What People Want (and How to Predict It)

What People Want (and How to Predict It)
Thomas H. Davenport and Jeanne G. Harris
MIT Sloan Management Review, Winter 2009

Consumers today are overwhelmed by “the paradox of choice” — so many choices to make, and no easy way to distinguish among the offerings.  Producers face the opposite problem:  They need to make wise investment decisions in a world cluttered with products.

Historically, neither the creators nor the distributors of “cultural products,” such as books or movies, have used analytics — data, statistics, and predictive modeling — to determine the likely success of their offerings.

Yet today, companies have unprecedented access to data and technology that allows them to consider evidence that was unobtainable just a few years ago.  Plus, with the increased cost and risk associated with the creation of cultural products, it has never been more important to get these decisions right.

In “What People Want (and How to Predict It),” in the Winter 2009 MIT Sloan Management Review, the authors reveal how companies are starting to use technology to forecast what customers will watch, listen to, and buy .  Davenport is Distinguished Professor of Information Technology and Management at Babson College.  Harris is director of research for the Accenture Institute for High Performance Business.

As they explain, the average consumer has so many options that he or she needs help deciding what media to watch and read.  The number of book titles published in the United States, for example, grew by more than 50 percent during the 10-year period from 1994 to 2004.  Yet, of the almost 300,000 books published in the United States in 2004, fewer than a quarter of them sold more than 100 copies.  Despite the increase in book production, surveys indicate that Americans are reading less each year.

At the same time, movie studios are churning out more movies than viewers can watch.  The number of Hollywood films released in 2006 was 607 — an 11 percent increase over the previous year, and an all-time high.  That total was almost double the number released in 1990, yet few people have the time to see twice as many films as they did just a couple of decades ago.

This trend of increasing production takes place at a time when cultural products are more expensive to create.  Studio movies, in particular, require big bets.  According to the Motion Picture Association of America, the combined average cost of making and marketing a studio picture in 2006 was $100 million.

Most films are not successful c...