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1. HOW TO IMPROVE PROFITABILITY &
OUTPERFORM YOUR COMPETITION:
THE GUIDE TO DATA-DRIVEN DECISION
MAKING
A.J. Riedel, Sr. Partner

2. The movie Moneyball depicts data-driven
decision making in action.
The movie Moneyball tells the story of how Billy Beane and
his Harvard-educated quant whiz kid protégé Paul
DePodesta turned the Oakland Athletics into a team
that consistently made the playoffs over a number of
years. And they did it using data-driven decision
making.
The Athletics were near the very bottom of the league in
terms of their financial capacity to spend on acquiring
talent. Through detailed analysis of every imaginable
baseball statistic, the duo uncovered the true underlying
drivers of success for a baseball team. They
uncovered the massive inefficiency in how baseball
talent is priced and were able to exploit this inefficiency
to their advantage. Billy and Paul figured out how to
gauge and price the true worth of every ballplayer.
The morale of the Moneyball story is that data-driven
decisions result in significantly better outcomes than gut
feel, intuition, or conventional wisdom.

3. Recent research proves that companies
that rely heavily on data analysis are
likely to outperform others.
Researchers at the Wharton School of the University of Pennsylvania studied
179 large publicly-traded companies. They found that the companies that
adopted “data-driven decision making saw measurable improvement in
productivity and other performance measures.
http://misrc.umn.edu/wise/papers/1a-1.pdf

4. What is data-driven decision making?
If you do a Google search on the term, most of the
search results relate to the use of data-driven
decision making in education.
In the education world, data-driven decision making
is defined as “A process of making decisions
about curriculum and instruction based on the
analysis of classroom data and standardized
test data. It is based on the assumption that
scientific methods used to solve complex
problems in industry can effectively evaluate
educational policy, programs, and methods.”
http://www.ncrel.org/sdrs/areas/misc/glossary.htm
The practice of data driven decision making in
education has exploded over the last five years
as educators have discovered how powerful
data can be when promoting school
improvement. Data driven decision making has
been credited with improving teacher quality,
improving curriculum, promoting parental
involvement, & narrowing the achievement gaps
amongst various student populations.

5. What is data-driven decision making in
business?
The process of making product development
and marketing decisions based on the
analysis of consumer, marketplace, and
competitive data.

6. Most housewares companies are using
data-driven decision making of a sort –
they are basing new product decisions
on what their competitors are doing.

7. But most housewares companies are not
collecting and analyzing consumer data.

8. Marketers still rely too much on intuition.
“A recent Corporate Executive Board study of nearly 800 marketers at
Fortune 1000 companies found that the vast majority of marketers still
rely too much on intuition – while the few who do use data aggressively
do it badly.
On average, marketers depend on data for just 11% of all customer-related
decisions. In fact, when we asked marketers to think about the
information they used to make a recent decision, they said that more
than half of the information came from their previous experience or their
intuition about customers. They put data last on their list – trailing
conversations with manager and colleagues, expert advice and one-off
customers interactions.”
http://blogs.hbr.org/cs/2012/08/marketers_flunk_the_big_data_test.html

9. Most decisions are made by HiPPO.
Many housewares companies use HiPPO-driven decision making (the “highest paid
person’s opinion”). HiPPO stands for “the highest paid person's opinion”. The term refers
to those people who have the final word on any design issue on the basis that they're
the highest paid person in the room.
Certainly, intuition grounded by years of in-market experience should always be listened
to carefully, but it pays to augment even the best intuition with data.
In today’s volatile business environment, judgment built from past experience is
increasingly unreliable. With consumer behaviors in flux, once-valid assumptions can
quickly become outdated.

10. Housewares manufacturers have an
average new product failure rate of more
than 50%.
If you are a typical housewares company, somewhere between 25 and 50% of the new
products your company introduced in the past five years met the company’s success
criteria.
What Percent of the Products Developed by Your
Company is the Last Five Years Met Your Company's
Success Criteria?
More than 50%
Between 25 and 50%
Less than 25%
0 10 20 30 40 50 60 70
Percent of Respondents
What’s more, you are probably wasting 50% or more of your new product development
budget developing marginal products that have a low probability of marketplace success.

11. Here are the top six reasons you should
adopt data-driven decision making.
1. By changing the way you make decisions you'll outperform your
competitors.
2. You’ll reduce the number of suboptimal decisions being made by
your managers.
3. You’ll reduce your risk of making costly marketing & product mistakes.
4. You’ll save money by weeding out the marginal products that have a
low probability of success before you’ve invested in tooling.
5. A larger percent of your new products will be marketplace successes.
6. You’ll get a better return on your new product investment.

12. Data-driven decision making does not
mean you need a multi-million dollar
budget.
Adopting data-driven decision making does not require a multi-million dollar budget for
retail store tracking data, data-mining, analytics software, or huge quantitative
research studies.
And unlike Billy Beane and his team, you don’t necessarily have to plow through every
imaginable statistic stored in your company’s databases. The Athletics used
mounds of baseball statistics to figure out how to gauge and price the true worth of
every ballplayer.
For housewares manufacturers, the answers to your most pressing product and
marketing decisions won’t be found in statistics. The answers will be found by
talking with and understanding the people who buy and use your products.

13. To get started using consumer data to make
product & marketing decisions,
you need a few simple data collection tools.
Market Research Online
Online survey software
Community (MROC)
A "dedicated online community for qualitative
market research purposes”, otherwise known
as a Market Research Online Community or
MROC. You can build and manage your own
in-house panel, have a company like
Communispace build and manage your panel
for you, or use a third party panel such as my
company’s HomeTrend Influentials Panel.

14. And people with analytical, creative, and
outside the box thinking skills.
Even more important than the data collection tools is the brain power to analyze
and make sense out of the data. If you don’t have people in your organization
who have strong analytical, creative, and outside the box thinking skills, you
should find an outside resource who does.

15. THE QUESTION:
WHAT FEATURES SHOULD OUR NEW
PRODUCT HAVE?

16. Manufacturers tend to want to cram as many
KPD into their new products as possible.
What features should the new product have? That is one of the first questions that the
product development and marketing people have to answer when they are starting to
define a new product concept.
Most housewares manufacturers think “more is better”. They believe that the more
features they put into a product, the more customers will like it. Or they want to be
able to claim to their retail customers that their new product has the highest KPD
(Knobs per Dollar) in the category.

17. But consumers don’t buy products
because of KPD.
They buy products they think will solve a problem better than what they are currently
using. They buy products that they believe will be easier to use or easier to clean.
They buy products that will make their lives easier or save them time.

18. Start by understanding your consumer.
A manufacturer of small kitchen electrics decided that they wanted to get into the
countertop microwave market. They contacted me for help in figuring out what functions
and features they should put on their new microwave oven that would really set it apart
from all the microwave ovens on the market today. They expected that I would
recommend that we do a comprehensive analysis of all of the competitive microwave
ovens. Instead, I recommended a consumer needs assessment.
To develop products that are significant improvements over the products that are currently
on the market, you have to thoroughly understand the people who are buying and using
those products. You must understand what problems consumers are having with the
products that are currently on the market so that you can come up with ideas that solve
those problems. You must understand where current products fall short so that you can
develop products that consumers will like better.

19. Type of research study: consumer needs
assessment.
•I started with questions about their microwave oven. Questions like how long they’ve
owned it, how much they paid for it, what brand they own.
•The next set of questions addressed how satisfied they were with their microwave oven.
.
•Next, I asked what they cook in their microwave oven, and how often they cook
different types of foods in their microwave oven.
•I asked questions about what cooking functions and features they would want if they if
they were buying a new microwave.

20. The research revealed that there are four
distinct segments of microwave oven
users.
 The first and largest group is
people who use their microwaves
mostly for melting and reheating.
 The second group is the people
who use their microwave mostly
to heat up leftovers.
 The third group is the people who
use their microwave mostly to
heat up frozen foods.
 The fourth group is people who
use their microwave to prepare
whole meals.

21. The functions and features people want
depends on what they use their
microwave oven for.
Are these cooking functions: functions Are these features that you absolutely
that you absolutely must have, functions must have, features that would be nice to
that would be nice to have but are not have but are not necessary, or features
necessary, or functions that you don't that you don't need or want?
need or want?
Control lockout
Child lock
Delay start
Convection
Racks for bi-level cooking
Multi-stage cooking options
Speed cook
Keep Warm/Simmer Convection
Instant On Controls
One-touch cooking categories
Popcorn button
Reheat
Shortcut keys
Sensor
Interior oven light
Defrost Timer
Carousel turntable
0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%
I don’t need or want this function I don’t need or want this feature
This function would be nice to have but is not necessary This feature would be nice to have but is not necessary
I absolutely must have this function I absolutely must have this feature

22. Decisions made based on consumer
needs assessment
 Based on the research findings, my client decided to
target the two smaller segments of microwave oven
users -- the people who use their microwave oven mostly
to heat up frozen food and the people who use their
microwave to prepare whole meals.
 Their microwave ovens would address a common
complaint of these two segments of microwave oven
user – that they couldn’t just put a food into the
microwave and walk away. Their microwave oven would
take the guesswork out of microwave cooking and would
have features and functions such as auto reheat and
defrost, sensors, One Touch Express Cook for common
frozen food categories, Multi-stage cooking options, and
Racks for bi-level cooking.

23. THE QUESTION:
SHOULD WE INVEST IN TOOLING FOR
ALL OF THE ITEMS IN THE LINE?

24. Type of research: Product Screening Test
A kitchenware manufacturer developed a line of 19 innovative new kitchen gadgets a
couple of years ago. Before they invested in tooling, they wanted to find out how
interested consumers would be in each of the items.
Respondents were shown an illustration and a brief description of each item in the line
and asked to read a description of the product. They were asked how interested they
would be in purchasing the product.

25. Purchase likelihood ranged from 42% for
Concept C to 7% for Concept S.
If this product was already available at your favorite
store, how likely would you be to purchase it?
Concept S
Concept Q
Concept O
Concept M
Concept K
Concept I
Concept G
Concept E
Concept C
Concept A
Competitive #1
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Very likely Completely likely
Purchase likelihood ranged from from a low of 7% to a high of 42%.
A purchase likelihood score of 7% means that 7% of the survey respondents said that
they would be “very” or “completely” likely to purchase the product at the given price.

26. A strong correlation between purchase
likelihood scores and how well the product
met company expectations.
Failed to meet Exceeded
TOP TWO BOX Met sales
sales sales
PURCHASE LIKELIHOOD expectations
expectations expectations
WATER PITCHER 60% X
FRUIT & VEG
48% X
SLICER
PASTA SCOOP 41% X
VEGETABLE PEELER 38% X
TOOL HOLDER 36% X
ZESTER 32% X
ICE CREAM SCOOP 27% X
BUTTER SPREADER 26% X
AVOCADO TOOL 25% X
TEA INFUSER 25% X
SERVING TOOL SET 24% X
CHEESE GRATER 18% X
SUGAR SHAKER 18% X
SALT SHAKER 14% X
All of the products with top two box purchase likelihood scores of 30% or more met or
exceeded company expectations. All the products with purchase likelihood scores of 24%
or below failed to meet expectations. Products with purchase likelihood scores in the
range of 20% to 29% fell into the gray area: three failed to meet expectations and two
exceeded expectations.

27. Decisions made based on product
screening test
 Based on the results of the concept test, the client dropped the five items with less
than 15% purchase likelihood from the line, saving them an estimated $17,000 in
tooling costs.
 But then the client fell back into decision-making by HiPPO. I had recommended
that the client introduce the five products that had purchase likelihood scores of 25%
or more. They chose to go ahead and introduce 9 products that scored less than
25% on purchase likelihood.
 Two years later, I conducted a study to compare how well each product did in the
marketplace to their purchase likelihood scores.

28. WHAT IS THE LIKELIHOOD OF
MARKETPLACE SUCCESS FOR THIS
PRODUCT?

29. Type of research: Product Concept Test
This case study illustrates how product concept testing can be used to determine if there is
a big enough market for a new product.. I seriously wondered how much demand there is
going to be for a specialty single-use small kitchen electric appliance that automates jam &
jelly making, especially when it is priced at almost $100. So, I conducted a product concept
test on a product that was already in market. Ideally, this type of research is done early in
the development process before much money has been invested in development and
tooling.

30. There is considerable interest in jam and
jelly making.
Do you make your own jam and/or Are you thinking about starting to make
jelly? jam and/or jelly?
Yes
30%
Yes
35%
No
65%
No
70%
The research revealed that jam and jelly making is a pretty popular activity. 35% of survey
respondents make their own jam and jelly. The majority of them have been making jam
and jelly for a number of years.
The research also revealed that there is a considerable increase in interest in jam and jelly
making. 30% of survey respondents say they are thinking about starting to make their
own jam and jelly.

31. But interest in jam and jelly making does
not translate into interest in the jam and
jelly making appliance.
23% of respondents said they probably or definitely would purchase the Jam & Jelly
Maker at the suggested retail price of $99.99.
Assume for a moment that you are planning to do some canning this year. If
this product were sold at one of your favorite stores for $99,99, how likely
would you be to buy it for your own household or as a gift in the next 12
months?
Definitely or probably would
Might or might not
Definitely or probably would not
0 10 20 30 40 50 60 70

32. Many respondents are not interested in
the product because of the $99 price tag.
“The price is very high for a product that wouldn't
be used on a daily or even weekly basis.”
“I can't afford something that expensive to use
Only once or twice a year. If I did make jellies
more often I'd make the investment.”
“It is so cheap to make jelly and I'm betting that most
people who are making it themselves are doing it
partly to be thrifty. A $100 price tag seems ridiculous.”
“Seems expensive since this would be a new activity for
me and I don't yet know if I would like it and stick with it.”

33. Highest positive purchase likelihood
among the people who already make
their own jam and jelly.
If this product were sold at one of your favorite stores for $99,99, how
likely would you be to buy it for your own household or as a gift in the
next 12 months?
Among respondents who are thinking about starting to make
jam and/or jelly
Among respondents who make thier own jam and/or jelly
Among the total sample
0% 5% 10% 15% 20% 25% 30% 35% 40%
Probably would Definitely would

34. Respondents who already make jam and
jelly appreciate the time and money
saving benefits of the appliance.
“If it would save me time, I'm all for it.”
“It's worth it to not have to manually stir constantly. I can in large batches,
so this would be extremely helpful..”
“It would make my life so much easier!.”
“I think it would save me money in the long run!”.”
“Because every year I spend about that much
or more and with a ton more work..”

35. Implications of Product Concept Test
When I first saw the jam and jelly maker, I seriously wondered how much demand there is
going to be for a specialty single-use small kitchen electric appliance that automates
jam and jelly making, especially one that is priced at almost $100.
What I found that there is strong purchase interest among people who make their own jam
and jelly.
What’s more, the segment of the population that makes jam and jelly is large enough that
this could turn out to be a nice niche product.

36. WHICH PACKAGE DESIGN SHOULD WE
USE?

37. Type of Research: Package Test
The manufacturer handheld household cleaning tool had come up with several different
versions of the package. The question they needed to answer was: which design is going
to catch consumers’ attention at retail and provide enough information to convince them that
the product really works?
Respondents were shown three different versions of the front panel and asked three
questions.
Next, respondents were shown a list of six different product benefits and asked which was
most important to them and why.
Finally, respondents were shown two versions of a side panel and asked which design did a
better job of selling them on buying the product and why.

38. Package B was the best of the three front
panel options.
Which of these three packages would be most Which of these three packages is best at
likely to grab your attention and make you want communicating what the product does?
to take a closer look if you saw it in a store?
None of them
None of them
Package C
Package C
Package B
Package B
Package A Package A
0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50% 60% 70%
Which of these three packages is best at making
you want to buy the product?
None of them
Package C
Package B
Package A
0% 10% 20% 30% 40% 50%

39. One product benefit – the very specific
claim of what the product eliminates --
was far more important than the other
five. Side panel A was the best of the two
side panel options.
Which product benefits are most Which of these two side
important to you? panel alternatives does a
better job of selling you on
Eliminates 99.9% of germs, viruses, buying the product?
bacteria, and allergens
Safe chemical-free sanitizing Neither
Kills germs, viruses, and odors
Side Panel B
No chemicals or residue
Side Panel A
Faster than sprays and wipes
0% 10% 20% 30% 40% 50% 60% 70%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

40. The package did not answer some of the
questions that prospective purchasers
had about the product.
“How long does it work? How often do you need to use it?
Can it be used on fabrics? How do you know it's working?”
“How long does it take to sanitize an area? ”
“Does it clean as well as removing allergens and microbes?”
“How long do I need to hold it above the surface? How much area
is covered by the light? do I need to move the wand over every inch
of counterspace slowly and in a particular manner?”

41. Decisions made based on package test
 Use front panel version B but use the more specific
product claim.
 Add more information about how the product works to
the back panel.
 Use the layout of side panel version A but add scientific
proof that the product really does work.

42. WHAT IS THE OPTIMAL PRICE POINT?

43. Type of Research: Pricing Test
This manufacturer had developed an innovative new type of utensil tray. The most
profitable price would be $19.95 but they were concerned that consumers would not be
willing to pay that much of a premium in a category where the average utensil tray cost
about $10.
We did an online concept test but instead of one purchase likelihood question, we asked a
series of three questions.

44. Of the three prices tested, the $14.95
price point is the price point that will
generate the most volume.
Assume for a moment that you are in the market for a utensil tray. If this product were sold at
one of your favorite stores, how likely would you be to buy it for your own household or as a
gift in the next 12 months?
$19.95 $17.95 $14.95
Definitely would not 12% 16% 15%
Probably would not 21% 26% 21%
Might or might not 37% 55% 43%
Probably would 20% 3% 21%
Definitely would 9% 0% 1%
•29% of the respondents said they probably or definitely would buy the product at $19.95.
•At $17.95, an additional 2% said they probably or definitely would buy the product. At
$19.95, these respondents were fence sitters; they might or might not buy.
•At $14.95, an additional 22% said they probably or definitely would buy the product. At
$19.95 and $17.95, these respondents were fence sitters.

45. WHY ISN’T THE PRODUCT SELLING
AS WELL AS WE THOUGHT IT
WOULD?

46. Type of Research: Diagnostic Test
A manufacturer of high-end small kitchen appliances recently introduced a new convection
toaster oven that had a number of features not found on other high-end convection toaster
ovens, including a new heating technology that promised better cooking performance. They
were confident that consumers would be willing to pay $249.99 for such a well-featured
toaster oven, even though the best selling competitive toaster ovens cost $50 to $75 less.
But the product was not selling as well as they thought it would. So I conducted a
diagnostic test to help them figure out why the product wasn’t selling. A diagnostic test uses
the same battery of questions that are used in a product concept test.

47. The product was comparable to the
competitive products on desirability,
believability, and uniqueness. But fell far
short on purchase likelihood.
How likely would you be to buy this
countertop oven for your own household
or as a gift in the next 12 months?
Convection Convection Convection
Toaster Toaster Toaster
Oven A Oven B Oven C
Countetop Oven C at $149.95 24% 8%
Price $249.95 $179.95 $149.95
Desirability 72% 71% 72%
Countetop Oven B at $179.95 21% 12%
Believability 74% 83% 75%
Countetop Oven A at $249.95 6% 2%
Uniqueness 56% 61% 59%
0% 5% 10% 15% 20% 25% 30% 35%

48. The added features weren’t worth paying
more than $200 for, especially in a
product category where a good quality
machine could be purchased for much
less money.
I don't see any feature worth the premium price. You can
get a good toaster oven for the $100 price range that can
cook a frozen pizza... All the fancy "store in memory"
sounds like a gimmick.”
“I’m not sure that the extra functions of the oven would
Justify spending so much more than I would for a
regular toasting oven.”

49. Implications of Diagnostic Test
 The reason the product was not selling through well was
because the unique features were not perceived by
consumers as delivering enough benefit to justify paying
such a high price.

50. SUMMARY
 Data-driven decision making is the process of making
product development and marketing decisions based on
the analysis of consumer, marketplace, and competitive
data.
 Data-driven decisions result in significantly better
outcomes than gut feel and intuition.
 Product and marketing decisions require consumer
data.
 You don’t have to have a multi-million dollar budget to
get started using data-driven decision making.
 Much of the consumer data collection can be done
using online survey software and a Market Research
Online Community.

51. About the HomeTrend Influentials Panel
 HomeTrend Influentials pick up on new home-related trends and embrace new home
goods much sooner than the rest of the U.S. population. (For example, as of June
2011, 76% of HIPsters own smart phones compared to an estimated 38% of the total
population.)
 If HIPsters embrace a new product, very likely it is going to be embraced by
mainstream Americans within a couple of years. If HIPsters reject a new product, very
likely the product is not going to be embraced by mainstream Americans either.
 HomeTrend Influentials are home owners who like their homes to look up-to-date and
like to keep their fingers on the pulse of what is new for the home. They are
constantly redecorating and making improvements to their homes. They enjoy talking
with their family, friends, and co-workers about what’s new for the home and they are
sought out by friends and family for advice on what to buy for their homes and what to
do to their homes. They are very active in community, civic, and political
activities. They readily try new food, household cleaning, laundry, and housewares
products that they see advertised or in stores and they eagerly recommend the
products that they really like to others.
 HomeTrend Influentials are well educated, articulate, insightful, and eager to share
their opinions with manufacturers. They are savvy consumers.
 HomeTrend Influentials participate in a variety of different research studies ranging
from e-mail surveys to in-home interviews to home-use tests to online click-through
surveys to focus groups, both traditional in-person and online.
http://www.4rmg.com/research-data-collection-and-analysis/hometrend-influentials-panel/

52. About Riedel Marketing Group
 In business since 1991, Riedel Marketing Group (RMG) is a trusted provider of
authoritative market and consumer intelligence on the U.S. home goods and
housewares industries.
 RMG helps housewares and home goods manufacturers make informed product and
marketing decisions that will lead to new product success.
 RMG is the only market research company that specializes exclusively in the
housewares industry.
 We have expertise in data collection and analysis.
– We have extensive experience with product concept tests, concept screening, market and
competitive assessments, home-use tests, and Internet-based research.
 We tell you what the data means and what to do as a result.
– We answer not just the “what” questions but also the “so what” (what are the ramifications of
the data) and “now what” (what do we do as a result of this study) questions.
 We have our own proprietary consumer panel.
– Our Market Research Online Community, the HomeTrend Influentials Panel, is a good
sample population because they are the bellwether for the mainstream population.
 We have a proven track record and satisfied clients.
– We been providing outstanding service to housewares manufacturers, industrial design
firms, inventors, and industry trade associations for over 22 years.

53. About A.J. Riedel
 A highly regarded marketing authority in the housewares industry, the top forecaster
of housewares trends, and an advisor to many housewares companies.
 AJ founded Riedel Marketing Group in 1991 to help housewares manufacturers
solve marketing problems and develop strategies and plans to grow their business.
 With over 25 years of marketing and market research experience in total, A.J. has
specialized in the housewares and home goods industry for more than 20 years. Her
knowledge and understanding of the housewares industry encompasses market
dynamics, channels of distribution, consumer behavior, and consumer trends.
 After earning her MBA at UCLA, A.J. spent the early years of her marketing career in
the consumer package goods industry. She helped jump start Wheaties cereal sales
at General Mills, increased Grey Poupon sales at RJR Nabisco, and revitalized the
air cleaner business at Norelco/N.V. Philips.
 Because of her extensive background marketing consumer products as a manager
for General Mills, RJR Nabisco, and Reebok, she is able to bring the tools and
disciplines of consumer package goods marketing to bear on the housewares
industry.
 A.J. has spoken at numerous industry functions and meetings and is the medias'
"GO TO" person for trends and insights in the housewares industry. She is
frequently quoted in national newspapers and magazines including the Chicago
Tribune, the Los Angeles Times, the Washington Post, the Boston Globe, the
Philadelphia Inquirer, the Wall Street Journal, and industry trade publications.
 A.J. lives in Phoenix Arizona with her husband and son.

54. A.J. Riedel
Sr. Partner, Riedel Marketing Group
 (602)840-4948
 ajr@4rmg.com
 www.4rmg.com
 www.twitter.com/AJRat4RMG
 http://www.linkedin.com/in/ajriedel