Choosing a route to drive growth: How size matters when using insight
Joseph Roche, Insight and Innovation Msc.
Bord Bia’s readiness radar outlined Insight as the area that businesses are least prepared to deal with of all 13 areas explored. The need for support and relative lack of preparedness in this space is driven by the fact that only 16% of companies interviewed have dedicated insight resources in their business, with investment levels expected to remain relatively flat in this space in the coming year (Bord Bia, 2021).
Insight is vital as it keeps businesses informed of developments in the market, but it is also a key input to strategy, innovation and the development of better customer relationships. As such, this is a critical area for support and development in the future.
“In the past, data and insights were often seen as a cost and targeted for cuts. But now it has become a strategic asset. In many food organisations, there’s a growing realisation that consumer-centricity is arguably the most important source of competitive advantage’ (Warner, 2021).
Larger food businesses now have a growing knowledge advantage as they access ever more sophisticated data insight tools not within reach of smaller food businesses. However, smaller food businesses are eroding the position of the big players through heightened agility and responsiveness to trends without needing such tools. Smaller brands are now 65% more likely than larger brands to outgrow their category, according to Bain and Co analysis Bain and Co (2018).
In the context of this article, we will investigate the use of insight and how it relates to business size.
Big business and insight
Food companies are continually pioneering new ways of identifying unmet consumer needs through the use of cutting edge technologies.
“In the insights industry, there is a real gap between what has been traditionally available and what we need today,” (Warner, 2021).
PepsiCo, Nestle, Danone and Unilever are upgrading decade-old techniques, such as consumer surveys, focus groups and retail sales data, which some see as too slow, and not cost-efficient.
Their aim is to “cut through the noise and identify what trends will stick" (Abboud, L, 2019). How might we place safe bets on trends that will jump into the mainstream against a backdrop of a fadish frenzy. Such tech advantages claim the largest food companies can now distil noise into clarity with ever increasing sophistication.
“It is like getting a crystal ball that we all have wanted for the past 20 years,” says Elaine Rodrigo, head of consumer insights and strategy for French yoghurt maker Danone. (Abboud, L, 2019)
Kerry Group and IBM recently launched an artificial intelligence (AI) tool to forecast future trends in food and beverage and guide the development of winning consumer-preferred products. Kerry Trendspotter taps into large scale unstructured data to understand consumer behaviour and anticipate future consumer needs. The tool enables real-time analysis of food-related social media content by digesting vast amounts of data quickly. Then by extracting food items and cataloguing food-related combinations, it can predict the trending food, ingredient and flavour candidates likely to go mainstream, (Foodingredientsfirst, 2019).
PepsiCo is working with five start-ups to build a set of tools knitted together in a proprietary platform that can be used by anyone at the company to spot trends earlier and quickly test out their ideas for products, packaging and advertising messages. Insights are democratized, at the fingertips of its global team when they need them.
Peter Robbins, Assistant professor at DCU Business School brings an air of caution to such tools and states they come with lots of health warnings. “When companies set the parameters on the data and categories they want to hear about and filter out what they refer to as 'noise' - they run the risk of missing out on the very outlying, radical ideas that might just unlock category growth - because if the idea is genuinely new or the insight is original, it's likely to be left on the cutting room floor and be cut out and identified by AI as 'noise''. Another potential mismatch between the tools and the role companies want them to fulfil is that organisations are looking for long term trends; sustainable, strategic growth opportunities - but the Twitter hose data just spews out real-time, spontaneous, self-limiting conversations and the real skill will be in interpreting which signals from the market are worth paying attention to. Hence, it's the role of the ethnographer, of the researcher, or the anthropologist which is vital in triaging those streams of consciousness into some tangible, coherent thread of opportunity” (Robbins, 2021).
Smaller businesses and insight
In most markets, large brands have lost share to local and small insurgent brands. Less than 5% of the growth in US consumer goods between 2011 and 2015 came from the 25 biggest companies. Results are surprisingly consistent across many categories throughout the world - (Bain & Co, 2018).
Winning companies will innovate to grow with new products, by meeting new needs that help elevate their categories to premium status while increasing product penetration. Large companies should not be afraid of smaller “insurgent” brands. “Start them, buy them or ignore them—but appreciate their ability to increase the elevation of categories to premium status and create opportunities” (Bain & Co, 2018).
Critics consistently point to how the emergence of HaloTop, an American no-sugar, low-calorie ice-cream, surprised Unilever and Nestlé, or how BrewDog cemented craft beer as accessible.
Implications for Irish food, drink & horticulture suppliers
There is a burning platform felt by the largest food companies, there is a tension between scale and adaptability, and smaller companies are being seen to take advantage in a fast moving consumer space. The stakes are high for consumer goods giants as online shopping and social media have lowered barriers to entry and eroded the advantages that used to come with scale. Large food companies must have their finger on the pulse of the consumer to inform product development. Retailers have essentially become competitors through their expanded private label offerings and small insurgent companies now out-innovate and out-hustle large established firms, eroding their share in most premium segments (Bain & Co, 2018).
“Small food companies need to use their agility in their favour - As they pick up their market signals more organically. Larger companies are slower to place their bets. They need to be continually persuaded with lots and lots of data. Such companies think global therefore this data can be helpful because they think globally first. This method can tell them that there is a lot of excitement about something in the US and Australia - but nobody is talking about it in Europe and this could be useful information to have. In terms of whether to launch there at all or, indeed, how to tell the story of the brand/product/category if they do choose to launch” (Robbins, 2021).
It will be fundamental to the future success of your business to add real value to a market rooted in real human needs. Such needs can be optimised and refined through the use of in-depth feedback with consumers. Bord Bia offers a range of resources to client companies. BI:TES, is a quantitative tool that iteratively evaluates concepts with consumers to understand their feasibility. Whereas, Taste and Tell quantitatively measures a product's performance and concept appeal with consumers to optimize market success once further developed. Bord Bia will also co-invest in research activity for certain clients in the market. Remember, we all have access to the same information, therefore creating your own data and using it to add uncontested value into the market will fulfil growth potential.
- at their genesis” (2019).foodingredientsfirst.com/. Available at: https://fif.cnsmedia.com/a/__ Z29R1HdVM= (Accessed: 21 June 2021).
- Abboud, L. (2019) Big brands turn to big data to rekindle growth. Available at: https://www.ft.com/content/abc231ac-c288-11e9-a8e9-296ca66511c9 (Accessed: 21 June 2021).
- How PepsiCo is reinventing insights to be ‘faster, stronger and better’ (2021). Available at: https://www.marketingweek.com/pepsico-reinventing-insights-faster-stronger-better/ (Accessed: 22 June 2021).
- HALO TOP (2021) Available at: https://halotop.com/whats-new (Accessed: 26 July 2021).
- How Zappi Works - Zappi (2021). Available at: https://www.zappi.io/web/pages/what-is-zappi/how-zappi-works (Accessed: 22 June 2021).
- Overcoming the Existential Crisis in Consumer Goods (2018) Bain. Available at: https://www.bain.com/insights/overcoming-the-existential-crisis-in-consumer-goods/ (Accessed: 22 June 2021).
- Samuel, S. (2021) Supplier insights: why General Mills is introducing a two-year growth metric. Available at: https://retailanalysis.igd.com/news/news-article/t/supplier-insights-why-general-mills-is-introducing-a-two-year-growth-metric/i/27908 (Accessed: 30 June 2021).
- Bord Bia (2021) ‘Readiness Radar, Charting the challenges and opportunities ahead’, p. 65.
- Robbins, P. (2021). Trend prediction tools and their roles within organisations [In person].