Refreshing research: How PepsiCo uses insight

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Imagine that you are the chief consumer insights officer for a multinational consumer goods corporation, responsible for a global insight function employing around 850 people and spanning a range of brands. Then Covid-19 hits, and old certainties fly out of the window.

For Stephan Gans, senior vice-president, chief insights and analytics officer at PepsiCo, the pandemic has meant the function needs to become more adept at planning for the future rather than telling us what’s happened in the past – perhaps the more traditional preserve of market research.

“We’re in a much bigger rush than we would have otherwise been to focus on improving our foresight capabilities,” says Gans, of the impact on insight since March 2020. “Every business in the world is basically struggling with the same thing – that Covid has uprooted a lot of things that we were used to. Planning for the future is arguably more important, but more difficult, now than it has been in many years, because incremental planning doesn’t really work – consumer behaviour has really shifted.”

Gans cites the example of the trend towards snacks that come in small packaging, which have been popular for many years, suddenly being disrupted by the changing mobility of consumers.

“That led to major research on the explosive growth of family packs more suited to in-house sharing. It’s a huge deal for the supply chain – it’s an incredibly difficult thing to suddenly rebuild your factories and redeploy capital assets. So, we’ve got to get better at forecasting where the market is going, not only in terms of consumer trends, emotionally, that help to inform the position of a brand, but also very practically – how much are people going to consume this product on the go? How much time are people spending at home? What’s happening with working at the office? If people can get to an office, they may stop on the way and buy a water or a Diet Pepsi.

“There is huge pressure on insights easing the way in shoring up those capabilities.”

Competitive advantage

For PepsiCo, however, the shift towards more predictive insights began before the onset of the pandemic. In the past few years, it has been building an insight function that aims to act as a source of advantage for the organisation, explains Gans.

“One of the key drivers of the change we’ve driven in consumer insight over the past few years – with the objective of consumer insight really becoming a competitive advantage for PepsiCo, instead of just a support function – is the digitisation of a large part of the function,” he adds.

That doesn’t mean simply standardising ways of working or using more tools, but includes changes in skills, capabilities, processes, who does the work and where the work is done. It also means changes to the relationships the company has with suppliers, and what work it commissions to agencies versus what it conducts in-house.

The shift towards digitisation was driven, in part, by barriers to entry coming down in the consumer goods markets, says Gans. “If you were to come up with an idea for a new drink or snack today, you could have it in the market next month. So, that leads you to consider: ‘what is it that I have as this very large successful collection of brands and capabilities? What is it that gives me an edge in the marketplace?’”

For Gans, that edge is data – specifically, the ability of an organisation to become smarter, based on its knowledge of a specific topic. It’s the type of knowledge that, in a large organisation such as PepsiCo, has historically remained quite siloed. With PepsiCo products available in more than 200 countries, advertising research in the past was usually carried out at a local level.
Gans explains: “If the local commercial leader in Guatemala wanted to test a new ad, they would call a local agency they work with and test it with the local tool – and the same in Jakarta, Berlin or Johannesburg.”

With this in mind, the company developed Ada – named after Ada Lovelace, known as the world’s first computer programmer – an in-house platform to collate results from all of the consumer insights work from across PepsiCo. In the area of advertising testing, this means that data collected about an ad in Guatemala could be used to inform another being developed for the German market, for example.

“It’s not only that you get smarter in Guatemala and Berlin, but that PepsiCo as a whole gets smarter, because either you’re testing the same ad or you’re testing different ads, but for the same occasion,” explains Gans.

Digitisation

Of course, to do all of this, you need technology. A large part of the insight function’s digitisation efforts relates to its aim to speed up consumer research using technology, deliver faster results for the business, and increase the impact of insight – acting as a strategic adviser to the rest of the organisation.

“Having the opportunity to in-house the way we work, rather than relying on full-service agencies, is one of the biggest ways you can drive that behaviour change,” says Kate Schardt, senior director of global insights digitalisation, who has been heavily focused on digital transformation efforts in terms of changing the operating model, specifically for advertising and innovation testing.

The shift towards in-housing was a big change for the organisation, particularly when it came to ad testing, because advertising development involves working with creative agencies as well as marketing teams.

The company has worked with Zappi to develop its ad testing and incorporate more metrics, including social sharing and cultural risk.

For example, PepsiCo crisps brand Walkers used Zappi to test ideas early in the creative process for its 2019 Christmas ad, featuring Mariah Carey. The testing highlighted flaws in the execution of the draft advert, and pinpointed areas for improvement, including social risk – the research found that some consumers felt the advert’s central joke, around taking crisps, didn’t fit well with the festive spirit. After creative adjustments, the final edit of the ad increased its scores of two measurements, creative sales impact and creative brand impact.

PepsiCo also works with artificial intelligence platform Lucy to run a search component on the Ada platform, called ‘Ask Ada’, directing individuals to the most relevant tool within the system, based on advanced programming interfaces. For example, if someone wants access to primary consumer research, concept testing or ad testing, they would use the Zappi platform within the system, while Black Swan’s predictive tool, Trendscope, is also accessible.

“If you go in and search [via ‘Ask Ada’], ‘what do we know about Doritos’ ad effectiveness around the globe?’, it will pull out data that will flow through from those various sources,” says Schardt.

One of the things PepsiCo uses in its innovation process to get a deeper understanding of the occasions when people are having snacks, for example, is the ‘jobs to be done’ framework. This is an approach to developing products based on understanding the customer’s goal, or ‘job’, and the process they would go through to ‘hire’ a product to complete the job.

“An example might be winding down after work – you want to put into context when people are consuming food and beverages. So, with food, what would you hire or fire for that job?” says Schardt. “We use a lot of empathy ethnographic tools to get a sense of where we want to play and solve problems with consumers, and then we use our test and learn, like with Zappi, to rapidly ideate based on what we’ve learned from those other tools, and do quick-turnaround concept testing.”

Custom vs standardised

While PepsiCo still commissions ad hoc research projects, it’s in increasingly fewer areas, says Gans. “The logic that starts with thinking about what constitutes a competitive advantage applies to innovation insights as well as it does to insights that relate to marketing campaigns – we’ve started building an innovation foresights capability that means there’s going to be a time when we won’t be relying on [external partners].”

Historical ways of working in market research are also now coming up against tech-led approaches that are more focused on scalability, creating new dynamics for the organisation.

“A lot of the tradition in marketing research is custom, small and complicated. In billing, for example, the tradition is that you pay per project,” says Schardt.

“The idea that you’re going to customise every project has probably been one of the hardest parts of standardising and automating, and has been an interesting tension we’ve had with Zappi; at times, it’s maybe not as flexible as people on the ground want. But in the middle, where I sit, you’re saying ‘do we really want people to have full customisation?’ Because, if simplification is the goal, then every project interviewing a very narrow consumer target isn’t great.”

Schardt says the company is now putting a lot of the expertise that would traditionally be the preserve of the insights specialist into technology. “There’s less and less of a need to review things such as questionnaires. A few years ago, people were still spending a lot of time doing that, and that’s not added-value work.”

Working with technology suppliers is a different experience, she adds. “They’re trying to hold the line as tech companies with a tech mindset of scalability, and that comes crashing into an old-school research mentality – when you go to a traditional supplier, they say ‘whatever you want’ because they are doing everything manually.”

Outlook

So, how have the digitisation efforts and the Ada platform impacted PepsiCo internally?

The team initially used a ‘seed and growth strategy’ to encourage adoption of Ada – pinpointing early adopters who were particularly enthusiastic about using it to lead the way. It has taken time to drive the change within the organisation, but the platform has now been adopted in every market. Schardt likens it to an aircraft carrier: “To move that ship takes a lot of effort to get everybody behind it.”

The Ada scorecard – which shares data on progress, scores on particular campaigns, and insights on why they performed the way they did – is now discussed in the quarterly CMO meeting. “There’s a conversation about quality in a consumer-centric way, which is amazing,” says Gans.

“PepsiCo spends billions of dollars on advertising and, for the first time, we have one way to assess whether it holds out to our norms of effectiveness; whether the creative is actually doing what the specific marketeer is hoping for.”

What’s Gans’ vision of the future for insights? “The journey ahead is about complete embedding and changing ways of working. The insights person who sits in that local market will have a completely changed role because, instead of being in-between the marketer and the agency, this becomes somebody who gets the results of the test at the same time as the marketer gets them.
“The insights leader can really then help interpret the results and craft a strategy with the marketeer on how to make the ad better. Once we’re there, consumer testing will have evolved from being a traffic light to being a sparring partner on the journey to commercial excellence.”