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Rice researcher delves into the importance of trendspotting in consumer behavior

Keeping on track with trends is crucial to growing and developing a relationship with your customers, these Rice University researchers found. Getty Images

Every business wants to read consumers' minds: what they love, what they hate. Even more, businesses crave to know about mass trends before they're visible to the naked eye.

In the past, analysts searching for trends needed to pore over a vast range of sources for marketplace indicators. The internet and social media have changed that: marketers now have access to an avalanche of real-time indicators, laden with details about the wishes hidden within customers' hearts and minds. With services such as Trendistic (which tracks individual Twitter terms), Google Insights for Search and BlogPulse, modern marketers are even privy to the real-time conversations surrounding consumers' desires.

Now, imagine being able to analyze all this data across large panels of time – then distilling it so well that you could identify marketing trends quickly, accurately and quantitatively.

Rice Business professor Wagner A. Kamakura and Rex Y. Du of the University of Houston set out to create a model that makes this possible. Because both quantitative and qualitative trendspotting are exploratory endeavors, Kamakura notes, both types of research can yield results that are broad but also inaccurate. To remedy this, Kamakura and Du devised a new model for quickly and accurately refining market data into trend patterns.

Kamakura and Du's model entails taking five simple steps to analyze gathered data using a quantitative method. By following this process of refining the data tens or hundreds of times, then isolating the information into specific seasonal and non-seasonal trends or dynamic trends, researchers can generate steady trend patterns across time panels.

Here's the process:

  • First, gather individual indicators by assembling data from different sources, with the understanding that the information is interconnected. It's crucial to select the data methodically, rather than making random choices, in order to avoid subjectively preselecting irrelevant indicators and blocking out relevant ones. Done sloppily, this first step can generate misleading information.
  • Distill the data into a few common factors. The raw data might include inaccuracies, which must be filtered out to lower the risk of overreacting or noting erroneous indicators.
  • Interpret and identify common trends by understanding the causes of spikes or dips in consumer behavior. It's key to separate non-cyclical and cyclical changes, because exterior events such as holidays or weather can alter behavior.
  • Compare your analysis with previously identified trends and other variables to establish their validity and generate insights. Looking at past performance through the filter of new insights can offer managers important guidance.
  • Project the trend lines you've identified using historical tracking data and their modeling framework. These trend lines can then be extrapolated into near-future projections, allowing managers to better position themselves and be proactive trying to reverse unfavorable trends and leverage positive ones.

It's important to bear in mind that the indicators used for quantitative trendspotting are prone to random and systematic errors, Kamakura writes. The model he devised, however, can filter these errors because it keeps them from appearing across different series of time panels. The result: better ability to identify genuine movements and general trends, free from the influence of seasonal events and from random error.

It goes without saying that the information and persuasiveness offered by the internet are inevitably attended by noise. For marketers, this means that without filtering, some trends show spikes for temporary items – mere viral jolts that can skew market research.

Kamakura and Du's model helps sidestep this problem by blending available historical data analysis, large time panels and movements while avoiding errors common to more traditional methods. For managers longing to glimpse the next big thing, this analytical model can reveal emerging consumer movements with clarity – just as they're becoming the future.

(For the mathematically inclined, and those comfortable with Excel macros and Add-Ins, who want to try trendspotting on their own tracking data, Kamakura's Analytical Tools for Excel (KATE) can be downloaded for free at http://wak2.web.rice.edu/bio/Kamakura_Analytic_Tools.html.)

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This article originally appeared on Rice Business Wisdom.

Wagner A. Kamakura is Jesse H. Jones Professor of Marketing at Jones Graduate School of Business at Rice University.

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Building Houston

 
 

Check out this curated list of innovation events in Houston for April. Photo via Getty Images

It's time to look at what's on the agenda for April for Houston innovators — from pitch competitions to networking events.

Here's a roundup of events not to miss this month. Mark your calendars and register accordingly.

Note: This post might be updated to add more events.

April 4 — A.I. Digital and the Future of Energy

In the latest installment of UH Energy's "Critical Issues in Energy" Symposium Series, the speakers will take a deeper dive into the role of A.l. within the energy marketplace, specifically with what is being done with A.I. and what is capable of being done. In addition to this pivotal look at one crucial aspect of the energy transition, attendees will be afforded networking opportunities with speakers and distinguished guests, and food/refreshments will be provided.

The event is Tuesday, April 4, from 5:30 to 7:30 pm, at the University of Houston. Click here to register.

April 5 — Creating & Sustaining Innovation & Entrepreneurship

Join us for a fireside chat discussing the growth of entrepreneurship & a panel on demystifying the patent process.

The event is Wednesday, April 5, from 9 to 11:30 am, at the Ion. Click here to register.

April 5 — HAN Angel Academy

Learn angel investing best practices from Capital Factory co-founder and chairman, Gordon Daugherty in a half-day bootcamp format for accredited investors.

The event is Wednesday, April 5, from 11 am to 4 pm, at Rice University - Shell Auditorium. Click here to register.

April 11 — Future of Health Care

The Greater Houston Partnership's inaugural Future of Health Care event highlights one of the region's major industry sectors driven by world-class institutions and professional talent.

The event is Wednesday, April 11, from 10:30 am to 1:30 pm, at the Royal Sonesta. Click here to register.

April 11 — Idea to Impact: Navigating the Challenges to Commercializing University Discoveries

Amazing discoveries are made in university labs every day, yet most of them never develop into widely accessible commercial products. Why? And what can universities do to change that? As part of Rice University's "Betterment of the World" Scientia Lecture Series, join Rice Business on April 11 at 4 pm virtually or in person (Shell Auditorium, McNair Hall) to hear Yael Hochberg, Professor in Entrepreneurship at the Jones Graduate School of Business, as she discusses the challenges in commercializing university research discoveries.

The event is Wednesday, April 11, from 4 to 5 pm, at Rice University and online. Click here to register.

April 11 — Greentown Houston Climatetech Career Fair 2023

Greentown Labs and ALLY Energy welcomes all professionals, students, and soon-to-be graduates to join us for the Greentown Houston Career Fair, which focuses on connecting professionals directly with Greentown Houston’ network of founders, CEOs, and cutting-edge climatetech startups looking for bright and eager talent.

The event is Tuesday, April 11, from 4:30 to 6:30 pm, at Greentown Houston. Click here to register.

April 15 — Earth Day Clothing Swap Party with Sustainable Fashion & Earth Month HTX

A clothing swap is a fun, alternative solution to thrift shopping or secondhand fashion that allows you to clean out the clothes you no longer wear and in return bring home new additions to your closet - all for free and hosted by Houston startup RESTATEMENT.

The event is Saturday, April 15, from noon to 5 pm, at Patterson Park. Click here to register.

April 17-18 — AI Powered Renewable Energy Workshop

AI Houston Institute of Rice University in partnership with Ion is getting together experts from academia and industry working on the application of artificial intelligence in solving some of the most complex challenges facing the Energy industry as it transitions into alternative sources of energy that are green and sustainable.

The event is Monday, April 17, to Tuesday, April 18, at the Ion. Click here to register.

April 19 — Investor Studio Series: Dream Big Ventures x Ion x Mendoza Ventures

Underrepresented founders face a lot of barriers, including rarely seeing VC dollars. However, Dream Big Ventures and Mendoza Ventures are looking to change those statistics to help diverse founders succeed. Join Dream Big Ventures Founder and CEO Staci LaToison, and Mendoza Ventures Co-Founders Senofer Mendoza and Adrian Mendoza, as they discuss the growth of women and Latinas in Fintech, AI, and Cybersecurity in this fireside chat.

The event is Wednesday, April 19, from 5 to 7 pm, at the Ion. Click here to register.

April 19 — The H. Albert Napier Rice Launch Challenge Championships

Join Liu Idea Lab for Innovation and Entrepreneurship and support Rice University student ventures at the H. Albert Napier Rice Launch Challenge (NRLC) Championships on Wednesday, April 19. Five student finalists will pitch their ventures to compete for the chance to win a share of $100,000 in equity-free funding.

The event is Wednesday, April 19, from 5:30 to 9 pm, at Rice University. Click here to register.

April 20 — Female Founders and Funders

Calling all rockstar female founders and investors in the Houston area. Mark your calendars for this month's Female Founders and Funders meetup. Coffee and breakfast is provided and the event is free to attend.

The event is Thursday, April 20, from 9 to 10 am, at Sesh Coworking. Click here to register.

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