How David Can Beat Goliath With Data

Small businesses want to be big businesses. Similarly, big businesses want to stay big.

So while the little guy tries to use his advantages to grow big, the big guy tries to use his advantages to keep the little guy at bay.

There is one advantage, one tool, that can be used equally well by both big and small companies: data. Data can turn Davids into Goliaths. And Goliaths can use data to crush Davids. Data is the equal opportunity weapon in business. It is the level playing field. It is the equalizer.

So what has data done for some of the companies, both big and small, that have worked with The NPD Group?

Well, as is often the case, we can’t share the exact stories of our clients. And as is always the case, we guard the confidentiality of those who do business with us. But by changing the details just a bit, we can illustrate the power of the data without revealing proprietary information. The data sets, products, and approaches we’ll talk about are used in a wide variety of the more than a dozen industries we track. To make things easier to compare and to protect our clients’ anonymity, we’ll tell their stories with pretend names, whimsical industry segments, and a bit of imagination.

You can’t get there from here

When a new product catches on at retail nationally, it generally does so after advancing through a sort of regional procession. A product debuts in one place, win some fans, and then adds distribution in other places, advancing across a map. That’s a classically David move.

Big companies, on the other hand, can, and sometimes do, launch new products nationally right away. But it’s more likely that a big company will test a product in a number of geographic regions before pulling out the big guns and going national. That’s a classic Goliath move.

The problem with either of those two approaches is that no two places are the same. There may be commonalities among places — New York and Chicago both have subways, for ex­ample. But New York is decidedly not Chicago. NASCAR may be a popular sport across North America. But it’s safe to say there are more fans in Biloxi than in Bangor.

Regionalism, not uniformity, is the norm.

That’s why understanding the regional differences in sales and distribution data is crucial to understanding, and winning, any David vs. Goliath scenario in retail.

Once upon a time we worked with a major beauty brand with a substantial national presence. The company is a classic Goliath — well-known, powerful, feared by competitors. So let’s call this company Goliath Skin Cream.

One day Goliath Skin Cream decided to launch a new product in one of the industry’s hottest segments. (Let’s pretend it’s the nonexistent and nonsensical segment dedicated to perfume-in­fused, ear-moisturizing lotions.)

The company called upon the power of its Goliath-like relationships with retailers. Predictably, retailers quickly found space on their shelves for Goliath’s ear moisturizer, a premium product priced well above the average in the category.

All was well.

But then the Goliath brand took a look at two widely used metrics: the Brand Development Index, which lets a brand see how well it performs within specific demographics (Coca-Cola among 18- to 29-year-olds, for example), and the Category Development Index, which measures how well a category segment performs within a group (all soda among 18- to 29-year- olds).

Goliath Skin Cream found two areas — on opposite sides of the country — where the ear-mois­turizing category was substantially stronger than the performance of its brand within that cat­egory. In other words, Goliath found two places it could grow substantially if it invested.

Using its Goliath-like powers, it began pouring marketing dollars into those areas to grow the brand and ward off fast-moving, locally based Davids.

Objects in the mirror are larger than they appear

Meanwhile, another company had emerged in the ear-moisturizer world. David’s Creamy Ear Lotion is a mid-priced product made with organic ingredients. It’s marketed at people who want natural-looking, but well-moisturized ears.

David’s Creamy believed there were a fair number of those people. But lots of retailers disagreed.

As a result, David’s Creamy struggled with distribution. Few retailers carried the brand. Even fewer gave it a good spot on the planogram.

Fortunately for David’s, it had access to velocity numbers within its NPD Store-Level-Enabled data. Velocity looks at sales figures but controls for distribution — which is research-speak that means velocity measures how well something sells at the places where it’s actually available.

We like to think of velocity as a measure of love. Velocity can show how strongly consumers feel about a product when they have an option to buy it.

It turned out that folks loved David’s Creamy Ear Lotion . . . they just couldn’t find it at most retailers.

David’s took its velocity numbers to retailers that had previously shunned its lotion. The retailers recognized, correctly, that David’s Creamy deserved to be in more stores and deserved better shelf space. Deals were signed. Boxes were shipped.

Goliath Skin Cream, interestingly, was not surprised by the rise in David’s fortune.

Goliath also closely tracks velocity numbers in its sectors. It was long aware that David’s Creamy had unrealized potential.

As David’s won more distribution deals, Goliath Skin Cream was left with several options. One, it could use its Goliath-level wealth to acquire David’s. Or two, it could use the same Goli­ath-level powers it used to win market share for its premium product and create a new, mid-tier cream to compete with David’s. (Launching a mid-tier product is no easy thing. Looking at the right data in the right way can help. For more on this subject, check out our article, Mid-Tier Pricing: When Less Really is More.)

He ain’t heavy, he’s a brand I feel strongly about

In the Biblical story, when David took the field against Goliath, he brought with him a single weapon: a sling for hurling stones. In the moments before the fight began, he appeared free of fear and lectured Goliath on the power of God.

In military terms, such factors (use of a technologically advanced weapon capable of engaging the enemy at distance, plus the possession of extraordinarily high morale) are known as force multipliers. Force multipliers do exactly what they sound like they do. They “multiply” the force available for any battle by dramatically increasing the effectiveness of the fighters.

The concept of force multipliers has been around forever. But the earliest use of the term is fairly recent, and it referred to the practice of using small military teams, such as the U.S. Army Special Forces units known as A Teams, to recruit and train larger groups of local guerillas.

An A Team’s purpose, in other words, was to find someone else to do the bulk of the fighting.

In retail, finding a force multiplying group of consumers to do the heavy lifting is an underused practice. But once again, a look at the right data can point the way.

Civic Science, a partner of The NPD Group, recognizes that the fundamental challenge of a Da­vid-sized company is that it simply cannot sell to everyone . . . yet, because not everyone knows about it. For a brand, such as David’s, Civic Science uses its real-time platform for collecting consumer sentiment to create a DeepProfileTM analysis for the brand.

And here’s the thing: DeepProfile is designed to identify which demographic groups have large numbers of passionate fans of those “low-incidence” brands — people who feel so strongly about a product that they will do much of a company’s marketing through word-of-mouth and social media.

For a company like David’s Creamy, that can make all the difference in the push toward becom­ing a national player. Once again, here’s a fictionalized account of how this works:

David’s Creamy found its force multipliers were young women in the Northeastern U.S. with a love of the outdoors and a strong interest in charitable giving.

So David’s Creamy, operating with a fairly small marketing budget, decided to spend its cash on getting that demographic even more excited. David’s teamed with a charitable organization that works to preserve wetlands. For every large bottle sold of David’s Creamy, the company promised to donate $1 to the charity.

David’s launched a social-media campaign under the slogan “Keep your ears moist, and the planet wet.” The fan base took to the campaign like a duck to those very same wetlands. Social media references to David’s Creamy soared. As did sales.

Goliath Skin Cream wanted a force multiplier of its own. And given that it had a substantial marketing budget, it didn’t want a guerilla force. It wanted the most powerful force in retail marketing: celebrities.

But which celebrity?

Once again, the data points the way.

The NPD Group’s BrandLinkSM service mines consumer sentiment data to see which celebrities are beloved by the same people who love a particular brand.

Goliath Skin Cream learned the folks who tended to love its ear moisturizer also loved Agnes Pseudonym, a TV actress with a dedicated fan base.

Goliath and Agnes quickly signed an endorsement deal, ensuring Goliath Skin could use the actress as a force multiplier capable of winning over her fans to the brand.

The right tool for the right job

There are numerous lessons to be learned from the original David vs. Goliath story. One, of course, is to know your tools. David wasn’t a soldier. He was a peasant. David famously reject­ed the armor that was offered to him, because he was not familiar with it. “I cannot go with these,” he said, “for I have not proved them.”

The moral of our David vs. Goliath stories is similar: Regardless of your size, the key to victory is in choosing proven tools.

Data is just such a tool. It is, in fact, the only such tool. It alone has been tested and proven to have the power to turn Davids into giants and help Goliaths counter the fast-moving threats of smaller players. Whatever the size of your company, data is what you should take to battle. It is both five smooth stones and a sturdy helmet.

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