How to fully maximize the potential of data continues to be a priority for marketers and business leaders. Data-driven product development, particularly in the consumer goods sector, is one of the key digital innovation trends emerging from China (see The Future of Retail: What Western Brands Can Learn From China).
From B2C to C2M
Traditionally, B2C brands manufacture products based on trend analysis and hypothetical consumer demands. They then rely on marketing to educate consumers and distribution to generate sales. However, the C2M model, heavily promoted by digital giants such as Alibaba, offers a consumer-centric approach to product development. In the new model, brands mine consumer data to identify demands. They then conduct trials and utilize data to optimize product design and marketing strategy.
The model is partially inspired by how technology companies develop products with demos and trials while incorporating real-time data analytics into product optimization. In China, smart CPG brands have innovated product development in a similar spirit, following multiple steps driven by data:
- Build integrated consumer database to mine demands
- Create product concept and launch demos on social media
- Gather demo results and social listening data for feedback
- Optimize products based on feedback data and move into manufacturing
- Launch highly targeted marketing campaigns to deliver to consumers
Case Study: Genki Forest
Genki Forest, a Chinese local beverage brand, provides a C2M playbook. During the 2020 Double 11 Shopping Festival, the four-year-old brand topped Coca-Cola and Pepsi, ranked No. 1 in beverage sales on both Tmall and JD, the two largest e-tailer platforms in China. The success can be attributed not only to their advanced omnichannel marketing strategy (see Social Strategies for Building a Digital Brand in China) but more importantly to their sophisticated use of data in product development.
According to an interview with the brand’s VP Zonghao, Genki Forest has built an integrated consumer database and a flexible supply chain that conducts rapid A/B testing. With the analysis of first-party consumer data, product teams mine demands and develop multiple demos to launch through influencers and social media campaigns. Based on consumer feedback on social media, Genki Forest would choose and optimize the final products from the demos, and then move into manufacturing.
Transforming into such a data-driven product development model requires enterprises to build integrated data capabilities that can process and analyze real-time data, flexible supply chains that enable speedy product trials, and cross-functional marketing teams that support executing each consumer-facing stage of R&D.