Market Intelligence Infomediaries

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Market Intelligence Infomediaries Ali S.
Kazeroonian, CTO Active Research ASK_at_ActiveResea
rch.com
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Definition Infomediary (revised)
(n.) An exchange that is maintaining trusted
relationships between buyers and sellers,
leveraging these relationships to create higher
value information by bartering lower value
information between the parties.
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Business Model
Active Research AdvisorWhy They Buy
Active Buyers GuideWhat To Buy
Buyers
Manufacturers Retailers
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The Custom Survey Process
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Crisis in Traditional Market Research
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Time Vs. Value-added
Time
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Market Research Models
Traditional Model
Business Problem
Automated Model
Business Problem
Time 0
Day 1
Month 1
Month 2
Month 3
Month 4
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Data Collection Points

• Network of Distribution Partners

Mass Portals
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Market Research Automation
Is more than automating one element of the
research process... 1 Web panels 2 Online
focus groups 3 E-mail/Web surveys 4 HTML of
results
it is the full automation of the entire
research process.
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Market Research Automation
\mär-ket -,ri-serch-,ò-te-ma-shen\ n, (ca.
1999) 1 The full automation of market
research 2 Continuous measurement of the
marketplace without human intervention 3
Answering market questions on demand
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Market Research AutomationWhat is new
different?

• Real-time information
• Actual buyers
• Massive samples
• Continuous measurement
• Extend automation beyond walls of the enterprise

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Who is the customer?

• Several Constituents
• Buyer - For Information, excellent experience
• Seller - Sell product, minimize returns, respond
  to market demand
• Can involve another middleman, ie Web Site -
  Qualified, educated buyers
• Who Pays?
• Web Sites
• Manufacturers and Retailers
• Not Buyer

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Buyer Benefits

• Market transparency
• Delivers convenience, value, knowledge
• Fits consumers busy lifestyle
• Unbiased, comprehensive resource
• Privacy assured
• Business model enables consumer advocacy

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Seller Benefits

• Broad, market level view
• Increase ROI through more efficient use of
  marketing information
• Make smarter product decisions
• Get to market quicker
• Real-time, continuous forecasting capability

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Benefits to Other Middlemen

• Sticky App - retains traffic, complete buyer
  experience
• Increases revenue by motivating highly qualified
  buyers
• Round out offering, quick, easy implementation
• Pay-as-you-benefit revenue share arrangements

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Trust and Neutrality

• Heisenberg Uncertainty Principle
• Beyond Trust-e
• Privacy - CASRO ethics
• Information provider is trusted third party
  between client and respondent
• Transparency and opt-in
• Reporting requirements

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New World versus the Old
MRA
Traditional
vs.
Sampling Issues

• Low cooperation rates
• Money incentive
• Selection bias - time
• Aspirational bias Purchase Intention
• Known Sample Universe
• Data entry errors
• Slow survey changes

Hi Co-op, Non-invasive Self-engaged
shoppers Selection bias - Web True
behavior Requires new methods/validation Control
led environment Instant changes
Logistical Issues
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Online Methodologies Framework
Household
Store-based
Non-Automated
Uses
Custom answers from random sample, may or may not
be projectable
Custom answers from targeted sample, such as
active car buyers
Market Research Automation
Uses
Top sites, passive collection from sample
representative of entire web, projectable to US
population
Deep understanding of particular product
category, passive collection from targeted sample
such as active car buyers
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Buyer Preferences Information Solutions to Help
You Answer ...

• Who is purchasing your products?
• How are you doing versus the competition and the
  market?
• What do your consumers want?
• How can you improve your product mix?
• Who should you market to (online/offline)?
• Which of the product features are most important
  to the consumer when selecting products?

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AGENDA

• Market Makers and Infomediaries
• Market Research Automation
• Benefits
• Case Study Active Research
• Success Stories
• Pricing
• Sales Forecasting
• New Product Development
• Implications

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E-marketplaceHow Consumers Shop Online
Retailer Selection
Product Selection
Product Purchase
Service
Delivery
Advertising
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Market Intelligence Infomediary to Virtual Supply
Chain
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Goal Answer Key Questions for Each Constituency
What do I build?
What do I sell?
How do I attract customers?
What do I buy?
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AGENDA

• Market Makers and Infomediaries
• Market Research Automation
• Benefits
• Case Study Active Research
• Success Stories
• Pricing
• Sales Forecasting
• New Product Development
• Implications

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Case Study Pricing a New Product
Client
Major consumer electronics company
Problem

• Need Xmas pricing for new category of product

1 month to make decision
Challenge
1) Intercept consumers at the virtual shelf 2)
Measure price elasticity of demand for 5 related
categories 3) Triangulate on best price point
Methodology
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Case Study Pricing a New Product
Price
Consumer Electronics Price Demand Curves
2,500
2,000
1,500
1,000
500
0
Percent of Population
2.00
9.00
12.00
15.00
43.00
71.00
89.00
100.00
Able to pinpoint price range for profit
maximization
Results
1 day (vs. 3 months using traditional methods)
Time
10 of traditional research costs
Cost
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AGENDA

• Market Makers and Infomediaries
• Market Research Automation
• Benefits
• Case Study Active Research
• Success Stories
• Pricing
• Sales Forecasting
• New Product Development
• Implications

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Case Study Sales Forecasting
Client
Fortune 50 digital camera manufacturer
Problem

• New line of digital cameras consisting of 5
  flavors.
• Manufacturing needed to know how many of each to
  produce. Logic suggests 20 of each.

Difficult to justify extensive market research
every time a tactical decision pops up.
Challenge
1) Intercept digital camera shoppers at the point
of purchase 2) Ask them to indicate preferred
flavor
Methodology
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Case Study Sales Forecasting
Results
Time
1 week (vs. 1 month using traditional methods)
Cost
15 of traditional research costs
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AGENDA

• Market Makers and Infomediaries
• Market Research Automation
• Benefits
• Case Study Active Research
• Success Stories
• Pricing
• Sales Forecasting
• New Product Development
• Implications

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Case Study New Product Development
Client
Fortune 50 digital camera manufacturer
Problem

• Extreme pressure to introduce successful new
  products.
• 6 month product lifecycle. 80 of revenues from
  products launched in last 3 months.

Challenge
Best method, conjoint analysis, can take 3-4
months. Too slow for the market.
1) Intercept digital camera shoppers at the point
of purchase 2) Administer Web-based conjoint
analysis 3) Apply data warehousing techniques to
automate data collection, cleansing reporting
Methodology
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Case Study New Product Development
Results
First 3 concepts rejected due to cannibalization.
4th concept accepted. Forecasted to expand share
by 4. Saved company 2-6 million by avoiding
cannibalistic scenario.
Time
3 days (vs. 4 months using traditional methods)
Cost
30 of traditional research costs
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AGENDA

• Market Makers and Infomediaries
• Market Research Automation
• Benefits
• Case Study Active Research
• Success Stories
• Pricing
• Sales Forecasting
• New Product Development
• Implications

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• Drawing for Free MRA custom survey of actual
  online shoppers
• Research Report Understanding the ecommerce
  Shopper
• Thank you!
• www.ActiveResearch.com
• Ali S. Kazeroonian, CTO
• ask_at_activeresearch.com

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About ActiveResearch, Inc
Active Research provides Web-based Market
Research Automation and e-commerce services to
help businesses attract and understand buyers.
The company is the first to offer real-time
market intelligence services that enable product
manufacturers, marketers and retailers to
understand and respond to changing customer
demands. Market intelligence is generated
through a network of portal, content and merchant
partners that host buyer's guides powered by
Active Research. Partners include leading
shopping sites such as GO Network, iWon, Lycos,
Looksmart, Productopia, mySimon, and BizRate.com.
Active Research continuously measures actual
consumer behavior, tracking nearly one million
online shoppers per month directly at the point
of sale, and delivers to clients statistically
accurate results. The company's Web-driven
services are revolutionizing the market research
industry by reducing research time from months to
minutes. Founded in 1997, Active Research is
based in Burlingame, Calif. and venture capital
backed by Aspen Ventures and Red Rock Ventures.
More information can found at www.ActiveResearch.c
om
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Overview of Services
Active Research Advisor - online market
intelligence service that helps companies track
what is happening in the marketplace and identify
new opportunities. Anonymous information is
collected from users of our buyer's guides and is
used to fuel real-time forecasting applications
within the Advisor product. ActiveFlash - custom
market research service. Similar to a "mall
intercept we perform a "shelf-intercept" and are
able to interview live shoppers while they are
"standing" at the virtual store
shelf. ActiveBuyersGuide.com - unbiased,
comprehensive product recommendation engine that
helps consumers figure out what to buy based on
their individual needs and preferences. This
engine is private labeled to portals shopping
sites across the web. www.ActiveBuyersGuide.com
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Power Dynamics Are Shifting in Favor of the
Buyer
Buyers and sellers have always had conflicting
needs ...

• Buyers Want
• Seller Choice
• Best Prices
• Seller Assurance
• Product Assurance
• Convenience
• Ease of Use
• Payment Options

• Sellers Want
• Bigger Markets/New Channels
• Competitive Intelligence Data
• Behavioral and Demographic Data
• Preferred Placement
• Back-Office Efficiency

but the Internet is shifting the balance of
power to the buyer.

• Geographic barriers are eliminated
• Price information is disseminated
• Buyer experiences are shared

Source Gartner Group
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E-Market Makers Will Settle in the Free Market
Zone
Free-Market Index
Traditional Reseller
Pure E-Market Maker
Manufacturer/supplier advocate
Customer/consumer advocate
Perceived as a biased source of information
Perceived as a trusted or neutral source
Exclusive supplier contracts
Nonexclusive or open to all suppliers
Sets and controls market price
Offers dynamic or market pricing
Maintain physical inventory/own title to goods
Virtual inventory only no ownership of goods
1
50
100
Buyer Revolt Zone
Channel Master Zone
Free-Market Zone
Seller Revolt Zone
Source Gartner Group
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Implications for Market Intelligence

• Market Intelligence industry is being
  revolutionized
• Technology isnt a Do it Yourself panacea
• Paid for real value delivered
• Not compensated for low value activities, such as
  administering surveys

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Market Intelligence Providers

• Doesnt have to be 11 today
• Individual measurement, aggregated delivery
• Position for 11 world of tomorrow
• Dynamic pricing, supply

Tomorrow
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Infomediaries Will Complicate CRM Initiatives
120
Joint Ventures
90
Third-Party Sites
E-Market Makers
Other
Linkages
Terabytes of Data
Company
Merged Data
External Data
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Web-Data WarehouseIntegration
Affiliate Networks
Internal Data
Company Web Site
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Syndicated Data
DataWarehouse
MarketingDatabase
1989
1994
1999
2004
Source Gartner Group
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Appendix
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AGENDA

• Market Makers and Infomediaries
• Market Research Automation
• Benefits
• Case Study Active Research
• Success Stories
• Pricing
• Sales Forecasting
• New Product Development
• Implications

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Definition Infomediary

• (n.) A website that is maintaining trusted
  relationships with its customer base and
  leveraging these relationships (and collected
  customer profile data) to introduce new products
  and services for customer acquisition marketing.

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Many more Infomediaries than Transaction Exchanges
Global No. of Sites
10,000
Infomediaries
Failures
Mergers,
5,000
Failures
Yard Sale
Low Barriers
Effect
to Entry
1,000
Year 2000
Effect
500
Wall Street
Love Affair
Transaction Hosts
100
Source Gartner Group
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Buyer Preferences Business Applications

• Strategic Analysis
• How are you doing compared to the marketplace?
• How are your customers making decisions? Who
  are they? How do you reach them?
• Sales Management
• What are your on-line sales and sales leads?
• When did you beat the competition for a sale or
  sales lead? When didnt you get the sale?
• Marketing Advertising
• How are customers making purchasing decisions?
• What is your customer profile compared to the
  category customer profile?
• Product Mix and Location Management
• What products and brands do your customers
  prefer?
• Where are your customers coming from?

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Market Intelligence Infomediaries are a subset of
E-Market Makers
E-Market Makers

• Strategy
• Build a reputation as a consumer advocate
• Access large numbers of buyers and sellers
• Invest heavily in branding

Definition A third-party intermediary that
provides value-added services for buyers and
sellers trading on the Web
Seller A
Buyer A
DB
DB
Buyer B
Seller B
Intermediary
DB
DB
Seller C
Buyer C
DB
DB

• Scope
• Can focus on a particular set of products or
  services or cover broader range
• Can disseminate information only, or also
  facilitate transactions
• Can retain the title of goods and act as a
  reseller

• Mission
• To help sellers expand markets
• To help buyers identify bestsellers
• To disseminate near-perfect information
• To manage the inherent diversity in systems,
  processes and data
• To build more efficient markets

Source Gartner Group