Price and Product Choice for Consumers

In 2015, New Zealand consumers were introduced to 13,984 new branded products. Nielsen found that only 64 (0.4%) had sales over $NZ1 million, with only 7 products being truly innovative new offerings. The rest were just line extensions. Manufacturers seem to be sticking to rather boring ways of growing their market share and in turn, reinforcing price sensitivity. However, smart, nimble small innovators have a chance to grab a slice of the market if they can look at changing demographics and target those with growing populations. Think Chinese, South Korean, Indian and Pacific Island peoples, as well as the growth in millennials and the over-50s.

Successful Competitive Intelligence

A recent article in Harvard Business Review found that 45% of competitive intelligence (CI) findings weren't used when management was making decisions about strategy. However, those companies who used the power of CI for their decision-making had four common factors:

• The CI analyst was assigned a "sign-off" authority over major decisions.

• Management was open to perspectives that were different from the internal consensus.

• The analyst's report called for proactive action more than reaction.

• The analyst was involved in product launches.

The CI analyst having sign-off for major decisions was the most important factor to getting CI used out of the four reasons above. This would indicate that the CI analyst must sit with the decision-makers and be comfortable debating and influencing others about the CI collected. They can't just drop off the slide deck and leave, but must actively champion the value and opportunity that CI brings, and make it a core component of decisions. They've also got to have "skin in the game", by having their name and research seen to be supporting decisions in a very public way that is accountable. That also helps keep the CI honest and reliable. What's not to like about that!

Free Market Research!

Millie is a new market research tool which gives a lot for free. It brings together market research, news, and reports in one place, with the added bonus of a robust search platform which enables you to filter out the info you don't want. When I tested 'Millie' on a search for avocados and the recent price hike, it directed me to a variety of national and international websites explaining the reasons behind the rising cost of this fruit, as well as analysts reports on large scale growers of avocados, and links to further earlier news reports. The result screen is a bit overwhelming to look at to start with, but once you get to grips with it, the information has been nicely curated, and offers text analytics too. One restriction for me was that it only covers eight sectors at the moment, but they are big ones such as food and beverage, health care, energy etc. Millie is a work-in-progress, so this may change, but even as it stands now, it is a pretty good resource for the desk researcher.

Searching Patents

Our latest newsletter (Insights 13) gives some handy tips on pulling country demographic statistics on just about every country in the world. We also feature a great new DIY tool on how to find valuable patent information. A patent search can highlight who is investing in R&D to be more efficient, and where they are focusing their efforts. Finding this sort of valuable competitive intelligence is usually a job for the expert searcher, but with the tips in this slide deck, you can learn more about the information contained in a patent. As mentioned earlier, patent searching can be fraught with danger, so get in touch with me if you need assistance. I can refer you to an experienced patent researcher.

The Sharing Economy

Uber and AirBnB are changing the face of not only holiday travel, but business travel too. With events such as the World Cup in Brazil and the New York Marathon, these 'sharing' companies help fill the gaps of traditional accommodation and transport providers by providing personalised experiences. Now companies such as Experient, which is the world’s largest third-party meeting management company, are offering conference attendees the opportunity to book AirBnB apartments close to convention centres as well as hotels. Families traveling on holiday, while Mum or Dad go to a conference come to mind as a segment that will want this option.

Competitive Analysis for Decisions

An article in the Harvard Business Review this year explored the idea that companies are spending up large on competitive analysis data and strategies, but they are not being used at the level where it’s needed. The advice is often ignored by senior management, and then companies miss out on opportunities to grow their market, or fail to notice disruptive technology taking business away from them. How can you ensure sure that managers are actually using the competitive information their analysts are producing? One way is to audit decisions made by managers. This is essentially finding out what information they used to make a decision, and why this decision is valid when surrounded by all the other noise swirling around. In turn, managers become better decision makers - they have to use competitive intelligence to plot and defend or champion what happens next. They also get a better sense of what is happening in their market, and the organisation gets ROI from its investment in market research. A win-win for everyone.

Retrospective Competitive Research

The Wayback Machine is a digital archive of older versions of web pages. Business researchers, and competitive intelligence professionals can use older versions of a website for company research. I have used this website to look for deleted products and branding changes, as well as tracking pricing information. It's also been great to find the names and biographies of past management. Not every web page is included but it’s a fantastic resource for building up a picture about an organisation, their products or employees.

Online Shopping Trends

Nielsen’s recent online retail report has driven home the message that the online shopping habits of Kiwis are quickly evolving. No longer a remote set of islands unable to access the latest products, New Zealand can now provide consumers who have access to the internet with a variety of unique and often more cost effective products than found in local stores. But what is driving e-commerce for Kiwis?

The ‘Why Behind The Online Buy’ summarises Nielsen’s report into a 40:40:20 split, finding that convenience, price and range are the main driving forces. Using mobile devices to shop is continuing as a growing trend with 23% of online shoppers buying via smartphones and 19% buying via tablets. Online store owners can help meet the drive for value, thanks to not having to pass on the costs incurred with a bricks and mortar store.

Christopher Adams of the New Zealand Herald last year predicted the growth of the retail trends “show rooming" and "click and collect” for online shoppers; this prediction has proven to be accurate, with a continuation of these trends well into 2015. Nielsen’s report confirms these details with 57% of shoppers having ‘show-roomed’, which is the act of finding a product in store, but then purchasing online for a lower cost.

One downfall to the online shopping trend is the large increase in product returns. Much of this can be attributed to the inability of the customer to see, touch and if applicable, try on the object for themselves, often leading to disappointment.  theregister.co.nz urges New Zealand retailers to consider interactive website features such as comprehensive zoom functions and dressing room style features to combat these high product return rates.

Case Study: Market Scan for NPD

I've just completed a new product development (NPD) project for a team of New Zealanders who have a great idea for a device and app. The thing was, they needed a quick market scan done by someone impartial who doesn't have that emotional link to whether the idea is worth pursuing. Budget and time frames were tight too.

Here's what I found out:

• My clients need to narrow down who their target user is, as the type of device and app is determined by developmental needs, so targeted functionality is key. It also needs to survive the "coolness" test for the users and purchasers.

• The overseas market leader is taking steps to dictate what the materials and safety standards of these devices is going to be. This is a really smart move by this competitor - they are helping decide and drive this important concern of purchasers, plus set the standard. This gives them a lead time over others in the market, as well as positioning them as the device of choice.

• Crowdfunding for these devices is the primary source of money for product development and marketing overseas, with the funds raised ranging from US$300,000 to US$1.2 million. This gives my clients an indication of what is likely to be needed to get their product off the ground here.

• The main competitors are selling the products themselves via their engaging and slick websites, which use entertaining videos to sell. Social media marketing via word of mouth recommendations is absolutely critical for these potential purchasers. My client needs to understand how this type of marketing will need to be employed if they go to market.

• The initial shipments of competitor products have sold out, and the companies concerned are taking names for a waiting list for new shipments. This indicates that there is demand for this product and the type of functionality it offers, for a premium price.

This information is the reality that my clients now need to get their head around before they spend any more money and time. Better to know now, rather than later. Contact me (cathy@heath.co.nz) if you need a market scan.

Top 10 Global Consumer Trends

Here’s a great report from Euromonitor that picks up on common consumer trends around the world. The free report is packed with supporting data, charts, logical analysis, case studies, and specific examples, all written in an easy to understand way. There's a section on how to market to millennials, the growing importance of connected health technology, the consumer as an influencer, and 'sharing' - the rise of lightweight living, where the benefit of belongings such as cars and homes can be shared by others.

If you want to understand how your business can be affected by these big picture trends, this report covers it all.

Cathy Heath's Interview in 'Bay Buzz'

 Cathy Heath, Director of Heath Research Services was interviewed in 'Bay Buzz' about how she helps businesses get their products or services to market. The article discusses how she finds the answers to:

• Will my new product or service be successful, or is someone else already in this market?

• Who are they, and what are their strengths and weaknesses?

• Is this an opportunity - or a danger?

If you know have a need to find out what is happening in your current or new market, or know someone who does, please email Cathy (cathy@heath.co.nz) or phone 06 843 3938 or 027 4393795.

Academic Research and Market Intelligence

Papers published in academic journals or theses give vigor and breadth to market validation. They do this by providing insight into new ideas, products or markets, particularly if it’s a narrow or obscure field of research or a cutting edge development.

Academic articles also can highlight who are the KOLs (Key Opinion Leaders) on a topic. This is useful because it can identify centres of excellence or companies that are researching in that space. Conference presentations are also often covered, which help identify who else is researching your field of interest, what their findings are, what gaps in the research there are, and what their next research strands night be.

Good quality information is primarily available in English language journals, but many foreign language journals can carry vital information not found elsewhere. Crucially, they give insight into local issues, written by local researchers. These articles often have an English abstract, which can be useful. Sometimes it’s helpful to email the authors of these papers to see if they speak English, and are able to supply perhaps a presentation in English, which covers the material you need.

There’s a range of free sources of full-text articles or you can search for fee-based articles published in journals on a multitude of subjects. The most reputable journals will usually charge around $40-$50 each for an article. Here’s some of my favourite haunts:

NZResearch - New Zealand’s largest collection of theses. Here you will find research from students and staff, with most providing the full-text for free.

Google Scholar - A mixture of fee-based and free articles, plus patents and case law.

Microsoft Academic Research - This database can be searched in a variety of ways from discipline, organisation, or conference to name a few. Once you’ve found a citation of interest, you can see where the research has been cited by other researchers, all on one page.

One paper will often lead you onto another piece of relevant research, so remember to keep track of where you’ve been to avoid wasting time later, when you are trying to track down where you read something vital.

Filtering Market Research

So, how do you pull together all the information you have collected when undertaking market research?

First, read through it all, and then take notes from what you have found. I find it helps to arrange it into sections. Depending on what you are researching, these sections might include market statistics, consumer preferences, regulatory, competitor strategies and substitutes, technology etc.

Filter out all the irrelevant or dated info, but be mindful about any vibes about the context in which your product or service operates in. Big picture stuff often dictates individual consumer preferences.

Don’t forget to include visuals. The size of a competitor factory might be 20,000sqm, but a photo of the factory instantly conveys the size, shape, flexibility of operations and type of environment that your competitor has.

Now you can see what market validation info you have.

• What themes or ideas keep repeating themselves? Draw the dots and see what emerges.

• Is the information that you have up-to-date and future-oriented?

• Do you trust what you are reading? Be honest, especially if it goes against assumptions that you’ve made. It could be the difference between success or failure.

• Does the information you have come from a variety of sources? Be aware of bias.

• What info gaps do you have? How can you fill them?

The above gives you a taste of how to use information to make a sound decision based on trends, facts, and context. Sometimes numbers won't match up or information won't be conclusive, or you just can't find that magic market size number that you desperately need. If you get stuck, just phone (027 4393795) or email Cathy for help.

How to use Alibaba for Market Research

Alibaba has been in the news a lot lately. It’s founder, Jack Ma, is China’s richest person, has become the first Chinese national to appear on the cover of Forbes magazine, and in 2014, pulled off the biggest IPO the world has ever seen. There are now rumours swirling around that Alibaba will buy eBay.
 
So what does Alibaba offer to companies looking to do some due diligence on a supplier?  It’s a starting point - nothing more. Even Alibaba admits that 23% of their customers were scammed by a Chinese company. Here’s a few tips to avoid that happening to you.

When using the search box and search filters on Alibaba, you can find out who makes the product you want. Just be careful about those entries that are listed as “Gold suppliers”. These suppliers have been authenticated and verified by Alibaba as legitimate traders, but they have also paid a premium to Alibaba to get this certification. Think of it as a bit like Google Adwords. There’s information to suggest that the checking to get ‘Gold Supplier’ certification may be suspect.

Also check to see whether a particular company’s product offering takes up most of the catalogue on Alibaba. This gives an indication that they understand and specialise in the market, and may have more robust quality standards. No guarantees though.

Another thing to do is to check out their company profile. Here’s you’ll find information on how many quotes they have sent out in the last 30 days, lead times, whether English is spoken, business terms etc.                                                                  

Check out the certification side of things too. You can search for products that have CE standards for example.

When using the search box, change the option from ‘products’ to ‘suppliers’. Here you will see a broad indication of revenue of the supplier, plus their top three markets that they sell to.

Alibaba is a great starting point to locating suppliers in China. You can view a range of products, see certification, find out response rates from a supplier etc. The big caveat with everything is to also get an independent assessment of the supplier. Alibaba have discussion forums where you can look for feedback. However, don’t just trust what is on Alibaba. For starters, consider doing a Google search with the name of the supplier and look for customer feedback or reviews.

Media Monitoring

Market research reports are great to get a feel of a market, but the information can become dated very quickly. A change of government, a competitor goes broke, or new technology can disrupt a market quickly and change consumer preferences. You need to use other information sources to validate what is going on now, and what it might be like in the future. Otherwise, you could be basing decisions on information that is out of date.

So... where do you go to supplement and validate market research info?

• Google News is the first obvious place to start. You can search for the keywords pertaining to your industry and set up alerts so that you can monitor the market in the future.

• News agencies like Reuters and Bloomberg all have websites and Twitter feeds which can help you. Other agencies which offer some free info on global trends include Time and Forbes.

• Twitter (by searching hashtags) and Facebook pages also offer news updates.

• Don’t forget about Idealog as well as Stuff and NZ Herald websites.

• LinkedIn Groups are also a great way to keep up with play. These industry forums are a great place to ask questions about a market. Of course, you need to balance this up with the knowledge that everyone on the forum may have an inkling that you are interested in this specific market, but you can get valuable information and advice.

The info sources above are just a taste of where you can look to check that the information you have is up-to-date. Don't forget to contact any subject matter experts that you might find mentioned in news reports or on Linked In. Most people are only too happy to present their opinions or give advice, providing you are upfront and honest about what you want to use the information for. Competitor websites that have media releases on them are also useful, plus monitoring job websites like Seek over a period of time can give an indication about what new skill-sets are needed to support your competitors' strategy.

Finding Market Share

Information such as market share or the number of widgets sold can be critical to know when entering a new market.

Although getting hold of good numbers can help you decide what strategy to take, it’s only part of the story. The key is to get numbers that you can rely on plus understand the context around them. A sales increase or decrease can be the result of a competitor moving into the market and launching their products, a factory burning down, which stops a product being made, or tough economic times. You can’t understand a market by numbers alone.

So now that I’ve made that point, statistics are often the first numbers you need for DIY market research. The University of Auckland hosts the OFFStats website. It’s easy to search for the statistical information you need, with links to great stats websites from all over the world. Here you can find out how many motor vehicles there are in Italy to which country makes the best use of information and communication technologies.

Market research reports contain great data and context on the size of a market, however they can often be very expensive. If you have spent thousands of dollars developing your product, it can be well worth the investment to get some reassurance and extra information that these reports can give.

There are ways of getting market data for free or little cost. Market research reports are often released with a free abstract that often has some great background data. A simple Google search can locate these.

Slideshare is a collection of presentations that have often been prepared by industry experts. These are free to download and contain data trends on markets. A similar website is Scribd.

We also have NZ Trade and Industry’s market research. It has loads of free research on a variety of export markets. Try them out now!

Google for Market Validation

Naturally when you invent a new product or service, you want to know if anyone else has had the same great idea that you have. Maybe you’d like to find out how big your potential market could be. This is all part of what I talked about in my last article about validating the market.  Your new product or service has to have the potential to make your customer’s life better by solving a problem, plus it has to make you a profit. Remember, if it’s not going to do both of those things, then you need to go back to the drawing board.

Let's look how to use some Google search tools for market validation information. It's not rocket science, and it's easy to do some DIY market validation before you get someone like me involved. 

There’s lots of good, free information that you can find by just using Google. Before you start typing, you need to be thinking of some keywords that will help you find the information that you need. For market validation, this could include phrases or words such as “market size”, “market value”, “market research”, or trends or maybe consumer and preferences. Note the speech marks around the phrases. Google now knows to put those two words next to each other as a phrase.

Another trick I use all the time is the filetype:???? search. If I wanted to find out how many widgets were sold in Vietnam, I could start by typing in the search box: widgets sales vietnam and filetype:pptx into Google. This will look for Powerpoint presentations with those words in them, which often have some great insights on how a widget is selling, or who is buying it. The same works with other types of documents such as pdf, docx, xls etc.

Google News is great for finding out who is also producing widgets in the market, and can give you useful information on their sales, key people, industry trends, and what the future might hold. Use other people’s experiences - good and bad, to help you fine tune your business and your product or service. Use Google’s filter tools for the most recent information to get exactly what you need.

Google Patent is collection of patent documents from the United States Patent and Trademark Office. By typing in keywords about your product, you'll get a list of patents which will give you diagrams of the different types of widgets, plus a description of how they work, and who is responsible for the patent - very useful to get a feel for what is out there! The big disclaimer here is that although Google Patents is a useful tool, it won’t replace the capabilities of a patent expert, and it only has USA patents.

One final tip: don’t rely on Google as the only browser to search with. Try Bing or even DuckDuckGo that won’t keep records of what you search for.

In the next article, I’m going to highlight how you can find statistics on the web. Numbers form the base of any good market validation plan, so it’s very important to find the most reliable data.

Chinese Consumer Preferences

China Skinny always have their fingers on the Chinese consumer's pulse. In one their recent newsletters, they highlighted 5 things to remember about the Chinese marketplace.

1. Find out where Chinese consumers shop, why they do so, and what strategies have other businesses used that have either worked or failed. Consumer preferences vary widely and are becoming more sophisticated. Also be aware that the Chinese government wants to build a stable internal economy, so will be encouraging the rise of domestic brands and protection of their IP.

2. Be bold with marketing - on and offline.

3. Obviously look at the Tier 1 and 2 cities, but don't forget about the potential of smaller cities. The most landlocked province in China was the number one seller of bikinis online per capita!

4. Have a flexible, long-term strategy in China. Keep informed about what is going on and adapt quickly.

5. Be true to your product and brand. Understand your market, the available opportunities, and how your products or services best fit into that market.