The Cornerstone Journal of Sustainable Finance and Banking: The Customer Knows Best
by John Hoeppner– Jul 31 2014
The Customer Knows Best: Wall Street Needs to Prioritize Consumer Research
For consumer-facing businesses like restaurants, grocery stores, and automotive manufacturers, competition on price, quality, and convenience is fierce and leaves little space for differentiation. Yet, even in this parity market, companies such as Chipotle, Whole Foods, and Tesla have achieved spectacular growth. Are these companies positioning themselves in a significantly different way than rivals?
Mission Measurement research has shown that these companies have capitalized on emerging consumer demand that financial analysts have largely overlooked. To date, Wall Street’s use of deep consumer research has been limited. Most analysts use observable metrics like historical sales trends, demographic data, and business cycles to inform their sales forecasts. Still, direct consumer research is rare because extracting meaningful information from consumers is challenging. But consumer data is increasingly valuable, and for industries with largely undifferentiated products, understanding consumer decision-making is essential to forecasting sales growth.