Every marketer knows the stat: 80% of new products fail. Or 90%. Or 95%. The precise number differs, but the story is always the same. 

By anyone’s standards, those are daunting odds for businesses that want to innovate and stay ahead of the curve. How can companies buck the trend and increase their success rate? How can you make sure your product is part of the 20% (or 10% or 5%?)

Clearly, it’s vital that any new product or service has to be just right. The question is, what does just right look like? And unfortunately, the answer to that question is not up to you. 

It’s up to your customers.

That means it’s important to find out at an early stage whether or not your concept is going to attract customers to buy or not, and if so, how you can make the most of it.

This is where concept testing comes in.

What is concept testing?

Concept testing is how businesses evaluate and optimise ideas before taking them to market.

The concept in question can be a lot of different things. It might be a totally new breed of product that no one has ever seen before. Or it might be a redesign or rebrand. 

Business questions that concept testing can address include:

  • Does the concept meet customers’ needs? Do they ‘get’ it? Do they find it appealing? Does it give them something they want?
  • Is the price right? What are consumers willing to pay? Is the product commercially viable?
  • How should it be positioned? Where does your idea fit in relation to competitors? Does it suit your brand? What’s your natural place in the market?
  • What details need to be tweaked? How can your concept get better? Is everything working right? Are any features missing?

Concept testing is not a single one-size-fits-all technique, but a whole range of methods that can be combined and tailored to fit the demands of each individual project. 

Why concept testing matters

There’s no avoiding it: conducting proper concept testing requires an investment of time and money. But that’s nothing compared to the potential cost of not testing concepts early on in the development process.

Failed products or services cost businesses not just in terms of wasted investment, but in the opportunity cost of what could have been achieved instead. The same goes for a bad ad or a bad logo design.

In fact, in the worst cases, businesses can suffer reputational damage or harm to the value of their brands by launching a product concept that wasn’t right for the market. Marketing history is littered with examples of products and ads that were wide of the mark. 

In 1985 Coca-Cola famously introduced New Coke – its answer to blind taste tests where rival Pepsi came out top. But the success of brands and products is about more than blind tests, and New Coke flopped. Decades later, it’s still remembered as a major marketing misstep.

Remember Juicero? No? Not many people do. Investors pumped $120 million into the $400 Wi-Fi-connected juice maker in 2016 – even though users could get the same effect by just squeezing the juice pouches by hand. Consumers saw through it, and within two years Juicero had been scrapped.

In 2005 ESPN launched an innovative mobile phone service that incorporated its exclusive sports content. But the price was all wrong, and the lack of handset choices also put people off.

Concept testing reduces the risk of costly failures like these, and increases the chances of hitting on a runaway success.

Ultimately, it’s about proceeding with confidence.

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9 Use cases for concept testing

1. Check whether your ideas will really fly 

Just because an idea feels right to you (or your boss, or your friends, or your mum) doesn’t mean it’s commercially viable. Rigorous concept testing research shows you whether you’re really on to something or not, so you can put a rocket under the ideas that have potential, and not waste time on the ones that don’t.

2. Settle arguments and objectively evaluate ideas

Everyone’s got an opinion, right? Great concept testing can cut through corporate politics, putting everyone’s ideas on a level playing field. It busts groupthink and unites teams behind ideas that have a real chance.

3. Compare rival concepts

Pit your ideas against each other and find out what consumers prefer. Once you’ve narrowed down your choice, you can focus on the ones that performed well.

4. Define your list of features and benefits

Particular capabilities and attributes can have a make-or-break effect on the success of a product. Find out which things consumers really care about (and which ones they can do without)

5. Figure out how to make it profitable

Knowing how to manage your costs and prioritise the investments consumers care about is crucial to success.

6. Improve concepts iteratively

Hone and tweak your concept in response to consumer feedback, then test again. Research might even throw up brand new ideas which you can develop and test.

7. Determine who to target

Concept testing can give you clear pointers as to which demographic groups, geographies or market segments will get as excited about your idea as you are.

8. Decide your communication approach

Setting the right tone and getting the key points across is not something that should be based on guesswork. Try your ideas out in the wild and get valuable feedback.

9. Refine after launch

To hone your offering, and keep it ahead of the competition, testing can continue post-launch. 

Does concept testing really work?

Some in the business world feel that intuition and inspiration ought to be enough to develop great products. True innovation, they claim, comes from maverick geniuses like Henry Ford, who supposedly said that if he’d asked customers what they wanted, they would have said “faster horses”.

The thing is, Ford was right. And that’s why at Kadence International, concept testing is about much, much more than just asking people what they want. 

Good concept testing doesn’t have to mean missing out on ground-breaking innovation or settling for mediocre ideas. It means getting under the skin of your customer and letting their feelings and needs inspire solutions with the most potential.

Sure, asking people what they want or what concept they prefer is part of the story – but only part of it. You also need to tap into the psychology and emotions that drive real world consumer behaviour, and put it all in the context of the trade-offs that consumers make regarding prices, benefits, and competitive offerings.

Concept testing the Kadence way

Concept testing is one of Kadence International’s many market research specialisms. We’ve got many years’ experience of testing concepts in numerous categories, and driving the creation of successful products and services.

Toiletries

What fragrances of shower gel would appeal to young teenagers, and what kind of imagery and language could bring them to life in a way that feels fresh and different?

We conducted research in two iterative stages. First, we ran an online survey among the target demographic to screen a set of early-stage concepts and identify the ones with the greatest appeal. The winning concepts were then explored and further refined in face-to-face focus groups, with an element of co-creation, providing the client with a robust set of high-quality concepts to develop.

Takeaway coffee

A major food and drink brand wanted to know what kinds of iced drinks could prove a hit with customers over the summer.

We ran a creative workshop with the client’s product development and research teams, to develop a series of new concepts and then visualise these with the help of our design team.  We then screened these in an online quantitative test. This allowed us to isolate the most popular concepts and acceptable price ranges. We followed up with focus groups to refine and enhance the most appealing concepts, giving the client a set of strong, worked up concepts to take into development.

Travel advertising

What kinds of imagery, messaging and language would be most effective in ads aimed at grabbing the attention of high-value travellers and attracting them to a holiday destination?

We ran an online quantitative test to evaluate a series of creative routes, looking at a number of different metrics. We began by measuring a baseline level of interest in visiting the destination, so we could identify the option that gave the greatest uplift in interest. The client was then able to create an ad campaign with the confidence that it would have the impact they wanted.

Food

A major food manufacturer wanted to gauge interest among its B2B customers in purchasing via a direct-to-customer (D2C) model, instead of through wholesalers.

We conducted a series of qualitative depth interviews looking at a set of concepts for potential D2C models. This helped the client establish which options resonated, and how they could be further enhanced.

Research methods for concept testing

At Kadence we employ a wide range of concept testing methods, including qualitative, quantitative, and combinations of both. Every project is different, and we always work with the client to come up with the right blend of techniques. 

We always begin by carefully considering what the client really needs. What do they already know, and what stage are their concepts at right now? Do they require high-level responses to a selection of concepts, or detailed feedback on one in particular? Do we need qualitative inspiration or quantitative rankings? It’s questions like these that guide our choice of methods.

Surveys

Online concept test surveys are a powerful tool. They can reach thousands of carefully targeted and engaged consumers, providing rich data that can be statistically analysed, ranked and compared. Online surveys can present choices in a way that mimics real purchase decisions, and use statistical techniques to unpick the relative effect of different attributes such as features and price. Our market research experts design the structure, hone the questions, identify the right respondents and analyse the results to pull out the key insights.

Focus groups

Focus groups – are a tried and tested way of getting rich qualitative input. We bring a small group of consumers together – face-to-face or online – and conduct a carefully guided discussion, often with prototypes or other stimuli to spark conversation. Our skilled researchers know the questions to ask that get to the nub of the issue, how to read between the lines of people’s responses, and how to understand the group dynamic.

Depth interviews

For more detailed investigation, we conduct depth interviews with individual respondents, to explore themes and topics in a way that isn’t possible through other methods. It’s a great way to dig into what really drives people’s decisions and behaviour.

Ethnography

Ethnographic research is the market research equivalent of going on safari. It’s about observing consumers in their natural habitat. We ask consumers to share pictures, make videos and keep diaries, or we simply spend some time with them one-to-one to get a window on their real lives.

Online communities

Online communities are a great way to get wide-ranging feedback from consumers. We run dedicated short-term communities specifically for your research project, where participants can explore concepts, discuss them, and contribute in text, image or video form, just like in any online community environment. We can put them in groups, set them tasks, and ask them questions. The responses we get are rich and immediate. And because communities run over a period of days or weeks rather than hours or minutes, they allow concepts to be iterated as the research progresses.

The role of design 

At Kadence we always approach concept testing with creativity, drawing on our in-house design skills..

Often the early-stage concepts we are asked to test are only roughly sketched out – it might be a selection of words on a Post-It note, or a collage of images found online. No problem. Our in-house designers and creatives flesh out the concept into something that consumers can get to grips with.

It might be a mock-up of an ad, a visual piece of stimulus to represent a new service, a model or prototype of a product, or a piece of test copy for an ad or website. We’re even piloting an augmented reality (AR) tool that will allow us to create digital 3D prototypes, so research participants can use their smartphones to see how a product would look in real life, in their own home, or wherever they happen to be. Compared to a static image, this immersive new method will take things to the next level, and we expect it to be a highly cost-effective way to deliver richer, higher quality insights.

As well as bringing design skills to our concept testing research, our approach is guided by the principles of design thinking.

The five stages of design thinking are:

  • Empathise: Start by seeing the world through your consumers’ eyes.
  • Define: Set out in clear, simple terms the challenge that you’re trying to address.
  • Ideate: Generate ideas based on what you’ve learned. (This is often the point our clients have reached when they get in touch with us – but that doesn’t mean we won’t return again to the first three stages later, to generate new ideas based on the results of testing.)
  • Prototype: This is where it gets real. Create a version of your product, service, ad or design that consumers can see, feel and provide feedback on. 
  • Test: Here’s where concept testing gets going in earnest. When it’s done, you can revisit the earlier steps and come back with something even better.

We believe this approach is a key part of what makes Kadence different.

10 Top tips for successful concept testing

1. Set clear objectives

It’s important to be as specific as possible about what your aims are. What exactly do you need to find out and what is it going to help you do or decide?

2. Don’t fall too in love with your ideas

The whole point of concept testing is to see which ideas are going to work and which aren’t. If you’re too wedded to a particular idea – or too set against another– then you risk heading down the wrong path. Let the consumer voice guide you, and have the courage to let a great idea go. It’s not the last great idea you’re going to have. 

3. Find the right people

It’s important to test concepts on a relevant group of people – those who represent the potential target audience. Kadence International has been running this kind of research for many years, and we’re experts at finding and recruiting participants – even the most  hard-to-reach audiences. Whether you’re looking for a cross-section of your potential audience, a specific subgroup or a handful of super-engaged brand advocates, we can help.

4. Bring it to life

Create stimuli that bring the concept to life in a way that feels tangible and engaging for your consumers.

5. Iterate, iterate, iterate

It can take a few tries to get a concept right, but it’s worth it (remember those stats on how many new products fail?) At Kadence, we have an in-house design team at hand who can bring ideas to life, and then iterate new designs and prototypes at speed, so we can rapidly respond to feedback, make adjustments and test again.

6. Be agile

Concept testing is different for every project, and doesn’t have to follow a rigid path. Expect to revisit and repeat the various steps until you’ve got your concept right. You never know what new ideas, issues and inspiration will come up when you put your ideas in front of consumers. Go with it.

7. Read between the lines

What consumers say out loud is the tip of the iceberg. We also need to think about how they say it, why they say it and what they don’t say. Professional market researchers are trained to see through to what consumers really think and feel – and what that means for what they will buy.

8. See the big picture

Concept testing isn’t just about scores and rankings for metrics like appeal or consideration. Look at concepts in context – think about the emotional response they elicit, what they mean for the direction you’re taking your brand, or how they might overlap with other offerings you already have on the market.

9. Work with a partner with the right processes in place to protect your early stage ideas

One of the most nerve-wracking things about concept testing is putting raw, untested early-stage designs and ideas in front of consumers. What if details end up in the wrong hands? Be sure to work only with trusted partners that have secure procedures and technologies for both online and in-person research. We’ve been doing concept testing research for years at Kadence, so we have stringent processes in place, and our research platforms include built-in security features that allow images to be watermarked, and videos to self-destruct after viewing. In over a decade, we’ve never seen a leak.

10. It’s never over

Once your product is launched and out there for real, you’re bound to learn new things, or want to make changes to adapt to fast-moving markets. Be ready to test out new ideas and keep iterating, so your product can keep getting better and better. 

What is concept testing? Essentially, it’s the process of getting your audience to evaluate or give feedback on an idea before releasing it to the public.

It can be used for adverts, physical products, websites, landing pages, and more. Here are some of the main reasons to use concept testing:

  • It’s a great way to evaluate ideas early on and make tweaks before sending something out to the wider public
  • It helps your team get company buy-in on ideas, justifying decisions by proving they work with empirical data

For these reasons and more, companies draw on the power of concept testing to make sure the ideas they come up with are actually viable in the real world before putting them out.

In this article, we’ll take a deeper dive into concept testing and what it’s all about. We’ll cover how to do it and the steps you’ll need to take.

How Does Concept Testing Work

Concept testing takes different forms depending on what you want to test, but generally, the process involves asking current or target customers e to engage with your concept and then evaluate it – either in person (for instance in a focus group) or online (either in an online community or by completing a survey or questionnaire to evaluate it.)

One of the most popular and effective ways of testing concepts is through an online survey so in this article, we’re going to focus on our top tips for getting this right.

When testing concepts through an online survey we ask questions to determine the appeal of the product, how innovative consumers thought it was, and so on. The goal is to gather feedback and to find out how the typical customer will respond to the concept, along with identifying any areas that need improvement.

So how do you get started?

How To Approach Concept Testing Through An Online Survey

Set a Clear Goal at the Outset

Before beginning, it’s extremely important to set a clear goal for your test. This is crucial because it’s what gives the survey its overall structure and direction.

Ask yourself and your team questions like:

  • Why are you doing this?
  • What kind of action will you take with the results?
  • How does this test fit into your overall strategy?

The answers to these questions will help you select your testing population better, choose the right metrics to track, and conduct a more effective and coherent survey.

Pick the Right Metrics to Track

The metrics you choose to track in your concept test are extremely important. They can make the difference between a useful survey that drives genuine positive change, and one that has very little effect other than to waste resources. Some examples of metrics to track include:

  • Purchase intent (how likely would you be to hit the buy button?)
  • Innovativeness (how innovative is the concept?)

These metrics will form the basis of your questions and shape your survey. Questions should focus on areas such as likes and dislikes, overall appeal, uniqueness, and innovativeness.

Give Your Survey A Clear Structure

Your survey should have a clear and coherent structure. Each section should follow intuitively from the next, with similar questions grouped together. You don’t want participants feeling  confused or frustrated at any point — it should all make sense.

A good way to help this along is by including an introduction section that clearly outlines what the respondent should expect from the survey, , along with instructions on how to complete it.

It’s also important to consider which method you want to use. Here are the main options:

Concept Testing Survey Methods

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The two main types are monadic design, which uses a single concept, and sequential design, which asks the participants to compare multiple concepts.

Let’s break that down a little further:

  • Single-concept (monadic) design. Here participants analyse one concept, learn the features, and then give their feedback and opinions in a survey. It’s a great way to get in-depth responses around one single concept, but it can be time-consuming and expensive.
  • Multi-concept (sequential) design. In this kind of test, participants do all the above, but then move onto another concept and repeat, and so on. It saves time and money by combining multiple concepts into one session, but there is a risk of participants getting bored and giving lower-quality responses as time goes on. What’s more, responses can be influenced by the order in which concepts are presented, so we make sure to always randomise the order to avoid any bias.

How Long Should a Concept Testing Survey Be?

There are many different opinions on how long your survey should be but our view is that it shouldn’t be any longer than 20 -25 minutes, At this point, respondents can suffer from what’s known as “survey fatigue” and the quality of responses can deteriorate as attention drops For example, SurveyMonkey recommend keeping it under 30 questions. Fewer focused questions can be better than dozens of less relevant ones.

Ultimately, it will depend on your concept, your audience, and the resources you have available.

Ask Screener Questions and Demographic Questions

Screener questions are a way to see if your respondents are relevant to your customer base. They’re usually placed at the beginning of the survey, and the goal is to filter out unqualified participants.

You shouldn’t be too specific here — you don’t want to filter everyone out. For example, let’s say you’re testing an online payment service. The screener question might be, “How often do you shop online?” 

Demographic questions usually come at the end of the survey. They’re a way to find out a little more about the people you’re speaking to and . usually focus on things like age or profession. Collecting information on demographics allows you to ensure that your survey is representative, as well as to analyse responses based on age, gender or socio-economic grade to identify any significant differences. Demographic questions can be considered sensitive, so by putting these at the end of a survey, you avoid people being put off from taking part in the survey from the outset.

Send the Survey Out

Once the survey is ready, it’s time to select a sample of people to test it on. This should be  representative of your overall population you are interested in targeting.

Analysis and Action

The final (and most important) part of the process is to analyze the results of your concept test and take action.

The way you analyze the results depends on how the survey was structured. For example, if your survey used Likert scores (asking participants to answer on a scale of ‘very unlikely’ to ‘very likely’, you can use something called top 2 box scores in your analysis. This allows you to use one metric to compare across concepts or attributes. Remember –  never pick a ‘winner’ unless there’s a statistically significant difference.

When you have your results, it’s time to put them to use. You can use your results to justify a product launch, get buy-in for a concept, or fuel further R&D.

When sharing your results, for example with company management, it’s important to be as clear and detailed as possible. Do all the work for them, and leave them in no doubt about your findings.

Concept testing can be an extremely effective way to get hard data in support of a concept. It helps you and your team make clear-headed, evidence-based decisions and create products that delight your customers and drive the company forward.

To find out how Kadence can help you harness the power of concept testing — and take a more data-driven approach to your organisation in general — reach out to request a proposal.

We’ve been working with Bloomberg to understand the priorities, actions and attitudes of business decision makers across APAC as the pandemic progresses. In the second of five waves, we explore attitudes towards travel, media consumption patterns and brands.

Take a look at the infographic for the key insights including:

  • 7 in 10 decision makers say their companies are restricting travel, up by 18% from the last wave in May
  • In 1 in 4 organisations, employees are given the flexibility to work from home.
  • 57% are looking for brands that are customer-focused and are flexible enough to accommodate their rapidly changing needs

Over the past few months, COVID-19 has had a significant impact on how we think and behave when it comes to food and beverage (F&B). When lockdowns were implemented in countries around the world, non-essential retailers were closed, dining-in was prohibited, and supply chains were tested. As a result, buying behaviours and attitudes have changed and F&B retailers are having to respond rapidly. Those that are able to act quickly will be able to emerge triumphant past the crisis, with many new strategies remaining relevant even after the pandemic. 

As countries are opening up, a common question among businesses is ‘what next?’ Governments around the world are trialing different measures to reopen the market, while trying to minimize the likelihood of a second wave of mass infections. Businesses are on one hand rapidly trying to adapt to the latest governmental policies, and on the other, thinking about how they should change to cater to a marketplace that in some ways looks very different. We’ll explore 3 key trends, with our thoughts on what is likely to stay post-COVID when it comes to F&B:

  1. Consumer behavioural changes
  2. Business adaptability
  3. Unfulfilled consumer needs

‘Stay home projects’: behavioural and purchasing patterns arising out of having to eat at home

Short term changes

While purchases of luxury products have largely decreased during the pandemic, there was a sharp rise in everyday products. With the closure of physical stores, and restaurants doing takeaway only, more people embarked on different ‘stay home projects’, experimenting with homemade recipes.

According to social listening data from Circus Social, people in Singapore, Japan, South Korea and Indonesia ended up making more homemade snacks during this period. In China, the sale of egg whisks on online retailer Tmall increased five-fold year on year. In Singapore, essential baking ingredients such as yeast and baking soda were wiped off the shelves in most supermarkets during the first month of the Circuit Breaker, and many consumers looking for alternatives online. This shift has had a huge impact on supermarkets and grocery retailers, forcing them to look for alternative sources of supply and diversifying their supply chain strategy.

The surge in interest in ‘stay home projects’ has also led to a dramatic increase in the viewership of inspiration channels as well as recipe searches, with Instagram-worthy home café recipes trending on social media shortly after they were posted. This presented opportunities for brands to think about showcasing their products through strategic product placements on these channels. This may not be a novel strategy, but it has become highly relevant given the larger share of eyeballs on these channels during this period. In addition, we see F&B brands offering home cooking meal kits, riding on the wave of ‘stay home projects’ and engaging with partners to showcase the ease of using these meal kits online.

Long term trends

We believe that many of these trends will persist even after lockdown. More people, including newbies in the kitchen, have found a love for cooking and baking, while homecooked meals have also brought many families closer together. With the increased appreciation towards ‘home projects’, we are expecting more people to cook at home than in pre-COVID times.

Improving e-commerce channels and offline-to-online services will be also important to meet the needs of consumers in the future. F&B retailers will need to up their e-commerce game. While brick and mortar stores will still remain relevant in the post-pandemic world, this period has shown the importance of having a strong e-commerce presence and robust supply chain. Consumers will become more used to shopping for groceries online, especially for products that they cannot typically find in the brick-and-mortar stores. If F&B brands want to extend their reach to a wider audience through e-commerce, the time to do so is now.

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Adaptability: the virus has become the catalyst for tech and sales model evolution for F&B retailers

Short term changes

With every crisis, there is opportunity. COVID-19 has accelerated the evolution of the food retail space, and retailers are adapting in order to realign with the shift in purchasing priorities and new lifestyles.

When bubble tea stores were mandated to close during the Circuit Breaker in Singapore, some partnered other restaurants to continue their sales. Some cafes offered coffee subscription plans for the caffeine-deprived, and others introduced ‘Circuit Breaker meals’ to go along with their drinks. Restaurants that were limited by physical space, or located in less accessible areas, are now able to be on a more level playing field with other restaurants, as long as they have presence online and support home deliveries.

For some brands, the pandemic had a positive impact on their business as they discovered new opportunities online. More consumers got to know some establishments through social media and review sites, meaning that these brands are now able to reach more customers than ever before. However, being able to realise these positive outcomes depended on how fast retailers could adapt to the F&B landscape in lockdown. Whilst some partnered with established food delivery apps such as GrabFood or Deliveroo, others drew on their own staff for deliveries and adopted alternative ways of ordering, such as using SMS/WhatsApp, Instagram messages, or their own websites. During lockdown, consumers were more tolerant of the usability of the platform – instead being able to demonstrate that you were adapting quickly to meet consumer needs was more important.

Long term trends

In the long run, restaurants need to reassess the competitive landscape in order to continue to stand out post-pandemic. Every aspect of the typical sales funnel, such as brand awareness, consideration, and trial, would have shifted due to the purchase behavioral changes during the stay home period. Previously unknown brands may have gained popularity as they reached more consumers’ homes. Consumers will also have different assessment standards for restaurants post-COVID, such as hygiene standards. Retailers therefore need to reconsider their USPs to stand out amongst new competitors in the market.

Unfulfilled need: starving for experiences – an area brands can focus on during and post COVID

Short term changes

As the pandemic subsides, will restaurants still retain their delivery model? Yes and no. Less popular food places, and those restricted by physical location or the space required for social distancing may continue to improve their online platforms to expand their reach through deliveries. But, high-end restaurants and cafes may not. While taste is a critical component of the F&B experience, it has to go in hand with the service, the ambience, and even the company while dining in. Psychological research has also shown that the sense of taste plays only a small role in the whole dining experience. It is a multisensorial experience, which can be best presented in the curated setting of a restaurant, with its choice of plating, lighting, background music, and interior design.

Even though there are do-it-yourself packs for bubble tea or cocktails, for most the ambience of eating or drinking out is unbeatable, so F&B retailers will need to consider how they deliver the experiential aspect, whilst social distancing continues, in order to differentiate from other brands.

Medium to long term trends

Post pandemic, consumers who have been starved of in-restaurant F&B experiences will be hungry for these – and may not mind paying a premium. How can F&B retailers tap into this need while keeping in mind the greater expectations for hygiene standards?

Against, this backdrop, there’s an opportunity for F&B outlets to increase and monitise service personalisation. Having more attentive service, customisable menus and dishes, or even food that can ‘interact’ with the diner – basically things that cannot be recreated at home – can be considered by F&B retailers.

How should you position your advertising as consumers emerge from lockdown with new expectations of brands and a different lens on marketing?

Discover the key learnings from our proprietary study, Brands Exposed, with over 4,000 consumers across the UK, US and 8 Asian markets by watching the webinar below.

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The economic impact of the COVID-19 pandemic in various markets has been undeniable. Some sectors like travel and hospitality have been hard-hit, while physical retail has suffered badly too due to social distancing and lockdown measures. Workers in these industries are affected as well, with their livelihoods threatened by uncertainty and instability. Within this context, money worries are certainly in the minds of many, as they struggle to make ends meet.

Even amongst the fortunate who still have their jobs, it is likely that they would have been impacted as well, albeit at a different level. Without having to worry about the ‘now’, they would be thinking about the ‘next’ and the ‘near future’. Economic downturns are not new, but one caused by a global virus outbreak is a little harder to manage and predict. As such, the more financially-minded consumer will have to start to think about what their investment portfolios should really comprise, how they can be economically-sheltered from the next disaster, and what kinds of financial planning will allow them to not just weather the storm, but also thrive in the long run.  

So what should retail banks, financial institutions and fintech entities prioritize, as the pandemic improves? What role do these organizations need to play in their customers’ lives, and on what kinds of principles do their strategies need to be based? We explore 3 key areas: consumer spending patterns, investing and cash, sharing our thoughts by examining what is likely to change in the post-COVID world, and what will remain the same.

Consumer Spending Patterns: Between Saving and Spending

Short term changes

Within Asia, two markets that recently relaxed their lockdown situations were China and South Korea. In both cases, there were instances of what is now an increasing familiar term in post-COVID coverage: ‘revenge spending’. The Hermes flagship store in Guangzhou saw its biggest single-day earning ever, when millions of Yuan were spent by previously cooped-up shoppers on luxury items. While in Thailand, which recently lifted the ban on alcohol sales at retail level, saw unprecedented levels of consumers binge-buying wines, beers, and spirits.

Regardless of the market and product category, one thing is common: perceived scarcity will motivate consumers to spend disproportionately in the short term. This also illustrates how the fundamental principles of behavioral economics and the multitude states of cognitive biases (too many to name here) are once again proven true.

Long term trends

In the longer term though, what are we to make of consumer spending and saving mindsets, in turn motivating actions/behaviors, which will be meaningful for financial entities to action on?

We see two likely scenarios, each combining a certain degree of emotional and rational assessment of how individuals see their ‘now’ and ‘(near) future’:

  1. Excessive fear and over-reaction to the economic fall-out of the pandemic and feeling the extreme need to be more assured/confident of their financial states, leading to reduced spending/motivation to seek out additional/side income
  2. Resignation and coming-to-terms with their helplessness when it comes to managing their finances (i.e. surrendering to the insurmountable force of macroeconomic changes), and maintaining the status quo, feeling good about creating/maintaining their sense of ‘normal’

There will certainly be many shades between these two extremes, just as there will also be minorities falling outside of these as well (e.g. increased spending/acquiring material goods to achieve the sense of security), but what’s certain is that financial institutes will have to play the role of showing the path to fruitful savings and meaningful spending, without leaning too far into one side or the other. An established bank that has a reputation for best-in-class credit cards in consumers’ minds may take the opportunity to come up with a savings product that validates a consumer’s side hustle, while a fintech that’s trying to break into the travel space may have to use this chance to re-think what their value-proposition really is to consumers who have to temporarily shelve their wanderlust.

Underlying all these, of course, is the presumption that the entity has a ‘trust bank’ upon which to draw notions of credibility and capability; all the money in the world thrown behind a huge messaging campaign in the post-COVID world will not help, if that trust was not already there in the consumers’ pre-COVID reality. 

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Investing: Between Risks and Returns

Short term changes

In the pre-COVID days, any sort of consumer research on investment products/journeys/choice and preference of investment instruments, often boils down to 3 main points:

  • How clearly the product information is introduced, and how much of its mechanism is understood
  • How well the investor can conceptualize the product for himself/herself, and how he/she imagines it within his/her portfolio
  • How he/she feels about it on the overall level

This combination of rational considerations and emotional reassurances will likely not change dramatically in the ‘new normal’, but there is the need to acknowledge the likelihood of investors perceiving the market to be more VUCA (i.e. volatile, uncertain, complex, ambiguous), thus leading them to re-assess whether it’s the ‘right time’ to be investing in the first place.

Based on past economic downturns, alternative investment instruments (e.g. art, whisky, coveted luxury brand handbags, etc.) have also started to become more commonplace and offer investors another way to grow their money. However, the mechanisms of such tools are often not clear, and usually complement a portfolio that’s still predominantly stocks/shares driven. Insurance-based products are also believed to be a likely winner in the world of money management; as consumers become more risk-averse, bonds and capital-guaranteed products are logically seen to be aligned with immediate appetites.

Long term trends

All that said, though, it is still necessary to highlight that very few investors carry out investments purely motivated by fear of losing; the savvy ones are aware of the notion of calculated risks, and the really experienced ones within that small bunch of savvy investors also know that ultimately the global market is very much sentiment-driven (read: emotions, cue behavioral economic principles again). This highlights the importance of ‘confidence’ and decision-making based on knowing all the ‘facts’ available at a specific point in time, which is actually the fundamental strategy applied by many governments around the world which have successfully contained the pandemic in their respective countries.

Therefore, in the post-COVID world, we feel retail entities that will do well with investors are those that understand how to pull the ‘clarity’ lever, showing their workings around how they feel a product/tool will help the investor achieve their wealth goals, while acknowledging the presence of VUCA factors and understanding what kinds of emotions can arise from investing in a global economy that’s still ‘finding its feet’.

Consumer perceptions of cash: is it still “king’?

Short term changes

Even before the onset of the pandemic, it is becoming increasingly clear that many markets globally are moving towards implementing cashless systems, or at least encouraging consumers to rely less on cash. Though not all executions were done well (e.g. India’s sudden and forceful removal of certain currencies from the market create a financial nightmare amongst consumers which took many months of correcting), the movement is at least gaining momentum, and acceptance appears to be higher in markets which are traditionally cash-focused

Covid-19 containment measures have basically forced upon various societies the need to pay for items in a cashless way; the removal of physical retail to adhere to safe distancing measures meant that opportunities to use physical cash have reduced dramatically, while paying for online purchases tends to be electronic in nearly all cases (save for cash-on-delivery options). Not having to handle cash within current context also means reduced chances of infection through virus transference on surfaces, so it appears to have multiple advantages that’s aligned with the ‘sign of the times’

What this means, though, is while the transition is quite smooth for the cashless consumer, the cash-minded one will likely have to think about how that impacts other parts of their financial realities. Money management and tracking, for one, will likely need to take new forms if cash spending is slowly being phased out from their daily lives. Another area which will likely see some change is in digital payment security: with increased volumes of payment, it will be naïve to assume that similar online safety mechanisms will suffice. To prevent any backlash that can potentially happen due to insecure cashless payment systems, it is an area within the financial industry that needs immediate attention, such that consumer confidence in the system may be sustained

Long term trends

However, we must not confuse “accelerated pace of change” with consumers loving the new ‘state of play’ for cashless; we are of the opinion that consumer sentiments towards the ‘meaning’ of cash (e.g. freedom/fluidity, security, options, empowerment, tangibility, etc.) may in fact deepen in the post-pandemic world, due to perceived uncertainties and insecurities (as we have mentioned above). What this then means is that the notion of ‘cashless’ may either need to be strengthened such that it goes beyond attributes like ‘convenience’ and ‘ease’, or relegated to specific consumption scenarios that may not need to be as ‘meaningful’ as cash 

This has important implications for the numerous fintech institutions globally that are trying to ride on the wave of new financial attitudes in the ‘new normal’; whatever solutions they’re proposing (e.g. payments, investments, money management, etc.) will likely be based on a cashless model, so on top of proving the validity of their use cases, the fundamental value that going cashless needs to be just as apparent. Only then can it achieve both resonance and acceptance amongst consumers, as they navigate their financial world and arrive at their own conclusions on what they will relegate to the cash ‘world’, and what they will gladly make ‘cashless’.

As opportunities for face-to-face research become more limited in the current climate, online research is coming to the fore. To help our clients navigate this shift, we ran an Ask Us Anything session to give clients a chance to ask their questions on getting the most out of online research. Almost 200 of you joined us, but for those that missed the session, we’re sharing the top 10 questions asked in the session, along with our expert advice.

1. Should I be doing research during the COVID-19 crisis?

As a result of the current crisis, we are seeing dramatic shifts in behaviours and attitudes. There’s a tendency to think that this will soon pass and that life will return to “normal”, but the reality is that consumers are going to be adjusting to a new normal. As insight professionals it’s our job to understand the changes we’re seeing so we can advise our clients on how to react accordingly. Arguably, research is now more important than ever before.

What’s more, in some ways, the lockdown situation will actually allow us to delve even deeper into the consumer psyche to understand emotions. One of the age-old techniques we use in qualitative research is the deprivation question, where we ask people to imagine what they would do if a product or service wasn’t available to them anymore. The truth is that this is now a reality for many consumers, and as a result, they’re able to consider and eloquently discuss the role products and services play in their lives in much more detail than before. Added to this, many B2C and B2B respondents now have more time on their hands, meaning that recruitment is actually easier, and we’re seeing greater engagement in the research itself.

2. How do we ensure that current emotions due to the COVID-19 crisis do not affect the way consumers answer?

We can’t ignore the crisis and the impact it’s having on consumers and businesses alike.  As a result of what’s happening, people are re-evaluating what’s important to them and the relationship they have with brands. Their expectation of brands and the role they should play is changing. A classic example of this are the many brands like Brewdog and LVMH that have ramped up their processing lines to produce hand sanitiser for health services. As brands pivot and change their approaches, consumers are naturally going to change their views of those brands. It’s vital to be able to tap into these emotions to understand the expectations that consumers have of brands now and in the future.

3. I usually do focus groups. What should I do now?

Instead of thinking about the methodology you had initially planned to use and how you might replicate this online, take a step back. Return to your project objectives and what you’re trying to achieve.

We see too many clients trying to find a like-for-like replacement when they’re considering online methodologies. If they’re used to running focus groups, some automatically default to an online focus group, but in reality, it could be that another methodology is better suited to their project objectives.

We use two frameworks to help clients think about moving their projects online. The first is to consider the depth of insight you need to obtain. If you’re looking for high level responses to concepts it could be that an online focus group will suffice, but if you really want to drill into who your consumers are and how they engage with your product, digital depths or ethnos could be more suitable.

Different digital approaches deliver different levels of depth and detail of insight

We also encourage clients to think about what they’re looking for from their respondents. Do you  want to engage respondents on a one-off or on-going basis? Do you want your respondents to bounce ideas off one another, or is a one-to-one setting more appropriate?

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These simple questions can be really useful in helping you think about the right methodology, but remember, one size doesn’t fit all. It is likely that you’ll want to use a combination of methodologies to achieve your objectives.  

4. My budgets are being cut. How do I ensure that I get the most out of my investment in online research?

An online approach is incredibly asset-rich. It will give you a host of video, image and text-based content, sometimes giving you more bang for your buck than some offline methodologies.  But to get the most out of your investment you need to think about two key things: moderation and analysis.

For online communities in particular, this is crucial not only to curate the conversation but to help you unearth those nuggets of insight. By moderating and analysing what’s coming out of the community on an ongoing basis, you’re able to dig into areas of interest that emerge during the course of the research and ask new questions as you go to help answer your objectives. This ensures you leave no path unexplored throughout your research.

At the same time, with such an enormous amount of information coming out of online methodologies, you need structure in your analysis to ensure you can build your insights appropriately. We have a range of tools we use in-house to help structure our analysis and thinking, focused on delivering the ‘so what’ to our clients and their stakeholders.

5. How can I balance a tight budget with the need to conduct qualitative research that is more representative of the market?

In this instance we’d recommend an online community approach. If you opt for a less complex and therefore more cost-effective platform, you can invest your budget in a larger, more representative sample. Keep tasks at a high level to ensure the analysis is manageable and consider using polling questions to give you broad-based findings at a quantitative level (sample sizes permitting!)

The one challenge that can come with increasing the size of your community is in being able to build rapport with and amongst respondents. To overcome this think about grouping people so that they can discuss topics in smaller groups within the community (e.g. customers vs. non-customers).

6. What are your top tips for moderating an online focus group?

Firstly, make sure you choose the right platform for your project. There are a range of platforms out there and they all have different functionalities that are suited to different business objectives. Depending on your market, you may choose to go with a text-based approach rather than video, if internet connections are slow.

Whichever one you choose, make sure it’s one that will allow you to see all the respondents’ faces on screen at one time, so that you can read facial cues. To help with this, keep your groups small – we’d recommend a maximum of 6 – 8 respondents.

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Don’t forget that you can use pre-tasks and warm up activities to better understand your respondents and build rapport. Make sure your moderator does their homework upfront, reviewing the screener and learning as much about each respondent before the session begins. Once you’ve done this the medium will soon become secondary as respondents relax into the group. Keep tasks varied within the discussion guide to keep everyone engaged, and finally, as with offline focus groups, the moderator’s energy is crucial, so choose wisely!

7. How can I use online methodologies for concept testing? How does this work with highly confidential concepts?

Online methodologies are a great tool for concept testing – and arguably can provide an even greater depth of insight to inform product development.

Online communities in particular are a great tool for this. Many platforms are specifically built with concept testing in mind and have tools that allow respondents to mark up elements of a concept that they like or dislike, along with a justification. The responses you get here can be even more detailed than in a face-to-face group.

Communities also allow us to iteratively improve the concepts over time. We can rapidly adapt concepts based on consumer feedback and put them back into the community for further comment, allowing us to build and refine the concepts as the research progresses.

The community platforms we use also have in-built features for dealing with highly confidential concepts. Images can be watermarked with a unique respondent identifier and if you’re testing ads, we can set videos to self-destruct after they’ve been watched once. On top of this, we use all the confidentiality procedures we would for concept testing in-person. With such stringent processes in place, we’ve never seen a leak in over a decade of running this kind of research. 

8. Is there a risk of “groupthink” when you bring people together for online research in groups?

There’s a common misconception that online communities only allow you to discuss things as a group. In actual fact, that isn’t the case. There are options to ask questions or set tasks that are completed privately, meaning that respondents aren’t influenced by others in the community.

9. Do online approaches work in Asia?

Absolutely.  The key thing is to find a partner who understands the cultural and digital footprint of the market you’re researching, so that they can advise you on the best methodology to use, based on the respondents you’re wanting to reach.

Digital footprints and internet connectivity does vary from market to market, and within different regions of the same country, but it’s hard to deny the increasing impact of digital and mobile technology across Asia. In The Philippines, the social media capital of the world, video-based tasks could be a great way of conducting research, whereas in China, familiarity with the digital way of engagement – from online communities to Wechat groups – presents an opportunity to engage and reach out to your consumers where they already are. And even in more rural areas you can explore potential probable solutions, such as text-based solutions to communicate with those you want to reach.

The key is to decide whether digital research is the right solution for your research is to understand from your research partner the digital feasibility, connectivity and savviness of your target segments and locations. 

10. I’m wary that with online mythologies I’m too far removed from respondents. I can’t see “the white of the eyes”. How do I overcome this?

We’d argue that online methodologies can actually help you get closer to consumers than you might in some face-to face approaches like focus groups. Particularly when we’re running an online community, we’re engaging with consumers over a number of days or weeks (rather than a few hours)  and in this time we can really build rapport and trust. This results in consumers opening up to us, helped by the ease of talking about their experiences to camera. Often consumers are actually more willing to open up at a personal level when talking to their camera phone than to a person that they’ve only just met!

In fact, we’ve just run a community in the US, looking at how consumers are coping in the pandemic, and we found people pouring their hearts out to us via selfie interviews. This helped us to really understand the issues that matter to them, and the context of those emotions.

If you’ve like to learn more about how online research can help you meet your objectives, please get in touch with your local Kadence office.

As of the first week of March 2020, the total number of confirmed cases in mainland China, the epicentre of the COVID-19 outbreak, is slightly over 80,000. This works out to be no more than 6 cases in 100,000 people. The probability is much lower in most other places, such as 3.38 cases in 100,000 people in Italy, 1.89 in 100,000 in Singapore, and 0.03 in 100,000 in the US.

Despite the low probability, many people are appearing to be more fearful than they should be, with an exaggerated perceived risk.

Panic buying happened within hours when the DORSCON level was raised to Orange in Singapore early last month. Canned food, rice, instant noodles, and even toilet papers were swept off the shelves that evening, with queues longer than we have ever seen in supermarkets. The same phenomenon hit the US, Germany, Italy and Indonesia this week, after more local cases were confirmed. Masks, sanitizers, and disinfectants are sold out, social events and activities are cancelled, and many instances of racism against people of Chinese ethnicity have been observed around the world.

Is this fear rational? It seems the fear is spreading faster, and affecting people’s lives to a larger extent, than the virus itself. Why is that?

The following five cognitive biases can explain most of these irrational behaviours during the COVID-19 outbreak.

1.     Negativity bias – we have the tendency to pay more attention to bad things

Humans have a natural tendency to place more emphasis to negative things, such as remembering negative incidents more clearly, being more affected by criticisms than compliments, or feeling more emotional pain for a loss of $10 than happiness gained for the picking up $10.

“Good things last eight seconds…Bad things last three weeks.” – Linus van Pelt, Peanuts

During the COVID-19 outbreak, we tend to pay more attention to bad news (in part also due to news channels’ willingness to focus on negative news as well, following the same principle) – the number of new cases/deaths/infected patients in critical condition – much more than the number of recoveries. Some people actively search for information that scares themselves more, such as ‘evidence’ that shows masks are not effective in protecting you from the virus, reading up on past global pandemics, or even unknowingly landing on fake news which exacerbates the severity of the situation. All these contribute to the psychological fear of ‘Could it happen to me?’.

2.     Confirmation bias – we pay more attention to information that supports our belief

People are prone to believe what they want to believe, and actively look out for evidence to support their beliefs, while dismissing those that contradict. This confirmation bias is more prevalent in anxious individuals, which makes them perceive the world to be more dangerous than it is. For example, an anxious person is more likely to be more sensitive about what people think of him/her, and constantly look out for signs that show people do not like them, biasing towards negative words or actions.

We naturally seek information to protect ourselves, because the ‘unknown’ is more fearful than the ‘known’. If we think the situation is severe, we tend to focus on news that talks about the severity of the situation, which results in a self-fulfilling prophecy. With greater amount of information now being spread much more quickly over social media, the effects of this bias are a lot more pronounced. A cursory scroll through the Reddit thread on COVID-19 can quickly convince someone that it will bring about the end of the world! 

3.     Probability neglect – we have the tendency to disregard probability when making decisions

A potential outcome that is incredibly pleasant or terrifying is likely to affect our rational minds. We are more likely to be swayed by our emotions towards the potential outcome and pay less attention to the actual probability.

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Looking factually at the numbers of COVID-19, the probability of getting the virus is very low, and much lower than many other risks that we are accustomed to, such as the common flu or cold. Yet people are terrified and have extreme panic or preventive behaviours towards the situation. The fact that the virus is new, and that it can be fatal, could have added to the fear, clouding judgement. Many are avoiding malls, reducing dining out, cancelling travels. This effect extends into greater economic implications. The ‘unknown’ is playing with our feelings, and we react to the feelings, not probability, towards the risk. 

4.     Stereotyping – we tend to make unjustified generalisations

On 11 February, the World Health Organization (WHO) announced the official new name of the coronavirus to be COVID-19. According to WHO, they had to find a name that did not refer to a geographical location, an animal, an individual or a group of people.

This is not just a WHO naming guideline, but an important step to reduce negative stereotypes. During the early stages of the outbreak, there was hatred against Wuhan, or China, and this prejudice has even extended to all Chinese people outside of China. In many countries, many people also irrationally avoid visiting the Chinatown, or dining in Chinese restaurants, as if you visit a neighbourhood Chinese restaurant, you will get the virus, even if your neighbourhood is safe[ML1] [DG2] . Aside from how stereotyping individuals is in and off itself a negative social action, such perceptions can also lead to feelings of false assurance, that one is ‘immune’ to the virus, which in turn can result in behaviours that run counter to public health advisories.

5.     Illusory truth effect – it’s true if it’s repeated

 “Repeat a lie often enough and it becomes truth” – people tend to believe what they constantly see or hear in the news, regardless of whether there is any evidence of its veracity. A recent study [ML3] [DG4] has shown this effect to be present even if people are familiar with the subject, as the repeated lies introduce doubt into their psyche.

This is one of the key reasons why “fake news” has been able to take hold during this outbreak – from quack sesame oil remedies to protect against the virus to misconceptions that packages from China are dangerous to handle. In Singapore, after the same few photos of panic buying being circulated via social media many times makes it a ‘nationwide phenomenon’. WHO and governments around the world have been actively trying to take back the narrative from these “fake news” sources, but the prevalence of social media and the ease of sharing such information to one’s friends and families will present an uphill challenge to combat them.

What it means for brands

Firstly, it is important to remember that cognitive biases exist in human beings, and consumer behaviours aren’t always rational. During the crisis, such behaviours are magnified, and the impact/ repercussions of these irrationalities become amplified.  you should consider what consumers are thinking, and how they are reacting. Understanding where the biasness is from, and how it manifests in thinking and actions, can help you decide on strategies what can potentially lead to behavioural changes.

Secondly, we also need to understand that relying on past information may not be able to help you accurately predict into the future, because people’s reaction to the same stimulus may have changed. For example, the last time DORSCON was raised to Orange in Singapore during the H1N1 crisis in 2019, there wasn’t ‘panic buying’ that led to the severe shortage of masks or sanitizers. Planning in the future, you can think about whether your brand will be perceived any differently once the outbreak is over – how would people’s mindset change because of the outbreak? What will people be looking out for, post- this crisis? Consider how you can address the post-crisis world, and find your competitive advantage.

Our kids media experts Bianca Abulafia and Sarah Serbun shared their top tips at Qual 360 of how to conduct qual research with kids and the culture considerations to bar in mind in each market.

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As you put the Halloween decorations away for another year, are you one of the many people thinking twice about that age old tradition of carving a pumpkin? 

#pumpkinrescue is trending on social media as organisations and consumers alike raise awareness of unnecessary food waste that the Halloween tradition creates. According to Hubbub, in the U.K., 18,000 tonnes of pumpkin go to landfill every year (that is the equivalent of 360 million portions of pumpkin pie) and many people have had enough, using the hashtag to encourage consumers to eat the remains of their pumpkin instead. 

Concerns around food waste are no fad. Our latest research, The Concerned Consumer, found that food waste is a key issue globally, with 63% of consumers telling us they do their bit to address food waste. This is particularly important for consumers in the UK and the US, where the figure rises to 71%. 

Keen to explore this topic in more detail, we’ve been digging into the conversations around food waste on Twitter, using a comparative analytics tool called Relative Insight. 

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So aside from discussions around #pumpkinrescue, how is food waste being discussed online?

Freezing food is a key topic of conversation. It is seen as a sustainable way to keep food fresh for longer, minimising food waste overall. And while thinking about pumpkins (which is a fruit by the way – yes, we googled it), we found that consumers are generally confused about whether they can or can’t freeze certain vegetables and fruit.

Another popular topic around food waste is finding a purpose for food scraps. Consumers are calling for more recipe suggestions incorporating vegetable scraps, or ways of composting it. Take a pumpkin as an example; the flesh can be used in pies and bread, the guts can be used for broth and mulled wine, the skin is edible in small varieties, and the seeds can be roasted. 

Want to discover more about the environmental, ethical and health concerns driving purchase behaviour in food and drink? Download our Concerned Consumer research.