Fundamentals of category management, 8: The power of data and insight

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Waitrose coffee

Insight is a widely used word in our industry. In fact, it would be hard to think of another word as widely used that is so loosely defined and so poorly understood.

Let’s start with the easy bit. What doesn’t it mean? Insight is not just data, market research or facts, though it is often based on them. As an industry we are burdened with too much data, sometimes to the extent that it can obscure from us what should be the most obvious truths. I remember a senior person in a struggling retailer asking me if we were sure customer satisfaction was correlated with sales performance. What do you think?

So it isn’t just data. So what is it? Here’s three definitions.

Insight can be defined as a penetrating discovery about consumer motivation that unlocks value. For instance, Disney’s insight about the value a parent gets from buying a family trip to Disneyland Paris. It is more than the sum of the experiences in the resort. It also includes the joy of the moment when they tell the kids “we’re going to Disneyland”. It includes the kids behaving well as the trip approaches. It includes the memories afterwards. This is really important because a trip to Disneyland Paris is expensive. The insight makes it easier for marketeers to justify the price.

Fundamentals of category management, 9: The basic rules of category growth

Insight can be defined as an understanding about human psychology relevant to profitability in our industry. Take the psychological principle of reciprocity. Human beings are fair-minded. If they are given something, they will typically feel an urge to reciprocate. This is the insight behind free coffee (Waitrose), ‘have one on us’ (Morrisons), or a liqueur at the end of your meal (Mediterranean restaurants). For as long as they remain a pleasant surprise, such gifts are effective, because of the reciprocity they inspire. Consumers reciprocate with their loyalty.

Insight can be defined as an obvious but inconvenient truth. ‘For many, Magnum ice creams are too big to eat more than occasionally’. That’s fairly obvious. But if you then say: ‘So let’s make them smaller’, it becomes inconvenient from a manufacturing and (at least initially) a return on capital perspective. By facing into this simple consumer truth, and doing the inconvenient thing, Unilever has had great success with Mini Magnum.

So insight can be an imaginative leap (Disney), a psychological understanding (reciprocity) or an inconvenient truth (Magnum). Whichever, it is about bringing a consumer perspective to the table, in organisations that are also worrying about shareholders, colleagues, retail customers, and other stakeholders. Insight is critical for the organisation’s long-term health. So start by understanding what it is, and what it is not.

Jeremy Garlick is a partner at Insight Traction

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