How to make CPG market research lean(er)

The cornerstones of Lean – validated learning, the Build-Measure-Learn principle, and MVPs are necessary and useful new additions to the CPG market research vocabulary.

Leaning into change

Ready or not, the CPG industry is bound to be disrupted by the flood of changes and trends brought on by millennial shoppers, healthy lifestyle trends, concern for the environment, smaller and local competition, and many others. Ironically, huge companies will need to be able to operate in an entrepreneurial environment where nothing is certain due to fast changes.
One of the best theories about how to deal with this type of environment is the Lean startup principle. According to this movement, a competitive advantage is gained by the speed (and cost) of your learning (or validation of hypotheses). This is best done by going through multiple Build- Measure (Validate) – Learn cycles. In contrast to it, traditional market research in CPG flows in the opposite direction: Learn – Measure (Validate) – Build. Thanks to the decreased costs and increased speed of MR, we can rethink how we conduct research, and spin the circle in the opposite direction by using more agile tactics.

What is the essence of the lean approach?

According to HBR, “It’s a methodology called the “lean start-up,” and it favors experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional “big design up front” development.” One of its cornerstones in the Build – Measure – Learn principle.

Build

To be able to go through the cycle quickly, rather than having the product 100% finished before validating,  companies define Minimal Viable Products – products with only the minimum of necessary features required to sell it. Building MVPs saves time (as the last 20% of development often requires 80% of the time spent in discussions) and prevents mislearning, as the ultimate learning for the lean startup is the real-life validation. Oftentimes in research, studies are delayed because the stimuli are not yet ready, while instead, we should ask ourselves whether they are good enough to test the hypotheses we have.

Validate

Lean research is about validating earlier. In the old paradigm, before a new product is validated, it goes through months of other research, and when the time comes to evaluate it, both you and the research agency are scared to make almost any changes or give recommendations aside from proceeding with the launch – because additional comments delay the launch and slow down the process even more.  So how do we bring validation in sooner in the process and improve it the product (through iterative testing) so that we can kill it much earlier?  Validation is also about the key hypotheses more than the final designs. But the current tested version just needs to be good enough to collect the data. You might not get the complete coloring 100% correct, but at least it is not an abstract description of a product.

Based on validation testing, you learn how to develop a better product. It is not necessarily done to have a yes/no decision.

Learn

Based on the obtained data, you learn and improve the product/design. After every cycle, you have new info to make the product better in the next iteration, but in the meantime, you know whether your product will work or not. With a conventional research process, this is often only at the end of the process.

Insights/market research can help with building a learning environment, but it will need to adapt by doing the following:

• Abandon 6-24 month learning cycles and switch to multiple rounds of learning cycles
• Focus on whether it works or not (validate), and not necessarily on why it works (pragmatism)

Shift from surveys to measuring behavior in a real environment (or at least as close as possible)

Reiterations

To learn faster, it is better to develop an iterative pretesting system to test sooner instead of at the end of the process. Don’t get stuck developing or arguing about the perfect product before checking with the consumers if they like it. It is challenging to know what clients really want, so developing a minimal viable product, and learning from it is better than arguing about the final features. In the words of Unilever’s global media director Alper Eroglu, “[..] start-up mentality is about reiterations. You launch something, and then you improve it.“ He adds further that “ [..] at Unilever, this is difficult because we aren’t used to this mentality. For us, everything needs to be proved to the last point.” Making sure that the idea or a product is tested all the way through and proven to be loved by the potential consumers is tying your hands when it comes to facing fierce competitors.

Virtual test lab

Combining both speed and in-market testing is difficult. You need to manufacture the products, convince retailers, obtain a large enough sample, and make sure that external factors don’t influence your data. One solution is virtual shopping, as it has a 0.8 correlation with real shopping behavior. With virtual shopping, we can build a learning environment and test critical scenarios such as

• Will my product with a recyclable packaging increase sales?
• Is the competitor taking market shares from me?
• Is this the right direction to develop in – does it have potential in the current market?

Market research, in its essence, is about learning how to listen to your consumers and ask the right questions. Lean market research can employ the build-measure-learn loop to go beyond turning ideas into products – its most beneficial outcome is the learning, and the quicker the learning happens, the better the results. Going through this loop as fast as possible enables fresh input for your process – and every part of the circuit should be designed to accelerate feedback.

Want to start testing innovation and shopper with an agile approach? Let’s talk about it! info@eyesee-research.com

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