Big Data Can Help Us Understand the ‘New’ Consumer
In today’s fiercely competitive world, products or services are facing one common problem, the old ways of segmenting consumers along broad socio-demographic and class based lines, has ceased to aptly describe the modern consumer, especially in terms of their ‘real-time’ relationship with a brand.
Why? Because Digital technology and ‘Big’ data are changing the way we look at the world today. They are changing the way consumers comprehend brands, increasingly through multiple channels and in multiple ways. This, subsequently, is changing the way that consumer interacting with the brand, and the way they share their experiences. The relationship between business and consumers, whether it is FMCG or luxury, consumer electronics or automotive, is now, forever changed.
Even the very technical bedrocks that have underpinned the business world we have known for decades are changing. Sampling of a demographic segment to find brand insights often takes much longer than necessary and, in today’s world, can mean significantly less. This is because consumers surveyed have their attitudes influenced by fragmented pieces of information that reach them via ever more fragmented channels. Individuals now consume a daily diet of text, image, video and many other formats that appeal to them.
Underscoring this is how the digital world is morphing into something that demands continuous attention, continuous connection, and continuous feedback, anytime, anywhere and on any given subject. Companies now have to deal with a moving target, and it is within big data that we can best understand what has become most important. What aspects of your brand, including anything stemming from your brand, physical or metaphysical, have a significant impact on the consumer in a positive or negative way!
Though there are many challenges, we believe these are not insurmountable, and if well positioned companies today can really tap into an exciting future. No place is this more relevant than in China.
In China there are now some 513 million internet users and will soon have a population bigger than that using intelligent mobile devices. On average these users spend four hours each day online, over 300 million of which contribute to social networking site, Sina Weibo, and relatively new system, We-chat. 84% of all internet users say they split their time online between social networking, video uploading, photo sharing and micro-blogging and as many as 64% say they have purchased something due to a digital marketing strategy. This number will surely rise in the future as everything moves to mobile and China will ‘own’ the largest group of users across all geographical boundaries.
The use of large data analytics in the field of Chinese consumers has rapidly gathered pace, despite a slow start. The importance of Big Data is not just with the ability to collect but in an ability to analyze and extract tangible knowledge about your audience. Huge amounts of data is just that, data, without an understanding of how to segment and what this means to the online habits of an audience then it will be of little use to a company.
In the US, the top spending companies in 2012 on average spent $24 million and those at the other end of the spectrum spent $7 million per company. In March 2013, Tata Consultancy Company, in a survey of more than 1,200 companies in the industry, highlighted that more than half (53%) last year had large data items, and the median across the industry was $10 million. Even though some companies are starting to get Big Data, and what it means to the future of global commerce, there is still plenty of way to go.
Data analytics doesn’t stop within a pure marketing sense. It expands across multiple areas from R&D to customer service. In logistics and distribution Geographical data can show us so much more about people’s consumption habits. In China, digital and big data provides entry for brands into third tier and fourth tier cities where the distribution and retail cannot outreach because of the significant distribution costs. With a rapidly increasing use of mobility connection and internet use, e-commerce will push further the channels to those third tier and fourth tier cities.
Yet, within China, many challenges still remain. A recent Bain’s survey conducted across 40,000 household’s highlights that in theory many Chinese nationals show a vague concern about a brand, however, establishing an intrinsic relationship between ONE brand and a consumer is extremely difficult. Compared to many other markets, the Chinese consumer retains relatively low brand loyalty. Within a particular product type Chinese consumers like to try different brands and compare and discuss online with their peers and friends. This creates problems because the traditional channels of advertising and consumer interaction often fail to make adequate headway. It is here that we see, once again, the potential of data analytics. Large data can be qualified and consumers segmented, providing a truly interactive platform, which, at least, is more conducive to a depth of understanding of the ‘new’ consumer.
Market segmentation allows us to both target and position ourselves in a market. In the past doing this would give very little insight into how the online world is reshaping consumption habits. However, because of a world of data analytics we can measure huge amounts of data in a short space of time, establishing a fusion between online habits and how this correlates to geographic, demographic, psychographic and behavioral patterns and differences.
As an organization, Fleishman-Hillard has been doing this for some time. We have developed many new data-driven research and insight capabilities, which, at its most stripped-down, is a world-class platform to help our clients solve problems. However, as an idea it centers on the notion of true. True data to understand a true consumer.
How we respond, when we respond, and to what extent, will shape the new consumer relationship well into the 21st century. Companies that ensure they develop the capacity to understand real time data that gives a deeper and more nuanced understanding of the consumer will be the ones that gain big from big data.