OPEN ENDED METHODS FOR

P R O D U C T O P T I M I Z AT I O N
how product optimization through the lens of
consumer experiences will earn consumer loyalty

Jen Hanson
Sequoia Partners
inventors of the realsightⓇ system
 © Sequoia Partners 2010 Confidential

Consumers have changed your categories

snacks are meals
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Consumers have changed your categories

nutrition is medicine
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Consumers have changed your categories

media is entertainment
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despite this, companies rely on familiar

practices to find ways to develop and evaluate
products which has created three challenges for
predicting long-term success
 © Sequoia Partners 2010 Confidential

Brands are missing opportunities to grow

consumers are not aware of what they do
“ninety-five percent of thinking takes place in the
unconscious mind” …
Jerome Kagan, Surprise, Uncertainty, and Mental Structures

they don’t know why they do what they do

“rather than guiding or controlling behavior,
consciousness seems mainly to make sense of
behavior after it is executed”
George Lowenstein, “The Creative Destruction of Decision Research”

and consumers are satisfied 75-85% of the time with any product
“being satisfied means consumers have found a solution to meet
their expectations, even if it requires a system of many
inefficient steps to get to the end goal” . . . “this is why
satisfaction is proven to explain only 8% of repeat usage”
Jennifer Hanson, Sequoia Partners

understanding the reality behind product decisions

fuels growth
 © Sequoia Partners 2010 Confidential

Products are losing their competitive edge

economic factors will continue to force consumers to switch from

higher priced brands to private label

Private label is Economic factors will Global growth is just as

gaining momentum continue to impact sales challenging: private label is
in the US of branded products stronger overseas

a deeper understanding of motivations re-

establishes brand relevance
 © Sequoia Partners 2010 Confidential

Insights tools lack rigor in the front end

IDENTIFICATION DEVELOPMENT IN MARKET

10%
$ $$$$
$$$$$

10%
$$ $$$
$$$$$
an inefficient development process restricts spending
money where development paths are chosen
 © Sequoia Partners 2010 Confidential

The result: cycle of failure

INSIGHTS & IDEAS

IN MARKET
FAILURES

REDUCED
BUDGETS
 © Sequoia Partners 2010 Confidential

The groundhog in the room

traditional insights methods simply DO NOT WORK
Surveys
Focus Groups
Short-term observations

DAY ONE DAY TWO DAY THREE

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?
HOW DO WE MAKE THE
BEST DECISIONS?
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Partner with consumers

We’ve pushed them away

We’ve ignored them
We’ve lost their loyalty
 © Sequoia Partners 2010 Confidential

Success requires changing

3 fundamental insights practices

1. Become the eyes of the consumer over an extended period of time,

instead of only the voice of the consumer at one point in time.

3. Discover opportunities and develop products from a consumer lens, not

a manufacturing one.

4. Apply a more rigorous quantification process in the front end, rather than
accept inefficiencies and failure on the back end.

success requires a paradigm shift

 © Sequoia Partners 2010 Confidential

observation
plus

quantification
the deepest consumer understanding and the proper validation you need to
pinpoint where and how to grow your business by placing more emphasis on what
people actually do, not just what they say
 © Sequoia Partners 2010 Confidential

Fundamentals of a more holistic approach

realsight® system:

State-of-the-Art
Video Based Cameras Neural Pattern
Observations Analytics
Analysis

realsight®

Extended Behavior-based
Engagement Social Networking Academic Theories
Software Frameworks
 © Sequoia Partners 2010 Confidential

A new consumer focus

Become the eyes of the consumer over an extended period of time
Walk in people’s shoes over days, weeks and months to
fully understand what they are doing and why they are
making decisions. You see how they behave within their
own environment and discuss their decisions to
understand their true motivations.

Discover opportunities and generate ideas from a consumer lens.

Apply sophisticated pattern analysis tools to discover 10-30
measurable ways to grow your business from thousands of tagged
behavior-based usage events. Each opportunity is supported with
videos of actual behavior and language used to describe reasons for
decision. This allows for close examination of the illusive gap between
what people say vs. what they do.

Apply a more rigorous process in the front end.

In a world of big growth goals but small budgets and staffing, it’s tempting to rely on
existing knowledge and syndicated information to save money and time. Besides
breeding similarity, it creates inefficiencies throughout the process and misses
opportunities to grow. Through quantifying observations you will have the best of
both worlds: the richness of ethnographies with the certainty of numbers.
 © Sequoia Partners 2010 Confidential

What it uncovers: consumer experiences

 © Sequoia Partners 2010 Confidential

Consumer experiences:
multi-dimensional segments of product usage events

Demographics

Activities / How Products

Rational Needs Times of Day /

Days of Week

Emotional Needs Locations

Environment / Sensory /
Atmosphere
 © Sequoia Partners 2010 Confidential

More comprehensive insight generation

a more complete view of consumers

a deeper understanding of motivations
a level of certainty lacking in qualitative

plus what you can’t get anywhere else...

 © Sequoia Partners 2010 Confidential

emotional needs
beyond generic need states

routine behaviors
habits that have high profit margins

contextual environment
sensorial elements that trigger results

these are the primary drivers of over 50% of product decisions and are often missing when
using other insights methods
 © Sequoia Partners 2010 Confidential

Framing an approach to product optimization

Behavioral Monitoring Experience Landscape Emotional Journey
database of observations segments of usage events needs before, during and after experiences

Landscape of discrete consumer experiences A deeper understanding of the usage decisions

Thousands of observations collected as they
through statistical analysis of the context / before, during and after each experience using the
occur through consumer generated videos and
environment, functional / emotional needs and the latest behavior based academic theories.
written diaries for 3-4 weeks
lifestyle drivers for each experience RATIONAL EMOTIONAL

She Has She Feels

Result
A treasure Excited

Behavior
She Does She Feels

Browses the store Pleasure

She Is She Feels

Needs
Curious Relaxed

In-Depth Dynamics Product Fit Prioritized Opportunities

the metrics you need for your business linked products to experiences roadmap from immediate to long-term
Strength of product linkage to experiences using a Actionable opportunities come from understanding
A full explanation of the key drivers that must be
structured series of closed-ended questions, usage processes and involvement, what and how
delivered for each experience, described in both
combined with actual behavior and language of products fit, and who are the people that have each
quantitative and qualitative metrics.
consumers. experience.
DRIVERS CATEGORY INVOLVEMENT
Interaction with Others People Product Strategic
25-54
Low High Experience Opportunity Opportunity Priority Focus
Hhld: 2+ Awareness Of Need Experience 1 Short-Term Frequency
Who No Kids Subconscious Conscious
$50-60K, Experience 2 Immediate Buy Rate
$75-$99K Information Gathering
Not complete Complete Experience 3 Immediate Buy Rate
What Category Products Experience 4 Immediate Buy Rate
MOTIVATIONS
Channel Convenience Experience 5 Short-Term Penetration
Not Important Important Immediate Buy Rate
Where Channel Location Experience 6
Section Location Convenience Experience 7 Long-Term Frequency
Not Important Important
Experience 8
Time of Day, Day of Product Convenience
When
Week Not Important Important Experience 9 Long-Term Penetration
Price Experience 10
Not Important Important
Needs Curiosity Experience 11
Brand
Not Important Important Experience 12 Short-Term Frequency
Context / Browsing the store Experience 13 Short-Term Frequency
Activity Relaxed DECISION
Likelihood Experience 14 Immediate Frequency
Low High
Involvement High Experience 15
Category
Primary Secondary Non-Category Experience 16 Short-Term Frequency
Category
 © Sequoia Partners 2010 Confidential

Comparison to traditional sequential monadic testing

1. Video observations reveal your true competitive set at repeat,

ideal for product benchmarking

2. Extended use results in greater product discrimination for

optimization, and reveals habitual behavior that earns consumer
loyalty

3. Attributes derived from open-ended observations help align

manufacturing and consumer definitions, strengthening
satisfaction

4. Consumer experiences reveal open opportunities for product

optimization, providing competitive advantages
 © Sequoia Partners 2010 Confidential

Video observations reveal your true competitive set at

repeat, ideal for product benchmarking
reframing the competitive set expands the landscape of opportunities

The snacking competitive set expanded

the market from $2B to $41B

5.8% of $41B

Total Snacking
Market

Category

Total Snacking Market

 © Sequoia Partners 2010 Confidential

Extended use results in greater product discrimination for

optimization

2X product discrimination among engaged consumers

Overall Liking (Top 2 Box %/Mean) Community Survey

Company’s Product 78%/6.00 60%/5.35
Competitor 6 67/5.12 56/5.23
Competitor 4 64/5.48 64/5.34
Competitor 1 49ppt 53/4.53 27ppt 52/4.96
Competitor 5 39/4.78 49/4.73
Competitor 2 38/4.03 49/4.60
Competitor 3 29/4.23 33/4.25
______ ______
Mean 4.86 4.92
St Dev 0.68 0.42

Products were provided to the community members, as well as to a survey sample.

Each group were asked to try the products and answer the survey. The community
members also filmed their experience and told us about it through blog diaries.
 © Sequoia Partners 2010 Confidential

... and reveals habitual behavior that earns consumer

loyalty
Shopping 100%

Entertainment Knowledge Budget Routine

% % % %

Product must Product must

stand out on be top of

Experience 10
Experience 1

Experience 2

Experience 3

Experience 4

Experience 5

Experience 6

Experience 7

Experience 8

Experience 9
shelf and mind prior to
provide high shopping for
value on stock up /
uniqueness pantry
% % % % % % % % % % loading
Penetration % % % % % % % % % %

Frequency # # # # # # # # # #

SOM % % % % % % % % % %

Brand SOM % % % % % % % % % %

Opportunity
 © Sequoia Partners 2010 Confidential

Attributes derived from open-ended observations help

align manufacturing and consumer definitions, ultimately
strengthening satisfaction
better discrimination: say & do sensory elements, finally measured
Color
BB

Attribute Attribute Attribute Attribute Attribute Attribute Attribute Attribute Attribute Light Medium Dark
1 2 3 4 5 6 7 8 9
Flavor
BB

Tart Neutral Sweet

Company’s Product
Survey
+ + + + + + + + 0 Temperature
BB
Community - 0 0 + - 0 0 - 0/+
Competitor 3 0/- 0 0/- 0 0 0 0 0 0 Cold Room Hot
Survey
Size
Community 0/+ - 0 + - 0 - + 0 BB
Competitor 2
Survey 0 0 0 - 0/- 0/- 0/- 0 0 Small Medium Large

Community - + + 0/- - - + + - Duration

BB
Competitor 4
Survey
0 + 0 0 0 0 0 0 0/+
Short Medium Long
Community - 0 + 0 - - 0 0 -
Pace
Competitor 6
Survey
0/+ + 0 + 0 0 0 0 0/+ BB

Community - + + + - - + + 0

+ Index >120; - Index < 120 vs Average

Attributes created from descriptive open-ended videos and blog diaries are far more
discriminating than traditional self-reported closed-ended evaluations. Only a handful
of attributes were comparable and the survey metrics. Other “in-tangible” or “time-
based” attributes are captured and measured.
 © Sequoia Partners 2010 Confidential

Consumer experiences reveal opportunities for product

optimization, providing competitive advantages
consumers define markets differently than companies
0.1
People self-report they are satisfied with
! Attribute 6 their current products. However, through
EXPERIENCE 1
EXPERIENCE 5 ! Attribute 7
observation it is revealed that there is a
! Attribute 8 EXPERIENCE 7 high level of dissatisfaction with many
! Attribute 10
0
! Attribute 3
! Attribute 4 products in most experience of use.
EXPERIENCE 2
COMPETITOR 1
! Attribute 1
EXPERIENCE 4
! Attribute 2
COMPETITOR 2
Experiences drive use, rather than benefits.
EXPERIENCE 6
COMPETITOR 5 Consumers seek a new product to meet
-0.1 ! Attribute 9 their needs for different experiences that
Company Product
EXPERIENCE 3 COMPETITOR 4
! Attribute 5 deliver an end goal. A benefit based
COMPETITOR 3 analysis limits differentiation of usage.
COMPETITOR 6

-0.2 Products can be further optimized to meet

-0.3 -0.2 -0.1 0 0.1 0.2 0.3
Development Opportunity Observation People expectations by leveraging key emotional
drivers of use within experiences.
 © Sequoia Partners 2010 Confidential

Different outcomes require a different approach

Focus on what people DO, not what they SAY

Quantifiable data with qualitative understanding

Demonstrates and validates opportunities and ideas

consumers show you where to go and how to get there

 © Sequoia Partners 2010 Confidential

A positive shift in the marketplace:

improved quality and accuracy

from to

SAY SAY & DO CHANGES

SPEED fast average Extended data collection:

1. Observations as they occur, 3+ days
2. On-going interviews via “social networking”

COST low to average average Multiple work streams:

1. Interview + observation
2. Real-time analysis
3. Analytics + Data tabulations
4. Multimedia reporting
QUALITY low high

Superior results:
1. More complete view of consumers
ACCURACY low high
2. Deeper understanding of motivations
3. Quantified opportunities
 © Sequoia Partners 2010 Confidential

The result: cycle of success

BETTER
INSIGHTS & IDEAS

IN MARKET
SUCCESS

INCREASED
BUDGETS
 © Sequoia Partners 2010 Confidential

There is always risk

GARBAGE IN GARBAGE IN, GARBAGE OUT!

GARBAGE OUT!
 © Sequoia Partners 2010 Confidential

Summary

• Create emotional messages tied to product experiences

• Strengthen brand equity at purchase and usage
• Source volume from brands outside traditional category definitions
• Target the multiple dimensions of common need states
• Grow through redefining channels of purchase
• Tap into habitual and “auto pilot” choices often unreported
• Identify ideas from consumer work-arounds and trade-offs
• Maximize portfolio growth
Questions or Comments?

Many thanks!
Jen Hanson | Sequoia Partners
P.O. Box 235 | Pequabuck, CT 06781 | USA
+1 860.516.4124 | jen@sequoiamp.com

Brand Growth Through

Consumer Experiences