Food Business Success® with Sari Kimbell

Ep #244 Test Before You Invest with Lara Fordis: Market Research Strategies to Inform Your Business Decisions

• Sari Kimbell • Episode 244

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Market research can make a huge difference in your product offering and launch strategy, but bad data can be worse than no data at all according to my guest,  Lara Fordis. 

In this episode, Lara returns to discuss how market research has evolved in the CPG industry over the past four years, particularly with the emergence of AI tools that have made research both more accessible and potentially misleading. Lara shares insights on how entrepreneurs can properly validate their product ideas beyond the "echo chamber" of friends and family, highlighting the importance of getting feedback from representative target audiences who will actually pay for your product. We learn about the benefits of in-home use testing (IHUT), how to avoid common survey pitfalls like double-barreled questions, and why understanding your product's unique differentiation is crucial for success. 

Whether you're launching a new food product or scaling your existing brand, this conversation provides valuable perspectives on gathering meaningful consumer insights that can save you from costly mistakes and help you develop a viable market proposition.

Find out more info about Lara's work and new course at http://fordisconsulting.com or email her at lara@fordisconsulting.com

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Stop the endless research and overwhelm! Know exactly what each sales channel looks like for success and create a roadmap for your unique business - it's all inside the Sales Channel Challenge https://www.foodbizsuccess.com/challenge

When you are ready to make the leap, get the support and accountability you need to create a beautiful business!

Pick up your copy of "Key Ingredients" on Amazon here.

Check out my YouTube channel at www.foodbiz.tube for how to videos to start and grow a packaged food business.

Sari  0:00  
Welcome to your Food Business Success. This podcast is for early stage entrepreneurs in the packaged food industry ready to finally turn that delicious idea into reality. I'm your host, Sari Kimbell. I have guided hundreds of food brand founders to success as an industry expert and business coach, and it's got to be fun. In this podcast, I share with you mindset tools to become a true entrepreneur and run your business like a boss, interviews with industry experts to help you understand the business you are actually in and food founder journey so you can learn what worked and didn't work and not feel so alone in your own journey. Now let's jump in!

Sari  0:49  
Welcome back to the podcast. This is so fun for me. We're actually doing a revisit with a very early guest, an OG guest, Lara Fortas is here. We're going to talk about market research, but this is actually one of the most downloaded episodes, is around validating your idea, and I interviewed you back in November of 2020. So welcome back to the podcast, Lara. 

Lara  1:21  
Thanks. It's great to be here.

Sari  1:23  
I'm excited to have this conversation because you and I have been working together and creating some exciting coursework where you you want to help more people to actually do this work. But before we get into that, well, first of all, I'd love for you to introduce yourself. I know you've been in market research for a while, and you are one of the leading people, one of my go to people for market research around CPG, so tell us a little bit about you.

Lara  1:55  
Well, let's see. I've been doing market research since 1996 so I don't even want to do the math on that, but for a long time, and I started out working at agencies that primarily catered to Fortune 1000 companies. And so that was my original 15 years. First 15 years was in that. And then I began to think about what I wanted to do, you know, do next? As I was at a phase of my life where I had a son who who needed a little bit more time, and I thought, well, why don't I take on all the projects that agencies are too big, you know, to handle. It's not cost effective for them, and I had a good reputation where I was so that's kind of how it started. Was the companies that knew they needed market research but couldn't really afford a traditional agency, are ones that I could take on and find a scrappy, creative way to get them something on their budget, because I didn't have the overhead. I didn't have the, you know, people demanding unlimited espresso and a billiard table and some of the things that a typical agency back in back in the late 90s would have had, or actually, when I started, it was 2013 but still, then there was a lot of that kind of expectation of market research agencies to have spells and whistles for their employees, so that I then, naturally, I segued into working with smaller, You know, smaller to medium sized companies. And then I thought, well, where my passion is is really with startups and early stage companies. And so then I started more proactively experimenting with talking to people who are starting things up. And my first client was actually someone who was coming out with a mail order custom raw cookie dough concept, which, you know now I go into to the stores and see that, but custom raw cookie dough was very unusual in 2013 or whenever it was now, when I went to do my taxes and saw the financial consequences of that. Initially, I was like, wow, I'm like, but you know what? I'm passionate, and I'm fortunate to be able to work for myself and have the flexibility to take on clients that I really love and love helping. And so I've been independent since 2013 and I treat my clients money as if it was my own. And I don't make decisions unless I would have made them, if that was my money, I was investing in a company.

Sari  4:55  
I love that I really try to align with partners and colleagues and find referrals that I feel like really have a heart for startups. And, you know, we really, we're rooting for the little guys, and really want them to succeed. Now that said, the budgets are sometimes out of reach, and we'll talk about that later. But let's, let's talk about, you mentioned that you went back and listened to the podcast from 2020, fall of 2020, which is wild. We were in the middle of a pandemic and feeling very shut in and locked in. And so I'm curious. Here we are, four and a half years later, what would you say has changed or evolved in the market research industry?

Lara  5:46  
I'd say it's the technology, and namely, AI, enables so that's even in the last, you know, few years or couple years. There's been, you know, there's just such dramatic changes so that it enables people who are not survey programmers, who don't want to learn how to use Qualtrics, to use survey platforms to can collect feedback with confidence, you know, and in a lot of the ways, that's a good thing, you know, like, I'm all about empowerment and collecting feedback so you can collect feedback more inexpensively, more regularly. The challenge with AI is that it gives you, it gives you a false sense of confidence sometimes, because it looks so good, you know, like you put it out and it's like, whoa, look at these charts and tables. That's beautiful. But the danger is that could be like lipstick on a pig, like the data underneath it that goes into creating those charts and tables. You don't know if it's valid or not, because you're not old school, you know, looking through reams of paper or looking through an Excel sheet, where you can. And we're humans, where you know things, things are fallible, so you might ask a question or be collecting data in such a way where there's like a little minor flaw, but the ripple effect of that can have major ramifications, and with AI that essentially becomes invisible because it looks good and you have no reason to doubt it, unless it's something extremely glaring. You know, where you're like, that really doesn't make logical sense. But the things that are directional, it's like, oh, you know, maybe you might say it's a surprise, or it's not what I expected. But unless it's really dramatic, you're not likely to say, you know what? I think I'm going to go back to that data and pull up those Excel, you know, those Excel spreadsheets and take a closer look. I mean, who has time, let alone desire, to do that kind of thing, so good in some ways, potentially a little dangerous in other ways, but overall, I'd say it's a net good thing, and that's the technology. And the access to technology is probably the best thing. Also you can get information about your target audience more easily. There's a lot more out there. Again, may not be perfect, but it looks and sounds so good, so I mean. It provides a lot of really comforting shortcuts. It's just knowing when to question them becomes a little bit of a challenge.

Sari  8:48  
That's AI, right? And then that's like.

Lara  8:52  
Yeah, it's like, I definitely have a love, hate relationship with it, because I love to be able to utilize it, and yet I can fully see how easy it is to become dependent and to not exercise your quality control muscle because it looks good.

Sari  9:12  
Yeah. So, I mean, AI is so good at synthesizing data, analyzing big numbers, lots of numbers, that kind of thing. So I can definitely see where that would be super helpful. And then the target really the technology around target customers. Now, at the time, obviously, during COVID, people were not doing in person focus groups, so I'm guessing those are back. But I think also the in home use testing has probably gotten a lot better too. 

Lara  9:40  
Yeah, I mean, out of a negative situation comes a lot of creativity. So a lot of things that used to be done in person, because that's the way we always did it. We're seeing the, you know, the workarounds like virtual focus groups, virtual in depth interviews have more of a place, because unless you're doing like a shelf set, where you're setting up in a focus group facility, and you're emulating like in yourbackground, a shelf set, if it's a concept test or certain things like that, like, why not just do it virtually? You'll save a ton of money. Now granted, Fortune 1000 companies. A lot of them find it fun to kind of see, you know, so but like, for the people that we're dealing with, generally not worth it unless you're doing like a taste test or something that necessitates being in person. And then I've gotten to, you know, well, you can't be in person, so why don't you do it in home, and that's called an IHUT or in home use test, when you don't have to come to a facility or a mall to try something, and that's become a real passion area of mine, because for small companies, it's a way to get a product in the hands of people, and it's actually provides a lot of advantages, because when you're at the farmers market or a focus group facility or a mall, you can get the taste and the texture, but you don't get the contextual use of something, so especially with like a snack food or a condiment or something that accompanies a meal, hearing about and seeing via video or pictures how people use the the condiment at a meal, or their kids snack. You know, how messy is it in the car? You know? Does it travel well to school. So some of those logistical in real life issues can be better addressed in home. And I wouldn't have really explored that as had it not been necessitated by a lack of ability to do in person work. 

Sari  12:04  
So let's just take a scenario, and I'd actually like to talk about like best case scenario if you do market research well, and then we'll talk about like worst case like, what often happens, unfortunately. But let's say I have a condiment that I want to bring to market, right? A sauce, or, yeah, some kind of a sauce. We'll just call it. We'll do that. So I make this delicious sauce in my home kitchen. All my friends and family are like, you should sell this, and maybe I even sell a little bit on the side, you know? But it's like, it's a very much a hobby. So I think I want to bring this to market. And I don't necessarily just want to go the Farmers Market route, like, I want to go, you know, retail route, ecommerce, that kind of thing. So what are some of the ways that I would use, like, I guess maybe the question is, like, what's the benefit of market research, and what would that look like? Can you paint us a picture? 

Lara  13:02  
Well for something like that, depending on what the scenario is, and assuming, you know, you had done some competitive landscape research. So, you know, you don't find out that, you know, someone three states away is doing the exact same thing. They're just doing a bad marketing job, but you know, they're ramping up, but assuming it's a, you know, a unique product, the advantage of market research is that you can find out if people are really going to buy it and pay money. You know, not just like, get it from you half price or free for the holidays, but like, actually go out purchase it with their own money and do so repeatedly, because that's where a lot of early stage, you know, and startups get into trouble is because it's what people say they'll do and what they actually will do are often pretty different. And I've seen this happen with Kickstarter and, like startup scenarios where everyone's like, yeah, go for it. And, you know, they set, like, a, you know, $150,000 goal, and then I see it's like, you know, it's like, 2300 you know, like, because, you know. 

Sari  14:22  
It's the wallet test, right? 

Lara  14:28  
Push comes to shove, you know, like, you know, and it's not nefarious, and it's not that they don't believe in it. It's just people think,  if I feel this unmet need, people will buy it. And that's just not true. Even an unmet want won't necessarily be purchased. It has to be something that people perceive as a pain point or an aspirational want that they're willing to pay money for. Anything else is, you know, not going to get you the revenue that you want. So the advantage of market research is getting outsiders, people outside your, you know, three degrees of separation on your Instagram, Facebook, whatever. Like what is the consumer who's going to purchase, you know, online, in your local store? What are they thinking about it? And is it going to be a novelty one time purchase, or is it going to be something that they see incorporating into their regular usage, regular purchase patterns, and that's not always great news. Like, I wish I could say that 100% of the time, the market research comes back and reinforces exactly what you wanted to hear. But I'd much rather help people understand like, these are the pros, these are the cons, and not spend their life savings, especially if it's in stocks right now, super bad idea, or quit their job until they know that they have the traction to make something viable. You know, that sort of minimum viable proposition idea, and that it's going to, you know, make them enough money to live on. I mean, most of the people that I deal with aren't, you know, some are, you know, like, those are going to make millions. But most people that I think we deal with are, you know, the drive is more based on passion, not on fortune. 

Sari  16:42  
Passion style business but yeah, gives them what they need, but they're not going for the giant $200 million payout. Okay, so it sounds like best case scenario is that you're able to either bring a concept or actual physical product that you've made, and you're able to speak with less biased people and ask them, I think an important part of market research, which is what you do so well, is that there's ways that you phrase the question, there's certain questions that you ask and don't ask. There's certain ones that maybe open ended, certain ones that maybe you want closed right, like yes, no, or ratings. I think there's just so much science and experience that you have that's built into actually doing good market research that gives you information back. And to be clear, if you're going to invest in market research, you have to like, you're not always going to love what comes back. Like, that's the whole point.

Lara  17:49  
Yeah, it is. The point of it is to be unbiased, and sometimes that you know that means kind of cutting your losses or pivoting to a different factor or flavor or something, and having that information so that you can make an informed decision is certainly really important. One of the things that's changed in market research since four and a half years ago is that with AI, you can ask open ends without the adverse consequences that I think I even cited four and a half years ago. So clients often want what's called verbatim. Sorry, you know, quotes basically. And I look at these quotes and they're inarticulate, misspellings, bad grammar, emojis, like, clients don't want to see that. They don't, but like, kind of the way of the world, you know, especially because open ended comments are not usually fun for people and they're typing them. Or now you can transcribe them, and the AI will clean them up so you can, when someone uses their voice, they tend to be much more articulate. And so when you present those findings, clients like that a lot better, so you don't have to use them as sparingly. And there was something called coding where, C, O, D, I, N, G, where you'd like, okay, these are the comments that fall into different buckets, and then you'd want to do that before, for instance, doing a survey. So I used to be a big proponent of doing that qualitative feedback, so that when we go to the survey, we could have more definitive buckets now, with AI, it will do a lot of the coding automatically, so you can ask open ended questions, which often provide more robust data. And so that's a really exciting improvement. So. In, you know, or people would go with word clouds, but sometimes, like, they'd ignore the not like, not good, you know. They just focus on the word good, you know, like, so it was, it had inherent danger. So open ended comments are really a lot better than they used to be. The challenge with using templated surveys, even in Survey Monkey, even like big ones, is that sometimes it's the way you ask the questions and the answer choices. And this is a big peeve of mine. For a while I did, I did what was called the research rant of the week, where I talk about things. But one of my one of one common problem I see is what's called double barreled questions. So is, you know, people will ask like, well, is it tasty and aromatic? Well, those are separate questions. Like, we may think of them as like, that's what you want to know, is it tasty and aromatic? But something can be tasty and not aromatic, and vice versa. And so having the professionalism to make sure you don't ask a double barrel question that someone can't answer, and I've seen, like, Bank of America do. I mean, I see big companies make this mistake. So like, if it happens, I'm not being judgmental. Well, I kind of, am being judgmental, but a small CPG company has an excuse, but those are the kind of little things not asking in such a way that you have the universe of potential answers that someone could do, which is why it's always better to have like nowadays, especially, and others specifier not applicable or something, if you're worried about that. But if any of you have ever been answering a survey and you're like, well, I can't answer this and I can't go on. Well, whoever's on the other end of that is getting this data that's inherently flawed because a bunch of people are picking random answers because they can't see it otherwise. 

Sari  22:11  
Oh, that's so true. I've certainly taken surveys before where I'm like, I don't know. 

Lara  22:16  
None of these are applicable and it won't let me skip ahead and I want to get my, you know, $5 whatever you know, like, you know, it happens. It happens to the best of researchers sometimes. 

Sari  22:34  
Yeah, I love that double barrel question. That's a good one. So going back to our example, so what I usually see is that, you know, again, I make an amazing sauce condiment. I think I want to bring it to life. Everybody, yeah, all my friends and family tell me, oh yeah, let's probably play this. And maybe even a few of them have purchased it from me, probably not at what you should be charging, but in any case, and then maybe I go out and I survey, maybe my Instagram or my Facebook followers. Maybe I even do like I'm going to send samples to friends and family with a, you know, Google form or Survey Monkey. Is that worse than no data at all?

Lara  23:27  
Yeah, that's kind of my thing. You know? Is that worse than no data at all? I would use it as a foundation. There's  another concept that's called self selected sample. So whenever you don't have a representative sample, or sometimes people will refer to like a census representative sample, you risk inherent biases. So if you're talking to people that know you, know of your brand, are inherently, you know, condiment junkies, maybe they, you know, subscribe to a particular influencer, that cannot be useful, but it has to be taken in context, because it's a self selected sample. Now with you know, data can be good as long as you know the limitations of it. So if you use it as like, this is great initial information. I'm going to use this as the basis for asking the kind of questions of a more representative sample of my, you always want to get like what is representative of your target audience in a way that you can extrapolate that information to a group beyond the people in your, you know, three degrees of separation circle, because unless everyone in that circle is going to tell everyone, and everyone's going to shell out money to buy it. That's going to be a problem. I'm a big believer in understanding differentiation. Like, when I hear the word, like, yeah, but it's the best, mine's the best. I just, you know, like, I'm not a violent person, but like, I just want to just, like, stop, stop right now. You're not going to win on being the best, because it's generally subjective. You're not, you're usually, if you're, you know, a cottage or you're not usually going to win on price, like there are certain things that you need to know your limitations. I'm not going to be playing volleyball. I'm not going to be, you know, snowboarding, like at some point you have to accept what you are and where your strengths and your weaknesses are. That kind of, you know, strengths, weaknesses, opportunities, challenges, and sometimes we, especially entrepreneurs, can it's hard. You know, no one wants to hear that their baby is isn't beautiful to everybody. Essentially, no one wants to hear that. But in order to be successful, and this can mean successful in bringing that not I mean even understanding feedback about the condiment and about like, what is it going to replace like, is it a new, you know, game changing condiment that's going to be used on something and, you know, non traditionally, or is it better than Tabasco? Understanding differences and advantageous differences is almost going always going to be more important that than things like subjective things like, it tastes better. I did have a condiment that people wanted to market as something that could be used on lots of foods. And when we went to look at it like, one of the competitors was like, tap it to you. So you've got to, you know, you're not likely to compete and take market share from Tapatio. How are you going to differentiate yourself to say to someone, this is what you should use instead of Tapatio? Or do you say like, this is an augment that you use differently than Tapatio? And then, you know, you look at things like, things that you might not think of if you're not a professional. Like, there's a lot of differences in cultures in terms of sauce preferences, and oftentimes there's a lot of, you know, personal pride that you know, like, you're just not going to change someone of a you know, if they're a long time brand user of certain condiments, you know, so you know, it's understanding where the opportunity is and where you can get the most. What it like people talk about low hanging fruit, and, you know, kind of like looking for, okay, you probably don't have one target audience. People target audience like there's usually multiple audiences, and they have different likelihoods of penetration and conversion and understanding that as counterintuitive as it sounds, that you're better off understanding your unique value proposition and advantages for certain specific subsets over universal appeal, that you're ultimately going to be better off. 

Sari  29:03  
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