Not many people question the importance of data in running a business.
This is the key to correct accounting procedures and the cornerstone of successful expansion. This is essential for hiring and firing. Of course, intuition is also important, but in the end, the data will show whether a decision based on intuition is correct.
In the food and beverage industry, data is also important because it can help us understand consumer trends. This is especially important in an era when what people want changes faster and more frequently than ever before.
The coronavirus pandemic has disrupted the waters to some extent (actually reversed the trend in some cases, such as the resurgence of boxed macaroni and other commercially available foods), but the rapidly changing trend has already been observed in pre-pandemic phases. The rise of social media, Internet influencers, and emerging technologies (think artificial intelligence and the Internet of Things) are some of the biggest factors adding fuel to the fire.
Know your data
As mentioned above, there is more than one type of consumer data. But even within the broader scope of data that provides insight into consumer trends, segmentation can be helpful.
On the one hand, we have aggregated market data or “third-party data”. The aggregated market data comes from market research, including focus groups, surveys, and research by think tanks such as Nielsen and Deloitte.
Market data to a large extent shows us the direction of review of consumer behavior. This is a very macro approach, and to be fair, the company has benefited from it for decades. For many years, it has been the only reliable source of knowledge about the direction of trends.
However, now we have consumer data based on the interaction between the enterprise and its individual consumers, also known as “first party data”, and its new relative “zero party data”, which is based on the consumer’s mutual agreement The way the data is shared with the company. In some cases, it is real-world data and can even provide real-time information. It is not macro at all, it is micro to the extreme. You can track individual transactions, clicks, content, and all of them to reveal preferences and predict consumers’ behaviors.
The data in this category comes from the direct experience of consumers of the company’s communication channels, such as mobile applications, e-commerce platforms, customer service centers and even experiences provided by employees. They can even take innovative forms, for example the Coca-Cola freestyle soda machine, which is both a soda dispenser and a “channel of communication.” They allow consumers to mix whatever flavor is contained in the machine, but more importantly, they also tell the company which flavors are mixed, and when, where and how often, to help the company understand how the consumer behavior shift accordingly and how product and marketing strategy should cater to these changing trends with as little lag as possible.
Quality, not quantity
This article is not intended to inspire companies to frantically fight for as much consumer-based data as possible. Quality is more important than quantity. In fact, if there is too much data for you to distinguish the signal from the noise, then too much data may become an obstacle.
In a world where digital experiences can help companies track and collect large amounts of consumer data, it is easy to start accumulating unprecedented amounts of information. The real power (at least in business) comes not only from owning data, but also from knowing how to use it to gain a competitive advantage.
This is not to collect as much data as possible, but to collect data that clearly serves your business goals and objectives. For food and beverage companies, there are several clear ways to achieve this result.
One is to purchase data from carefully selected sources. By establishing business partnerships with retailers and other alternative channels and suppliers, you can obtain useful data that can tell you, for example, which other products you often buy with your products, how your products are sold, time and place. And in terms of consumption, how do you compare to competing products, etc.
Another way to obtain valuable consumer-based data is to create your own direct-to-consumer experience. In some activities, this is the gold standard because it will result in you having complete uncorrupted first-party data. In the past, generating your own consumer data was in most cases ineffective and cumbersome to the point where the cost was too high.
Today, with the incredible capabilities that IoT devices and software services provide, this is a very real possibility worth considering for any business focused on growth. The beauty of these solutions is that it is not necessary to have a B2C experience that covers 100% of the consumers. You only need a “window” to enter the market and track consumer behavior in depth.
Riding the wave of data
The ability to rapidly collect, analyze and act on large amounts of information (possibly “big data”) is permanently changing the food and beverage landscape. With the continual emergence of new technologies and applications, no one knows exactly what the industry will look like, even 10 years later.
Given that we have come across many successful cases of digital adoption, along with the obvious danger of lagging innovation, there is no reason why leaders in this field (from small entrepreneurs to FSTE 100 executives) should not take advantage of what is on offer today.