I submit that our Market Research industry has been experiencing what I’m calling an “Inverted Moore’s Law.”
I’m sure you are familiar with the concept of Moore’s Law… generated by Gordon Moore, co-founder of Intel in 1965, and largely proven today, that computing power would double every two years while costs halved.
If you look at our industry, I’d argue that Moore’s Law has played out in the opposite direction…that quality decreased while costs have increased. This is unsustainable.
The Current State of The Industry
Today the global A&I industry revenue is estimated at $40 to $50 billion dollars, and in the US alone, there are over 5000 companies offering services in this field. And, as clients of these companies, we often measure the cost of single projects in the tens to hundreds of thousands of dollars…and sometimes more.
Yet if you dig deeper to see if quality has increased, you find the opposite. Take basic share measurement panels as an example. As emerging channels like eCommerce and OTC have grown, coverage has declined while costs have gone up. Look closely into the costs we pay, you may be surprised to find items like “mandatory enhancements” and “cost of living” expenses built-in with no meaningful coverage or quality improvement. It’s like P&G saying to Tide consumers that while our cleaning power is no longer removing all your stains, we will be charging you more as our expenses have gone up! Our consumers would laugh at us.
I sometimes compare this to the early days of my career. The limited data we had largely reflected a complete picture of the consumer and the market at that point in time. The quality was also very good as we were getting it straight from consumers to us scrappy researchers who could turn research around at the speed of the market and at costs that in some cases were little more than the bus ticket to the consumer’s home and a small token of our appreciation.
Since then, the world has changed. And the industry has changed, though not all for the better. We find ourselves with incomplete data sets, shallow insights and unsustainable costs per data or consumer connect. We have also seen the gap between us and the consumer increase with a complicated value chain. Yes, the markets are more complex, but the technologies and capabilities available are more advanced. And Moore’s law should have played out.
“Our 100-year-old Industry is Unsustainable”
We are at a critical juncture in the industry, and simply put, the status quo is no longer an option. In its current set-up, our 100-year-old industry is unsustainable.
The time is ripe for Disruption. What we want to do is lead to this disruption, in a productive way. What we at P&G call constructive disruption. Constructive is a carefully chosen word. It’s one thing to disrupt and destroy value, but our job is to disrupt in a way that drives growth and creates value.
Increasingly, with the pace of change in technology, changing consumer needs, vast amounts of data, competition, and business leaders’ expectations – what’s needed from today’s analytics and insights professionals is dramatically different than just a few years ago. In a world of exponential change, the new need and expectation call for a radical transformation in the speed, cost, and quality of insights. If NOW is NOT the time for constructive disruption in our own industry, then I don’t know when that time would be.
Analytics and Insights Ecosystem
At P&G, we have a new Analytics and Insights Ecosystem to enable us to operate at the speed of the markets. A&l at P&G is always looking for more and better ways to discover growth opportunities and insights in order to delight the 5 billion people we serve around the world with superior brand experiences. We do this 24X7 by having our eyes on the consumer and hands on the keyboard.
A&l at P&G follows a three-step approach. It starts with clearly identifying the Business Problem or Opportunity, then Learning & Experimentation, and finally, Activation of Insights. This, along with new technology in learning and experimentation, enables us to learn and act at consumer and market speed.
Now, let’s explore this ecosystem in the context of a real case study. Let’s start with the business opportunity. As P&G looks for growth opportunities, we discovered some of our brands have a market share gap among consumers in income brackets around the US household median income of $60K per year. The first question we must ask is why.
P&G makes everyday household products, about 65, in 70 core categories. Brands like Charmin bath tissue, Bounty Paper Towels, Gain, and Tide laundry detergent, Pantene and Head & Shoulders shampoo, Puffs tissues and Swiffer Dusters. Why aren’t these consumers buying more of our brands?
So why does P&C have a gap with these consumers? Here are the choices:
a. P&C brands are too expensive
b. P&C brands are over-engineered
c. P&C brands are not available
We’ve asked this question to others before and their broad reaction is consistent with what you are telling us that P&G brands are too expensive for this consumer group. This was also the belief for some inside P&G. We assumed our brands were too expensive and this was backed up by traditional research methods like focus groups and panel data confirming that hypothesis. This is why it’s important to start with a well-defined business opportunity, an open mind, and a focus on consumer needs or behavior. Otherwise, it’s too easy to fall back into current beliefs and assumptions. The more clearly this is defined, the more likely you are to be able to come up with a meaningfully new insight or solution.
Let’s continue to look at this problem through the lens of A&l and P&G. We just identified the business opportunity, which is the first of our three steps. The next step is Learning & Experimentation, the heart of A&l at P&G.
Behavioral Science in Experimentation
Learning and experimentation are where P&G is making the biggest transformation in how we learn about our consumers and markets. Today I want to talk about three platforms that are powering A&l at P&G – our Analytics Studios, DIV, and Deep Human Insights powered by Behavioral Sciences.
Let’s start with the Analytics Studio. We believe that working with the most granular level of data possible leads to breakthrough findings that are masked in the high-level aggregation we are used to.
One Analytics Studio capability we’ve developed utilizes granular geo data and is called Neighborhood Analytics. It looks at data at the neighborhood level finding consumers who are quite similar in demographics and purchase behavior. It does this by integrating several data sets, both proprietary and third-party, to look at consumer groups in a more granular way than ever have before.
Moving back to addressing the opportunity with our target households with incomes around the median, let’s look at an analysis we did utilizing this capability.
A Real-time Study
To have a bit of fun today, we conducted this analysis here in the Las Vegas area.
We have a map of the United States with neighborhoods colored based on many different facts including household income, other demographics, and purchase behavior. As we zoom into the Las Vegas area, we found some surprising insights. The neighborhoods colored in blue represent our target households of median income around $60K and the green and red dots represent P&G performance. Within these neighborhoods, we saw performance variations of up to 20 points. Imagine how much an increase in the share of 20 points is worth if executed everywhere! This clearly indicates there is more to consider when it comes to purchasing behavior than demographics alone. Traditional data sets would never have allowed us to get this granular and would have hidden these insights in aggregates. When we start connecting these granular insights with knowledge of distribution and shelf sets, we can drive more targeted action than ever before.
We think of analyses like these as natural experiments. In the past, if we wanted to test different shelf sets or promotions, we’d look forward. We’d find two cities that looked alike, would implement two different strategies, and then read the results. Depending on the category and the vehicle, these forward experiments could take months to execute and read. Our Analytics Studio allows us to look at thousands of natural experiments, in real-time, that is happening every day, week, or year across the country.
This type of analysis tells us the ‘what’, but it’s only dialoguing with consumers that can give us the WHVthat brings a holistic view of the market and consumer to every business decision. Today’s consumer understanding supply chain has grown too long…too complicated…and too expensive. We are at risk of becoming so far removed from our consumers that it literally takes months to set up a simple conversation. No more. Every insights professional should be able to have a dialogue with a consumer at a moment’s notice and be trained to elicit insights that are inspiring. Consumers are at the heart of everything we do, and when we need insight into consumer behavior, we start by observing and listening to them.
This brings us to the second capability we utilize within learning and experimentation – DIV Research. At P&G, we believe every A&I professional should be able to conduct DIV research that elicits feedback and insights directly from consumers in little to no time.
Moving back to our case study, recall we saw very different P&G share performance in very similar neighborhoods, but getting the consumer perspective is critical. We asked consumers who routinely shop in these Las Vegas areas to tell us about their shopping experiences. Within a matter of days, we received over 1,500 pictures, videos, and responses all for less than the cost of plane tickets for your typical group of researchers. And we got quality insights about different shopping experiences from the consumer perspective. The key thing we noticed was how much purchase decisions were influenced by the context of the shopping environment and how the same consumer was choosing P&G more often in some stores than others. Which led us to the question of why.
We can answer this question using the third capability within learning and experimentation – Deep Human Insights powered by Behavioral Sciences.
P&G has moved away from traditional research methods into more behavioral science-based implicit methods that focus on consumer behaviors. Consumers can’t often articulate why they make certain decisions, but we know it’s influenced by things like context, memory, and what just “feels right”. This is why understanding behavior is more important than intention.
We are moving to a point in time where we can leverage the internet of things to get more real-time, behavior-based data that is far better than traditional habits and practices. And as it goes through its own Moore’s Law; devices in the connected home are becoming more accurate, less obtrusive, and more affordable.
Surface-level Understanding with Better Speed, Quality, and Cost.
For the purposes of this real-time case study in Las Vegas, we couldn’t utilize connected home technology, so we opted to talk to consumers in their homes. Yesterday, my team and I did some quick in-context research with a few consumers in some of the neighborhoods in Las Vegas where P&G performs well and where we don’t. We wanted to better understand the WHY behind their choices so we can serve them better. We know as researchers that nothing; whether it’s pictures and videos or connected homes, can replace the power of a one-on-one conversation. And what we found by talking to consumers may be surprising to some of you.
Here are some of the insights we discovered:
We talked to consumers who value convenience and performance even when they have a tight budget and are looking for more sustainable solutions. Let’s hear from this consumer who talks about Tide and Cascade making her life easier. (Video with sound)
We also found consumers who are willing to pay more for products with superior benefits that get multiple jobs done. Let’s hear from a consumer who recently purchased Crest 3D White. (Video with sound)
Without leveraging all aspects of AI at P&G we wouldn’t have gotten to this depth of understanding. Relying on traditional methods or accepting this problem as unfixable would have led us to believe these consumers would never buy P&G as often as other households. But we now have a holistic understanding of the opportunity and what to go do and it was not always consistent with the going-in hypothesis.
So that brings us to the third and final step in P&G’s A&I Ecosystem – Activating Insights.
Based on everything we learned today, what will P&G be doing next to activate our insights across our portfolio of brands 7
We’ll use our geodata to impact our in-store assortment at the most granular level.
We’ll use insights from our DIV research to help consumers, when shopping in-store, understand why P&G brands are right for them.
We’ll use our conversational research to even better communicate the value and superiority of our brands in a way that resonates.
And while that’s what P&G will be doing next to activate our insights, the final question you might be asking based on the new A&[email protected]&G Ecosystem is what will it take to rise as an A&I Professional of the Future?
At P&G we are referring to our A&I leaders as “Rebels with a Cause.” This is a concept I’m borrowing from an NPR Hidden Brain Podcast, and it’s perfect for leading constructive disruption. We are building a tribe of A&I Rebels at P&G with three qualities:
• A sense of Purpose – We grow our brands by understanding consumers better than anyone else. We observe, listen and are be able to empathize with our consumers in all their diversity.
• Unbridled Curiosity – We dig deep to get the real why behind the what. We don’t take what we see on the surface as gospel.
• A Growth Mindset – We take risks, try new things and do our work in radically new ways to transform today’s realities into tomorrow’s possibilities.
Finally, P&G Rebels Activating this New Ecosystem Will Lead to:
• Sharper, more specific Business Focus and Opportunities. This is imperative for quality insights and business impact. This must always be step one of an A&I professional’s job.
• Actionable Accuracy as we invest in data sets and platforms that provide granular details, in real-time to reduce the dependence on slow, and often less accurate research. We are indeed moving towards a world without the need for explicit surveys.
• Better quality insights, and a stronger conviction to
drive action, as we get directly in touch with consumers through DIV and in context research.
• And through all this, we’ll see a powerful business impact that is delivered both faster and cheaper than ever before.
Leveraging our New Analytics & Insights Ecosystem and fueling talented Rebels with A Cause has the potential to give us the real Moore’s Law where the quality of our insights is better, faster and cheaper which will be to the benefit all of us. Most importantly it will benefit the consumer by providing superior brand experiences, and when the consumer wins, we win.
We’ll use all this data as seeds for future innovation in other benefit areas that are important to these consumers.
And most importantly, we will not assume we know what the consumer wants, but we’ll use AI and P&G to go beyond.