By Eddie Yoon, Jeremy Bartlow & Tim Joyce
THE key to better forecasting is what we call “middle data”—information between big, country-level data and category-specific microdata. Middle data, is closer to actual consumers than far-flung data, like GDP, and it elevates the frame of reference, as most companies mistakenly believe consumers spend more time thinking about their categories and brands than they really do.
Here are some examples:
Trends in religious growth are one of the best predictors of fashion-related categories. In areas where Christianity is growing, sales of Western-style fashions are likely to grow too. The share of the world’s Christians living in sub-Saharan Africa is expected to grow from 24 percent in 2010 to 38 percent by 2050, according to Pew Research. Religious growth is a stable, steady and sustainable trend—which makes it the ideal data for forecasting.
Your climate and your house can help predict how much you spend on your young children. Compare a large suburban home with a small condo in a city. Compound this with your local climate, which dictates how much time you spend inside your home. A family in a larger house and a harsher climate is likely to have much more demand for children’s toys and books.
The UN human development index (a metric combining education, economics and infrastructure) is another great predictor of consumer behavior. This index can help explain whether consumer demand for beverages is more “drink to live,” focused primarily on functional beverages, such as dairy products and big bottles of water, or “live to drink,” focused on recreational beverages, such as beer, wine and coffee.
The UN data helped take the measure of China’s beverage consumption. From 2000 to 2012 China’s development index rose from 59 to 72, putting it into the “high” category. During that period, China’s grape-wine consumption increased more than fivefold, according to a study by Australian National University. The UN index is publicly available data that develops slowly and steadily—the Goldilocks zone for forecasters.
Eddie Yoon and Tim Joyce are principals, and Jeremy Bartlow is a project manager, with The Cambridge Group.