Marketing costs companies too much money! The latest study from Oracle Marketing Cloud reveals that only 52% of businesses increased their marketing budget in 2016. That’s 11 percentage points fewer than in 2015 (63%) – and maybe it’s down to the number of marketing flops in recent years.
Half of all consumer products end up consigned to the annals of history. For example, Amazon suffered this fate following the launch of its Fire Phone. The smartphone, which was supposed to be met with huge demand, was given the cold shoulder by consumers, resulting in a total of $83 million of unsold inventory.
But despite constant efforts from a range of companies to get consumers involved as early as possible in their process of innovation, consumer insight often turns out to be incomplete or misleading. And the reason is that the methods used to discover what consumers want have their limits. Focus groups, interviews, media listening – what if the answer lay elsewhere? We explain how hackathons can provide you with insights that are more accurate, comprehensive and representative.
1. The many faces of product innovation
‘The consumer is boss’ is a mantra that any company with its sights set on the mass market has to adopt, explains Marc Alias, director of communications and external relations at Procter & Gamble France. The first focus groups were created by working on this principle.
They’re based on a simple idea – putting the consumer back at the heart of the business’s creative process. This method gives companies the chance to meet their customers’ expectations as closely as possible, and it’s a real marketing classic used by major groups – including Coca-Cola, Colgate, Nestlé, Motorola, PepsiCo, Kraft Foods, Unilever, Motorola, British Airways, Sainsbury’s, Barclays, Danone, Peugeot, and LVMH.
So what’s the main benefit of this approach? It allows consumers to (more or less) freely express themselves on their expectations and the reasons behind their actions.
It’s true that this method provides a real leap forward in terms of market research. But it also has a number of disadvantages, as it involves:
- A very limited panel of consumers, generally under 12 participants. Above this point, you run the risk of sub-group dynamics coming into play.
- A very short study, lasting just one to three hours
- A time-consuming exercise, as fully transcribing a three-hour interview takes three days of work in itself!
- Biased information due to the potential presence of strong personalities within the group or certain participants’ self-censorship
In the digital age, social networks are a fairly reliable window into our society and its expectations. Couple this with new ways of tracking – especially the analytics provided by Google, Twitter and Facebook – and it becomes possible to listen to and record everyone’s needs and preferences. It’s called ‘social listening’.
This extremely quick method (sometimes taking just 24 hours) allows you to collect an astronomical amount of information, which is then studied in real time to identify recommendations regarding the behaviour and expectations of the selected consumer target market. Another benefit of this tool is the way it provides access to customers’ feedback on a brand and its competitors to get an overview of how healthy a sector is, giving you advance warning of any upcoming crises.
Use with caution
But don’t let yourself be misled – even if social listening is fairly reliable because of its high-tech nature and the volume of data processed, bear in mind that after you’ve collected your data, you have to analyse it. And this is the point where the process becomes tedious.
Using social media data can put you on the wrong track for four main reasons:
- Information overload. There is such a thing as too much information. Collecting information en masse is effective if and only if the scope of your study is small enough and properly defined.
- Data interpretation. When information is taken out of context, it can be misleading. Especially given that the software responsible for analysing data from social media has trouble capturing emotions, particularly sarcasm.
- Self-censorship. The data you analyse may be biased, as when using social media, people tend to project an image of themselves that isn’t always true to who they really are. First and foremost, what they post reflects the way they want to be seen.
- Lack of correlation between certain results. The data analysis systems used can sometimes identify a relationship between two variables where, in fact, there’s no logical correlation between them.
2. Hackathons and collaborative marketing – the new tools in product innovation
Hackathons have stepped into the limelight in recent years, and they bring all the benefits of focus groups and social listening with fewer disadvantages. Hackathons are an opportunity for businesses to open up their R&D to the outside world, giving consumers the keys to innovation. It’s goodbye to working in a vacuum and hello to open innovation mode.
From Bouygues to Publicis to Orange, a host of CAC 40 companies have already turned to hackathons for a new way of innovating. And these three groups aren’t alone – 32 companies on the stock exchange have focused a section of their business strategy on open innovation (including incubators, accelerators, and internal or external hackathons).
Launching a product that speaks to consumers
As needs develop, the pace of innovation picks up – and only sourcing ideas from within your company becomes a big risk. A hackathon is a chance to reach out to hundreds or even thousands of young people and consumers. And it no longer simply means understanding people’s dream products and services, but co-creating them by working with consumers. The company gets participants to think about new concepts and ideas, then helps them to create a product that closely meets their expectations.
Microsoft, for example, launched a student hackathon because they needed to identify the best marketing ideas to reach out to their target market, 18-25-year-olds. Who better than young people to design a marketing strategy aimed directly at themselves? Understanding what motivates them and winning them over isn’t easy unless you have direct contact. That’s why Microsoft asked 628 students to put on their marketing director hats as part of its Surface Challenge. And the result was more than conclusive!
A disruptive and usable idea within 3 months
“The problem with hackathons is that you get projects 80% completed, then forget to finish the last 20%,” says Sarah Cherruault, CEO of Auticiel.
Enough stereotypes! A hackathon isn’t necessarily a few dozen developers locked in a room for 48 hours, guzzling down energy drinks to stay awake. They can also be competitions that take place over several months on an online platform.
Open innovation challenges have been transposed to the internet for the simple reason that once they go digital, hackathons let businesses unite diverse communities – students, developers, employees or consumers – around a single challenge.
This new competition format allows companies to collect more ideas and reach out to more people. Participants can sign up online, then create or join a multidisciplinary team by joining forces with people whose profiles complement their own. And the results are even better when there’s a genuine exchange of ideas between the company and participants, but also within teams themselves. That’s why the ideation and project development stage have been extended from a few hours to several months.
By extending online open innovation challenges, the aim is to give ideas time to mature and find their place in their environment.
The benefits that companies gain from holding a hackathon is the insight that participants themselves provide. It’s a way of turning the situation on its head – consumers, who are normally passive with no influence over the choice of products offered to them, suddenly play an active role. It’s the consumers who, working with the brand, develop the idea or concept behind the product. The company then benefits from the new perspective that participants bring, allowing them to create a product that truly meets consumers’ needs.
For example, SEB got on board with the hackathon adventure a few years back by involving hundreds of students in its innovation process. For the group, the main aim was to create a product that would be genuinely useful to its users and be in tune with the times. For example, for its 2013 hackathon, SEB brought together 130 students to address the topic of ‘products for tomorrow’s well-being’.
Using hackathons to build strong links between the brand and consumers
As well as an innovation strategy that’s truly focused on consumers’ choices and needs, choosing a collaborative approach to marketing means strengthening existing links between the brand and its customers.
Unilever – one of the first groups to take part in the online hackathon experience – is fully aware of this. In 2009, the group extended its collaborative innovation approach by launching its own online platform, which it has recently opened up so anyone can take part. Unilever now publicly shares all of its projects that are part of its open innovation programme.
Through consumers’ active involvement in its creative strategy, the company hopes to achieve two aims: to boost its cycle of innovation and to strengthen brand loyalty by making itself more approachable and listening more closely to consumers. In other words, collaborative marketing means putting across a positive brand image. And it’s clear that Unilever knows this. Since launching its online platform, the proportion of external ideas adopted by the group’s entities has shot up from 25% to 60%.
Open innovation: opening R&D's doors to consumers
Whether a company wants to develop a new product or simply find a way of communicating with its target market by playing by their rules, hackathons encourage companies to step out of their comfort zone.
It’s no longer sustainable for brands to be complacent, especially when they operate in an unstable environment such as today’s. Consumers are becoming increasingly versatile, and loyalty is becoming a rare concept. But thanks to open innovation, companies can co-create their new products and services by working directly with consumers. R&D becomes open to all, and everyone wins.
As we’ve seen, to stay ahead of the competition, marketing needs to be opened up to innovation – and a wonderful partnership is born.