Decision Support

Focus Groups are Dead: It’s Time for Brands to Refocus

Team MakerSights

August 29, 2022

Are you familiar with the famous Betty Crocker cake mix focus group? In the 1950s, company executives were curious why their new pre-made cake mixes were not selling as anticipated despite the obvious time-saving benefits over competing products. 

They interviewed several small groups of American women, many of whom were housewives and had recently entered the workforce for the first time. It didn’t take long to discover that the women felt “guilty” for how little effort the dessert required to make for their families. 

The answer? Increase customers’ participation in the baking process by asking them to mix an egg into the batter. The results of this small change were staggering, and Betty Crocker cake mixes soon dominated the market.

Since then, focus groups have become the most popular method for capturing consumer sentiment and feedback on products. There’s only one problem: It’s 2022, not 1950. And a lot can happen in 70 years.

Focus Groups: Then vs. Now

The last seven decades have given way to dozens of inventions that completely changed our way of life, from barcodes and DNA testing to GPS and a little thing called the Internet. The thought of store associates manually tagging items using pricing guns or drivers pulling over to plot their destination on a physical map sounds antiquated, if not a little funny, and highly inefficient given the amount of technology and data available today. The same can be said of focus groups.

Products Then and Now

Once upon a time, consumers had fewer options and brands had less competition. Companies could succeed and even capture an entire market by offering just a few basic styles. The volume and variety of prints, patterns, fabrics, etc. were more limited and far less nuanced, making testing a much simpler and straightforward exercise. 

But as the market has grown increasingly global and consumer options have multiplied, the need for brands to offer a more diverse and differentiated mix of products to remain competitive has increased drastically. Even back as far as the late 1980s marketing guru Regis McKenna noted in the Harvard Business Review, “...new technology has spawned products aimed at diverse, new sectors and market niches. Computer-aided technologies now allow companies to customize virtually any product, from designer jeans to designer genes, serving ever-narrower customer needs.”

Collecting and comparing consumer feedback on such a wide variety of specific styles and product details simply isn’t scalable, cost-effective, or insightful using traditional focus groups. As New Balance’s Director of Consumer Insights and Analytics Charles Wilson shared during a recent PI Apparel presentation: “There’s a limit on how much product we can show any one consumer. So if we’re in a room with consumers….we maybe have anywhere from 20-30 sneakers and anything after that turns into noise. The consumer just can’t quite distinguish across that much choice.”

Consumers Then and Now

Until recently, popular culture mostly highlighted and catered to one type of consumer. Brands were historically comfortable with assuming that a small homogenous group of people accurately represented the entire market and everyone’s buying preferences. It’s safe to say that diversity has not traditionally been considered a top value or priority for the majority of mainstream brands.

But as stated by Deloitte in their research on the changing consumer, “There is a seismic shift that has taken place in the United States over the past 50 years. The population has become increasingly heterogeneous: Millennials, now representing 30% of the population, are the most diverse generational cohort in US history, with roughly 44% consisting of ethnic and racial minorities. In comparison, only 25% of baby boomers belong to ethnic and racial minorities.” 

Not only are markets and buying power growing increasingly varied, but one in three consumers now considers a brand’s commitment to diversity and inclusion when making a purchase, according to Top Design Firms. While it may have once been possible to understand and appeal to a wide swath of the population by conducting small focus groups of “typical consumers,” this strategy simply does not produce the same results today. 

This point is illustrated by retail veteran, Rothy’s SVP Chris Hull in a recent interview: “In my days at Nike, you’d organize a focus group of maybe 10 to 12 people. It’s time-consuming to do, expensive, and it’s usually dominated by one or two voices, the most opinionated [people in the room]. You come back from those focus groups thinking that you can extrapolate those two voices to be 2,000 voices and that’s going to help make your decision.” 

The Market Then and Now

Remember back to school shopping as a kid? Before the 2000s, we had to visit stores to see, try on, and purchase clothes and shoes, or wait patiently for catalogs to come in the physical mail. Our favorite brands dictated and unveiled the latest trends to us each season. Consumption moved at a slower pace, giving brands the time necessary to compile and host multiple in-person focus groups. In fact, most brands’ assortment development cycles still span 18-24 months from product strategy to actual release. 

But the rise of digital commerce has forever transformed the way consumers research, select, and purchase products. Trends are born instantly as consumers live stream Paris runway shows from their living rooms. Social media influencers and peer reviews now have greater power over audience demand than top brands. And consumers can access products directly from brands online and buy them faster than you can say “add to cart.” 

Traditional focus groups just weren’t built for the modern market. Microtrend cycles have accelerated from 3-5 years to mere months or even weeks. Effectively capitalizing on current events requires brands to move at the speed of near-real-time. Put simply, by the time a brand is able to gather a group of people in a single room and get their input on its latest style samples, the market has already moved on. 

Despite how much has changed over the last 70+ years, brands continue to rely on focus groups as the primary vehicle for gathering consumer feedback, and the effects are eating away at retailers’ profit margins faster than they realize.

Lack of Perspective Leads to Lost Profits

With traditional focus groups failing to give brands the volume, variety, and velocity of consumer insights they need, stakeholders are often left to rely on their gut feelings and intuition to decide which products to create and bring to market. “Focus groups are intermittent and can help brands validate their larger strategy, but you can’t really use them to work on each individual product or all of the colorways you are considering,” says Tim Janaway, former adidas General Manager of Outdoor & Golf and current MakerSights advisor.

Teams waste hundreds of hours debating over every silhouette, color, pattern, and detail. Thousands of dollars are spent developing graphics, swatches, and samples for pieces that never even make it to consumers. Often, teams either adopt the wrong items or are too afraid to drop any, leading to inefficient SKUs and bloated assortments.

“Part of the reason why brands become over assorted is because every retailer wants something different, or marketing has its own ideas about what will sell in a particular channel,” explains Janaway. “It’s not uncommon to have an American working with a German trying to figure out what a young Chinese consumer wants and the final decision being made months later by a 50-year-old buyer based on no consumer insights!”

In the end, 40% of new products now fail to sell each season – and are either incinerated or sent to landfills – and 30% sell only after they are marked down. The number of garments produced has more than doubled in the last decade, yet the fashion market value has increased by less than 17%. Years of product, consumer, and market evolution have rendered focus groups nearly obsolete, and as Janaway says, “the data and tools have not been available to help brands analyze product feedback on a more consistent, real-time, and tactical level.” That is, until now.

Consumer Testing Provides A Clear Path Forward

Along with modern problems come modern solutions, and the latest voice of consumer technology allows brands to digitally gather detailed feedback from thousands of consumers around the world across highly specific and diverse audience segments in just a few hours. It’s now possible to evaluate and compare consumer preferences and demand at scale for various products and particular features, including fabrics, colors, patterns, silhouettes, prices, and much more.

An example of consumer sentiment testing results across two Consumer Profiles in the MakerSights Voice of Consumer platform.

In fact, research shows that the best of these tools can run roughly twelve detailed, highly targeted tests for less than the cost of four 6-person focus groups made up of general population, 18- to 49-year-olds in a single city — all in a fraction of the time. This allows brands to give their consumers a seat at the table and involve them in each decision along the value chain, even before sketches and samples are developed. 

In addition to minimizing stakeholder guesswork and crafting assortments consumers truly love, this approach empowers brands to minimize over assortment by appealing to diverse consumer segments with the fewest number of SKUs possible — ultimately reducing markdowns and margin erosion. For example, to maximize team efficiencies and deliver consistently on-trend assortments, Dearfoams wanted to incorporate more consumer feedback into its product creation process. 

The team started with traditional focus groups but quickly realized that the results were difficult to scale and not representative of the majority of Dearfoams’ customers. So, the brand decided to leverage modern consumer testing to better understand Dearfoams’ core customers and aspirational consumers. It’s now able to collect consumer sentiment data at scale pre-season and use it to narrow down silhouettes, prints, patterns, and more before investing resources in developing samples. 

Not only has this led to a 50% reduction in proto sampling after just a few months of testing, but it has also enabled Dearfoams to effectively appeal to younger consumers and make bold assortment decisions with confidence. The team was even able to confirm its hunch that consumers no longer want house-only slippers and shift its resources to creating indoor/outdoor slippers only.

Now, imagine that the brand’s top-rated slipper colorways were all neutrals. Additional consumer testing using the latest technology could reveal that two of the three neutral styles appeal to the same segment of middle-age buyers. However, replacing one of these cannibalized styles with a new electric blue shirt would enable them to reach a younger segment that finds this bold color highly appealing, thereby increasing revenue and reaching more diverse consumers with the same number of SKUs. 

An example of MakerSights’ Line Efficiency graph showing potentially cannibalizing styles and where to cut the long tail to achieve SKU productivity.

Time To Refocus

Betty Crocker’s cake mix focus group story is famous for a reason — it was a groundbreaking research tactic and remarkably effective for the time. And the brands that took advantage of these novel focus groups reaped the benefits. We’re still talking about Betty Crocker’s success today, after all!

But 70 years of innovation have given way to significant shifts in the product, consumer, and market landscapes. Brands’ lack of accurate and timely consumer insights is forcing them to turn inward and make product and assortment decisions based on intuition and opinions. With markdowns on the rise and retail profitability on shaky ground, it’s safe to say that the focus group as we know it is dead.

Now is the opportunity for retailers to harness the latest technology, data, and analytics to tap into their consumers’ needs and desires in a more efficient, cost-effective, accurate, and insightful way. The brands that embrace these cutting-edge consumer testing methods today are sure to become the “Betty Crockers” of tomorrow!

Team MakerSights

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