Too many decisions are based in HiPPO or intuition
A recent Corporate Executive Board study of nearly 800 marketers at Fortune 1000 companies found that the vast majority of marketers still rely too much on intuition. On average, marketers depend on data for just 11% of all customer-related decisions.
If your product development and marketing managers are among the minority who are using data, most likely, they are using data to confirm and support decisions that have already been made by management.
Why? Because most housewares companies use HiPPO-driven decision making (the “highest paid person’s opinion”). HiPPO stands for “the highest paid person’s opinion”. The term refers to those people who have the final word on any design issue on the basis that they’re the highest paid person in the room.
Certainly, intuition grounded by years of in-market experience should always be listened to carefully, but it pays to augment even the best intuition with data.
In today’s volatile business environment, judgment built from past experience is increasingly unreliable. With consumer behaviors in flux, once-valid assumptions can quickly become outdated.
Why it is imperative that you adopt data-driven decision making?
Data-driven decision making is the process of making product development and marketing decisions based on the analysis of consumer, marketplace, and competitive data.
Many housewares companies are using data-driven decision making of a sort – they make new product decisions based on what their competitors are doing. Which is there are so many me-too products on the market today. And why so many new housewares products fail.
To be a hit with consumers, new products must meet two criteria:
- They must either be unique or superior to what’s already on the market AND
- They must solve a problem or meet a need for the consumer.
Very few new housewares products meet these two criterion.
Here is what Ann Hall Every, Food Writer/Freelance Food Professional at CookWithAloha.com, says about the press releases and sample products for new kitchenware and housewares products that she gets from manufacturers who want her to review on her website: “I can’t tell you how many items come my way that make me say “what are they thinking”?! Either the items don’t work, or it is a totally useless item for the consumer.”
If you are a typical housewares company, somewhere between 25 and 50% of the new products your company introduced in the past five years met the company’s success criteria. What’s more, you are probably wasting 50% or more of your new product development budget developing marginal products that have a low probability of marketplace success.
If you are not satisfied with your company’s new product success rate or your return on your investment in new product development, I urge you to adopt consumer data-driven decision making.
How to get started with data-driven decision making
Adopting data-driven decision making does not require a multi-million dollar budget for retail store tracking data, data-mining, analytics software, or huge quantitative research studies.
You can gather much of the consumer data you need to make sound informed product and marketing decisions by doing online surveys with a Market Research Online Community, either your own in-house panel or an third party panel such as my company’s HomeTrend Influentials Panel.