Over the past three years, business has grappled with a multitude of challenges, from the relentless impact of COVID-19 to soaring inflation, sky-high interest rates, heightened job insecurity, and the looming spectre of a recession.
At the same time, there have been seismic shifts due to the pace of technological change. Arguably both the type and the scale of the transformation we are currently witnessing is unparalleled throughout human history.
Certainly, never before have consumers been subjected to such a whirlwind of change in such a brief time span. Such significant shifts in the global economic landscape used to occur at a slower pace, typically once every decade, as exemplified by the early 1990s recession, the boom and bust of the dot-com era in 2000, and the global financial crisis of 2008.
This is why the ability to harness real consumer insights holds such importance in the present moment. Relying solely on gut instinct simply doesn’t cut it in today’s dynamic and demanding environment. Brands must maintain a close connection with consumers to gain a deep understanding of how to engage with them and what captures their interests. Insights must be both swift and highly accurate, as the subtle nuances of consumer behavior have become paramount.
The e-commerce upheaval
One of the most significant changes in the past few years is how e-commerce has put brands in direct communication with consumers. E-commerce has existed in various forms for some decades, from the 1982 Boston Computer Exchange to the birth of Amazon in 1995. But the current proliferation is unmatched. It is now a key indicator used to inform marketing decisions by the retail industry and brands.
In Pureprofile’s joint e-commerce report with the IAB, we found that the values which underpinned the ethical lifestyles of recent years are being put aside in favour of financial caution in the current economic climate. This signals that many consumers are doing it very tough at the moment and shifting their priorities when it comes to online shopping.
Convenience remains the top reason for buying online but it has declined as a driver of online shopping this year, falling 10 percentage points compared to 2022. The importance consumers place on domestic brand ownership also fell dramatically from 69% in 2022 to 58% this year.
The evolution of identity
In addition to shifting their buying habits, consumers are undergoing a significant transformation in how they perceive and express their identities. This transformation has a direct impact on the choices they make when it comes to products and services.
This shift in consumer identity is a critical focal point for market research given our historical tendency to categorise individuals by gender. However, contemporary consumers are increasingly transcending traditional binary gender norms, and it is imperative for market research and brands to adapt to this change.
Notably, the LGBTQI+ community, which now encompasses a diverse range of identities, wielded an impressive $3.7 trillion in purchasing power in the United States alone in 2019. So brands ignore the evolution of identity at their own risk.
AI and data availability
Many excellent points have been made across the industry about how AI will shape the future of market research. Steve Phillips, CEO and Brendon McLean, CTO at Zappi consider that GenAI in particular offers a huge time-to-value reduction compared to traditional AI and ML, allowing for rapid results and insights.
However, as an industry, we would be remiss to assume that today’s uses of AI are the correct uses of it. Telling examples include the US lawyer who used ChatGPT for a legal brief, where it “hallucinated” fake citations, and online real estate marketplace Zillow being forced to write down millions of dollars and axe thousands of staff after an error rate in the machine learning algorithm incorrectly predicted home prices.
One of AI’s greatest strengths is its use as a powerful search engine. However, we are also seeing several major companies opt out of data sharing with open AI, such as Reddit and X/Twitter. This means that the third-party data sources that AI looks to in order to inform their algorithms are rapidly depleting and what’s left to draw on is not necessarily premium data.
Additionally, new legislation is also rolling out across Europe that reins in how top social media platform algorithms can use consumer data for advertising and bans surveillance advertising states. This further limits how data can be utilised within AI and market research.
What are the implications for market research?
Market research used to be about understanding what consumers are doing and their drivers. With data abundance and AI, the “what” point is already known but it needs to be overlaid with “why”. You know a consumer saw your ad, but what difference did it make to their purchasing decision? They read a review online, how did that change their opinion? And what recommendations can you offer a brand to either deter or reinforce a behavior?
Undeniably, the role of market research is rapidly evolving. As an industry, we need to be more open to new data sources and methodologies that offer brands a more holistic view of the consumer. We also need to embrace diversity and cultural shifts that break down traditional demographic groupings and set new standards for consumer identity, before we further explore consumer behavior.
And of course, AI and GenAI hold huge potential for the industry to help navigate the changes, providing a way to better understand consumers more quickly. As AI reduces research timelines, the challenges of data quality and privacy concerns persist. Researchers must navigate these complexities and remain innovative and ethical. In a world where the potential of AI and GenAI is still unfolding, staying adaptable and forward-thinking is key.
By, Martin Filz, CEO at Pureprofile
This article was first published by Greenbook