Companies now have unprecedented access to data and sophisticated technology that can inform decisions as never before. How successful are they at helping forecast what customers want to watch, listen to and buy?
Historically, neither the creators nor the distributors of cultural products such as books or movies have used analytics — data, statistics, predictive modeling — to determine the likely success of their offerings. Instead, companies relied on the brilliance of tastemakers to predict and shape what people would buy. Creative judgment and expertise will always play a vital role in the creation, shaping and marketing of cultural products. But the balance between art and science is shifting. Today companies have unprecedented access to data and sophisticated technology that allows even the best-known experts to weigh factors and consider evidence that was unobtainable just a few years ago. And with increased cost and risk associated with the creation of cultural products, it has never been more important to get these decisions right.
In this article, the authors describe the results of a study of prediction and recommendation efforts for a variety of cultural products. They discuss different approaches used to make predictions, the contexts in which these predictions are applied and the barriers to more extensive use, including the problem of decision making pre-creation.
They then discuss two aspects of the prediction market. First, the need for better prediction for distributors of cultural products, and second, the potential for business models around prediction techniques.
4 Comments On: What People Want (and How to Predict It)
Tom & Jeanne,
My compliments on taking such a fresh, and new approach, to the topic of predictive modeling. When reading the article I could not help but think of a hilarious movie Mel Gibson did a few years back, called “What Women Want”, where he is an advertising executive who can read women’s minds. For generations, people have imagined what it would be like to have a proverbial “crystal ball”, and how they would use it to affect financial, military, and social outcomes. The most significant finding in your article though, is that the heads of movie studios do not believe that mathematics can effectively be used to predict outcomes, but rather their own intuition and gut feelings are much better suited to the task. One company that you seem to have overlooked, is Mobile Agent Technologies ( http://www.agentos.net ), and their methodology for Common Sense Reasoning ™. Their offering is based upon a rules engine and human cognitive theory. Their software has the ability to simulate human intuition and gut feelings on a computer. This technology when combined with subject matter expertise, data analytics, and predictive models, can be used to build a new generation of automated decision making systems, which can make faster, more accurate, and unbiased decisions. In this economy, the ability to reduce the cost of making decisions is crucial. In over six months of using the Netflix service, I have only ordered one movie that their system has recommended. As for Amazon, I keep getting email solicitations for books on topics that are of absolutely no interest to me. As you stated in your article, product recommendations are only an “adjunct” to the main distribution business of these and similar firms. I am looking forward to future articles on the subject, and more about innovative firms like Mobile Agent Technologies.
Even if the data is not analyzed properly, customers may still take the recommendations provided (which are supposed to be what they want) because they are just too lazy or impatient to do any amount of thinking or research itself.
In this case, the market researchers can pat themselves on the back for increasing sales through their data mining, but is it more a case of the customer being allowed to be lead and therefore the all the data research is less relevant
I gained a lot of insight from the discussion above. I have always believed that one should present the good attributes of different products and then let the customer decide for himself. Clearly this has been a mistake. Customers who do a lot of research before buying, will not be influenced that much by recommendations, but it seems like many are simply too lazy and just buy according to recommendations.
I think credibility does play a major role. Take buying shares as an example. Many people have to rely on recommendations simply because they do not have enough knowledge. But they know that a particular broker has proven himself over time, so his recommendation can be followed without hessitation.
I agree with @Taylor that customers may still take the recommendations provide because they are to lazy to do any amount of thinking or research. A well laid out campaign with the proper PR to hype the movie/book/event can make a huge difference on opening night. I am sure with Will Smith hiring the best in Hollywood to groom his career helped him become the star he is today and not only by following what movies made the big bucks back in the day. As much as in todays society we claim to be informed buyers I still feel a good campaign with flashy press can sometimes over shadow a bad product or movie and persuade us to see/buy it.