece by our editor's, Lenny and Larry, on the rise of Microbrands and how their growth will change market research.

In her recent post about IIeX North America, Adriana Rocha mentioned that one of her favorite talks was “The Rise of Microbrands” by Richard Jalichandra. This was one of our favorites too. The mission of IIeX is to bring the latest in innovation in insights/research to the wider marketplace. A talk like Richard’s stands out because it isn’t explicitly about research, but rather about a new, important trend in business: New, entrepreneurial products being launched and nurtured on the Amazon platform.

Microbrands

These products have an enormous advantage over a typical new product launched by a startup, in that they don’t have to worry about creating awareness or distribution or fulfillment of orders – Amazon handles it all for them.  Some of these products have already become big successes, selling in the tens of millions of dollars. Even if small individually, as a whole, Microbrands’ sales add up to a substantial amount. Pretty impressive – and a big headache potentially for established brands from multinationals, as these new products fly under the established “research radar”. Nielsen may not be able to see how sales develop over time since it is all done on Amazon, and their survey brand trackers may not be granular enough to pick them up until these new entrants have already developed considerable traction.

But What About Market Research?

Being researchers, we couldn’t help but wonder about the role of market research for these microbrands.  Clearly, Amazon can provide them with an enormous amount of information covering a variety of topics, like sales/conversion, profiles of whom their customers are (thank you, Prime members!), and ratings of the products. But at some point, as their development progresses, they’re going to have to go outside of the Amazon garden to find out important information about customer needs, usage occasions, offline competitive set, etc.

How Are They Going To Do It?

Wouldn’t it be interesting if Amazon decided to start a service to get this kind of information for “their” Microbrands? They could offer to combine new, custom information with the vast data they already hold. This would be extremely powerful for things like targeting of digital ads, a business that is rapidly growing for Amazon. Chew on what that could mean for the market research business.

Since these are entrepreneurial brands that live online, we think it is a pretty good guess that if they feel they need to acquire information outside of Amazon, they’re probably going to turn first to one of the DIY platforms, or to some similar automated technology platform like a Zappi or a Delvinia.  They’re cheaper and faster than traditional market research firms and are arguably a better cultural fit with an entrepreneurial online brand. This would be in keeping with one of the major trends identified in the past several GRIT reports for brands as a whole.

But here is where it gets interesting if we speculate just a little bit. It seems highly unlikely that these Microbrands have anyone on staff that is either a trained market researcher or a “highly experienced user of market research.” They’re entrepreneurs, after all. They’re going to need help both up front in the design phase, and certainly at the backend to derive insights that can drive the right business action. In short, they’ll need some consulting help.

Where Should They Turn?  

The answer to this question becomes a kind of hinge for market research industry strategy. Remember, we’ve been finding in GRIT that research companies have been moving in either a technology direction or a consulting direction, with some companies lately trying to combine both in what we’ve referred to as “full-stack research”.

To the extent these Microbrands ask the automated platforms for consulting help, the platforms have a choice: they can say “sure, we can help”, or they can say, “sorry, that’s not our business model, we’re a pure technology play” (leaving the Microbrands to find their own consulting help)  

If platforms decide that they want to say “sure, we can help”, they need to decide how far along the path of “full-stack” they want to go down, and that becomes an important strategic decision involving organization/headcount/talent/compensation, etc. Effectively they have 3 choices:

  1. They can build that consulting capability internally by hiring the right talent. We’ve seen companies like Qualtrics go down that path. They’ve taken over a lot of tracking studies from other research companies, and because of extensive client demand, have hired a number of senior consultative researchers to work with clients.
  2. They can partner (formally or informally), with outside consulting companies.  
  3. They can turn to a network of “trusted” freelancers.

We don’t want to turn this into a pitch for Savio, the freelancer marketplace we built for the insights industry, but these ideas are an example of the trend that inspired Savio. The trend of “platforms” such as Amazon, Alibaba, Uber, Airbnb, Etsy, etc… powering the launch of new businesses is also at play in market research as the industry adapts to a whole new class of potential buyers generated from these larger platforms. Zappi, AYTM, Delvinia, SurveyMonkey, Lucid, Dynata, and many others are gaining traction to streamline the process of research and align with the needs of emerging Microbrands by providing scale, but the missing step is going to be to scale the need for smart people still necessary to take data to insights and insights to strategic action plans.

The Next Big Shift

We think the “Uberization” of insights is the next big shift that has a strong likelihood of redefining the strategic calculus for both providers and sellers of research. This will turn consultants into Microbrands themselves, who reach the limits of their own scale through partnering platforms that form the connective tissue for the insights supply chain.

There is no escaping the build/buy/partner imperative to meet human capital needs of buyers that technology providers are not well positioned to offer, so perhaps the insights industry needs to proactively start embracing the “Microbrands” shift as part of our own “macrostrategy”. If not, we run the risk of losing out like so many other businesses who missed out on disruptive paradigm shifts. 

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Lenny Murphy & Larry Friedman

Co-Editors, GreenBook Blog