Predictive data analysis can help companies become 'market makers,' consultant says

Leighton, speaking at the Next Innovation Summit recently in Anaheim, CA, told his audience that companies that lead in markets use predictive data analysis to either identify trends in their incipient stages, or better yet, to identify as-yet ill defined consumer needs and create a trend all their own. “Starbucks is a great example of what I call a ‘market maker,’ ” said Leighton, who is the founder of consultancy Abunda Solutions . “They changed coffee from a commodity into an experience.” Fallacy of focus groups While it may be risky to be a market maker, being a me-too company, a market follower, has its own risks in an environment in which 80% of new product launches fail, Leighton said. One way to find yourself in the market follower category is to rely too heavily on the information supplied by focus groups. The focus of this approach is on the past, Leighton said. It can yield good information on what’s currently working, but doesn't provide a lot of insight into desires consumers have yet to express. “A focus group is great if are trying to capture what people currently understand,” Leighton said. And the approach has another failing: People lie. “Consumers will tell you they are very health oriented and then you go into their homes and see all this junk food.” “The key is try to understand how people live and make decisions. The approach is to go into people’s homes and observe how they interact with products in an empirical way. Where do they keep their supplements, for example? In the medicine cabinet? In the kitchen? “Doing it that way you get an insight into what’s important to them, and the better you are at identifying and addressing those needs that have not yet become apparent,” Leighton said. Inflection points So how to wipe the mist off the crystal ball? Leighton looks first at trends that drive market behavior. He breaks these down into cyclical, micro and macro trends. Cyclical trends rise and fall like the tide. These fads can buoy the market from time to time, but don’t fundamentally change it. Micro trends are driven by changes in attitudes and behaviors. The phenomenon of tattoos moving from a ritual in traditional cultures onto the skins of soccer moms is an example of such a trend. And then there are macro trends, such as environmentalism or nationalism, that impose an overarching, top-down influence on market behavior, Leighton said. Leighton uses a concept he calls ‘cross impact analysis’ to try to predict how these trends will interact and to identify future opportunities. The approach is to graph multiple trends over time can show points where many come together. One example Leighton gave mapped the course of trends that included ‘time-starved families,’ health care costs, the rise of Millennial and the aging population on one graph. Seeing where these intersect can provide so-called ‘inflection points’ that can be the starting point of new underlying trends, which can then be modeled for their life cycles, Leighton said. Convenience first Dosage innovation is one message gleaned from the above example. The way the trends come together, Leighton infers that Millennials are seeking alternative health care solutions but will not take the time to understand or comply with complicated delivery modes. One recent supplement launch that calls for two pills five times a day might be a non-starter for this group. “Your product has to have a message of convenience in some form or fashion,” Leighton said. “With all the information out there, there is this white noise hitting us all the time. People want simplicity, organization and direction. They want solutions that are easy to adopt. If I have to understand a lot of things about your product, it’s adding to my stress level.” Another trend Leighton identified for the group concerns a basic human weakness. People say they want to lead healthier lives, but what they really want is to have their cake and eat it, too. “People are looking for lifestyle antidotes. They know what they should be doing but they are not going to do it,” he said. It’s this concept that underlies the whole trend toward healthier snacks. Skating to the puck The bottom line, Leighton said, is that many highly successful companies have used the approach to be first to market by creating the market. Market followers are inherently limited by a defensive, incremental mind set, he said. “The market makers, companies like Apple and Starbuck, thrive on disruptive changes. They anticipate shifts in the market and deliver products that consumers didn't even know they wanted. These companies are focused on predictive market analysis and that allows them to skate to where the puck is going to be,” he said.

Predictive data analysis can help companies become 'market makers,' consultant says

Markets, whether for dietary supplements, functional foods or other consumer products, are divided between “market makers” and “market followers.” You don’t want to be in the latter group if you can help it, said market research expert Peter Leighton.

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