It may seem like a basic question, but when I ask “what is an insight?” I get a plethora of answers.  So I set out to answer the question myself.

When I started my career it was very much in the realm of data processing and information retrieval.  Data as the raw material and information as the analysed and summarised outcome.   I then moved to the qualitative side of market research back in the days when we called it research.

Somewhere along the way data processing was seen as too old fashioned, and everybody wanted “data mining” and “big data expertise”.  Qualitative market research findings were no longer sexy.  They had to be “Insights”.

Over the years I have seen a lot of simple data, summarised information, behavioural observation, behavioural understanding and product improvement which were presented as “GROUND BREAKING INSIGHTS”.

So here is my simple view of the world:  “If it doesn’t change consumer behaviour it’s not an insight.”

The short version of this article is that Insights need to be behavioural, emotional, true (credible), relevant, original, ownable and measurable.

The World of Compromise

We live in a world of limits and compromises.  There are many things we would like to do better.  When somebody shows us a better way we adopt it quickly.  Many of the greatest inventions in history are so obvious once seen that a common reaction to them is “Why didn’t I think of that?”

The insight comes from seeing how people behave and understanding that their behaviour is a compromise from the ideal.  The inventor then leverages the insight to produce the product that changes behaviour.

Recently I worked on a project with a major packaging manufacturer.  They spent a day in a busy bakery observing workers in action.  They noticed two things in particular.

  • Existing product (a frozen part-baked bread range) was stored in large cartons that were very heavy to lift. They needed to be removed from the freezer to open them.
  • Once lifted out of the freezer the staff were reluctant to put them back in. Product left in the hot kitchen began to thaw and spoilage rates were high.

The engineers set about addressing these two insights.  They designed a new freezer carton which could be opened in-situ in the freezer.  The staff could remove only the product they needed for immediate baking.  This innovation changed how the staff in the kitchen behaved.  It made life much easier for them, so it qualifies as insight.

The change also reduced the levels of product spoilage.  This is process improvement (but not necessarily insight).  It improves profit levels for the client.

There is a nice roundedness to this outcome.  The Client makes more profit, and is consequently more likely to work with the packaging company again.  The staff have an easier time in work, so they are happy with the change.  The customers of the bakery are less likely to receive a sub-optimal product, so they will enjoy their bread and come back for more.

The world of needs and wants

Anyone who studies marketing 101 learns about Maslow’s Hierarchy of Needs.  As you rise on the pyramid you move from needs to wants.  If you are purely needs driven then you are unfortunate in modern society.  Most humans have moved beyond a daily struggle for Water, Food, Shelter and Security.

We live in a world of choice, which is good in one way and bad in another.  Everyone, even the richest billionaire, faces resource constraints.  In simple terms there is more “stuff” out there than we can afford.  If you want it all, and want it now you will be disappointed.  You have to make trade-offs.

The early trade-offs are easy.  Do you eat food this week or do you take a spa day?  Starving people don’t take spa days.  If you are needs driven then the need wins out.

In a wants driven society there are many people who forgo food and trade it off for a day at a spa.  They call it a diet, or a detox.  They don’t “need” food, so it becomes something they can trade off.

In the world of needs and wants “Insights” are clues to how trade-offs will work.  This is the realm of Economic Behaviourism.  It is a weird and wonderful place where people frequently make sub-optimal decisions which make no sense on paper.

In this world your best clue that you are dealing with actual “insights” is emotion.  Insights are born in the Freudian Id, what popular psychologists refer to as the Inner Child, the Primitive Brain or the Lizard Brain.

If your research uncovers useful data you will see people nod sagaciously as they consider how to use the findings in the business.  They will see the relevance of your findings to others, but not usually to themselves.

If your research is insightful your audience will be excited, emotional and immersed.  You will hear phrases such as “that is sooooo true!”  “That is so me!”  “I do that all the time” etc.  It is real, truthful and personal in a way that data and information never are.

Paying the piper

Insights are fantastic as long as the client can use them to make money.  As a result there are a few boxes you have to tick when you present your insights:

Relevance:  they have to change consumer behaviour in relation to your client’s product.

Originality:  there is no advantage to being the second company to leverage an insight.

Ownership:  if your client can own the insight territory this has potential for huge market share gains.  Most innovations are easily copied by the competiton.  Branding is less easy to copy.  Insights and Branding are two peas in the same pod.

Measurability:  I have seen brilliant insights that have come to nothing because they could not be applied to the customer record data.  It is pointless having something that changes the lives of 25 year old female insurance buyers if the client does not collect customer age and gender in the sales process.

Bulls V Bears

A bear squares off to a bull at Frankfurt stock exchange

A bear squares off to a bull at Frankfurt stock exchange

This is not a post about basketball or American football.  It is about the stock exchange.  We frequently speak of Bull markets and Bear markets.   Today is the anniversary of Black Tuesday in 1929 and one of the worst bear markets in history.  Wednesday 30th October 1929 saw a bear market rally, which is also known as a suckers rally or a dead cat bounce.

So Bull markets are when things are on the up and up.  Bull markets are positive, shares are gaining in value and traders are happy.  All decisions seem to be good decisions.  You buy a stock and the stock rises in value.  You sell the stock and you bank the value.

A bear market is one that is heading down.  If you buy a stock in a bear market you instantly see your value fall.  That makes people sad and discourages trading.

In a bull market trading is brisk and fluid.  In a bear market the trading stagnates.  So why do we call them Bulls and Bears?

There are many guesses as to the origin of the terms and I don’t have any conclusive proof, but here is what I believe.  Bull derives from the Latin “Bulla” which is the term for a lead seal.  Most legal transactions were carried out in Latin until relatively recently and Latin terminology still suffuses legalese.  If you agreed a contract for a trade it could be nicknamed a Bull.  In the same way that a letter from the Pope is called a Papal Bull.

The first stock market trading in derivatives in the European markets was on Ships cargoes.  Amsterdam and London were the early leaders in stocks, as the hubs of trading for the Dutch East India Company and the British East India Company respectively.  As an example let’s look a the British Tea trade.

A ship owner sends a ship to China to pick up tea.  That ship may be the first of the season to return, when the market is empty of fresh tea.  If that is the case he can make huge profits on the tea.  But if he arrives a month later, behind the majority of the fleet, he may find the market saturated with tea, and prices could be rock bottom.

To hedge against uncertainty the ship owner sells tea contracts.  Each contract is sealed with a bulla, so they are nicknamed bulls.  The contract for tea is at a fixed price.  Let’s say it is for one crate of tea for the price of 1 pound sterling.

As the tea season approaches the mood of the market begins to shift and fluctuate.  If last years tea has run out there is a lot of interest in the new stock.  The contract at a fixed price may be a good bet.  Traders will place bids to try to buy the contract for more than face value.  So a Bull for 1 pound may rise in price to 1 pound and six pence.  There is a market for contracts, or a “bull market”.  Every time a contract trades the price rises.  Ship owners may be encouraged to sell more of their pending stock as contracts in such a market.

On the other hand if there is a rumour of a tea glut in China then the traders may be happy to wait for the ships to arrive and for the tea auctions to establish the market price.  There is no interest in buying the bulls.  Any offer to purchase a contract is below the face value already paid.  The owners of contracts are left to “bear” the price they have paid up front.  They may have paid more than the tea is worth on the open market.

So a bull market is where trading is attractive and a bear market is stagnant or shrinking.

The bear market rally occurs when prices are falling.  Everyone is feeling bearish and trading volumes fall.  Prices stagnate.  Some traders believe that the lower price now represents a new floor value and that the share price will rise again.  They buy shares, raising the price a little on low traded volumes.  Then the falling dynamic cuts in again, and the cagey traders release larger volumes of stock onto the partially stable market.  The result is a headlong tumble, and those traders who bought at the new floor realise they have been suckered.

It was Munehisa Homma, the Japanese Rice Futures trader, who first understood that prices of derivatives have more to do with emotion of traders and the herd mentality than with the physical value of the commodity.  Time and again we have seen boom and bust cycles driven by psychology rather than economics, Mississippi Property, Dutch Tulip Bulbs, South Sea Company, 1920’s Florida property, the British Railway bubble, the .Com bubble, Enron and all the way up to the Irish Property bubble of 2007.  All driven by buyer psychology.

Homma was nicknamed the God of the Market because everything he touched seemed to turn to gold.  Sort of an 18th Century Japanese version of Warren Buffet.  He is also known as the father of the candlestick chart, an elegant method of capturing activity in a market.  The “Candle” is a rectangle which describes the opening and closing positions in the market while the “Wick” indicates the highest and lowest traded prices in the session.  By charting market movements Homma could see what psychology was doing, and could make market predictions that gave him an edge over traders who were reacting to circumstance.

Now there is an entire science founded on the candlestick chart.  It comes with enigmatic Japanese terminology to describe patterns, the hanging man, the inverted hammer, three black crows or three white soldiers.  For each pattern there is a predicted response.  But now that the responses have been programmed into computers there is almost an inevitability to certain market movements.

Of course, if you know what the computer programmes will do, a savvy trader can still find an edge…..or can they?

When Markets go Dark


Traditional marketing theory holds that there are three broad strategies for positioning a product.  You can be the best, you can be the cheapest, or you can serve a specific niche.

It is most simple to communicate that you are the best or the cheapest.  It is more difficult to communicate niche benefits.  One great boon of the arrival of the internet was to support niche communications.  Using the internet you can target communications at tiny market segments and still succeed.  As a result we get the “long tailed comet” and the weakening of mass market simplification.  We don’t all have to settle for a white sliced loaf simply because it serves the broadest audience.  You can get your loaf of yeast free pumpkin seed bread made with stone ground flour from a mill operated by orphan refugees.

What is interesting about Dark Markets is that this niche power is removed.  Tobacco is the most dark market we have.  Some nations are very dark, Australia, Canada, Ireland and England seem to be in a competition to win the race to be the darkest tobacco market.  In Ireland the product is no longer visible in-store.  The packs are hidden behind closed doors, and no advertising, promotion or communication of any sort is permitted to the end consumer – other than the price list.

Absent any communication it is impossible to convey the benefits of niche products.  As a result people select using simplified heuristics.  They can see the price.  So it is either high price or low price.  Highest price must be the most premium product and lowest price is assumed to be best value.  Consumers assume that lower price products will be of inferior quality, and in the case of tobacco they will be less “healthy” than the premium price products.  It is interesting that the biggest markets for low price brands, and for counterfeit brands, are in the “full strength” tobacco products.

Profit margins on low price products are derisory.  It is in the interest of the manufacturers to keep as much of the business as possible up at the premium end.

So what?

Other markets are going dark.  Pharmaceuticals are partially there, Alcohol is being targeted, Baby Milk Formula, Childrens Cereals.  Many products run the risk of following tobacco down the path to the dark side.  What lessons can you learn from Tobacco?

1.  Stop fighting for share.

If you treat a dark market the way you treat an overt market, and fight for market share, you will lead a race to the bottom on price, and drive value out of the market.  The major players in the market have to move away from using share points to reward sales teams.  Focus on profitability measures.

2.  Build premium positions.

Forget the middle market.  Devote your resources now to building strong premium positions that are simple, clear and relevant in the minds of your consumers.  Don’t waste money building brand positions for marginally profitable lines.  Be patient!  Take your time to build your premium position.  You will come under relentless pressure from sales to use sales promotions and discounts to push share.  You have to fight that.  A premium brand should never be on sale.

3.  Cheap must have a compromise.

If one player is building a fighter/Tiger brand, you need to communicate to your consumers why Premium is different to Value.  Why is cheap also nasty?  You must convey this effectively before the market goes dark, or the consumer will simply buy on price.  But you also need to be careful not to damage the category.  If cheap vodka is bad for your health, it must also be clear that premium vodka is at least health neutral (ceteris paribus)

4.  Motivate stakeholders early.

Get the retailers to buy in on premium.  Make sure they understand that it is about CASH margin, not percentage margin.  So what if you get 15% on a $10 bottle of Vladiawfull vodka.  It is far better to get a tight margin on a €60 bottle of Grey Goose.  Also, get them to fight for light.  Make it clear to them what the negative impact of a dark market means to their business.  Organise them into lobby groups.  Help them to advocate their positions with  grass roots political representatives.

5.  Build a network of ambassadors.

Find the people who like your product now and recruit them for the long haul.  Not barmen or shop staff.  They have to have longevity, so they need to be business owners.  Get long term buy in for your brands now, and it will pay back handsomely when the market goes dark.  Bring these people together, make a community where they can help each other and help your brands.  The market may be dark, but you can have online buzz as members plan their next outing of the eg John Player Amateur Golf Classic.