Before we begin to attempt to answer this, we need to be clear about exactly what the difference is. An insight or to have insight, is to gain an accurate and deep understanding of a situation or a circumstance. An assumption on the other hand is something that has been accepted to be philosophically true or is certain to happen without proof. The last part of the definition is what makes the two so different (proof). Essentially, an assumption from a marketing point of view is little more than an opinion.
True insights are gleaned when one spends time to gain a deeper understanding, does the hard yards, invests in the research and takes the time needed to get to know the industry, the products as well as the market you operate in. With regular monotony, I have heard business people say, “this is what my gut is telling me”. Should you never trust your gut? Probably not, but then understand that you go into this project based solely on assumptions. You are investing the resources you have available based on these assumptions – let’s hope they are right.
Too often I have heard people describe their target market simply as “males”, if we are really lucky they may take a guess at the potential LSM classification for good measure. The living standard measurement (LSM) was introduced by the South African Audience Research Foundation (SAARF) in the late 1980s and is now the most widely used marketing research tool in Southern Africa. LSM is unique in its means of segmenting the South African market, by segmenting groups of people according to their living standards using criteria, such as degree of urbanisation and ownership of cars and major appliances.
This honestly does not help at all. Why not give some real understanding, some real insight? Insight is difficult to give when all you have to go on is assumptions. The smart analyst will be the one that is able to give you more. A marketer who relies solely on the LSM classification is likely to be spending more money than necessary, as well as possibly creating products the market does not need or want.
While the LSM classification has some merit, when used in isolation it is simply outdated and one-dimensional. A better approach would incorporate the use of demographics, psychographics, personality and behavioural traits, opinions, as well as actions taken. This multi-dimensional approach will allow for assumptions to be left aside and true insight gained. You then need to distil this profiling to deploy it with relevance to your brand. After all, your brand needs to resonate with people, not statistics.
One example of when assumption can get it wrong is this: A man working a minimum wage job often will spend an entire month’s salary on a pair of expensive Italian designer leather shoes, whereas a man who earns a good five-figure salary would not. Why is this? The assumption is the minimum wage worker buys the shoes as a status symbol, where people he interacts with may think he has the house, car and lifestyle to go with the designer shoes. Whilst the status factor may play a part, we cannot assume this is the only reason or factor behind why he purchased the shoes.
Some in-depth understanding and insight into the market may show something completely different. The man was willing to spend such a large amount of money, as the shoes are more than shoes to him. The shoes are his car too, as he walks to work, he needs to buy great quality that lasts. He cannot afford to buy a cheap pair of shoes that may break. The true insight into this specific market is summed up perfectly in the old Afrikaans expression “goedkoop koop is duur koop”.
Therefore, by using assumption only, it is possible that the brand which sells and markets the shoes, is now spending more than needed, as there is no insight into the market. They have focused on the wrong idea (selling the shoes as a status symbol, rather than a high-quality, long-lasting pair of shoes that will be walked in every day). By selling the shoes and communicating the wrong focus point, the retailer has dismissed a large part of their potential market. A real practical insight is paying attention to what the market is actually telling you, rather than what you imagine it to be.
So the next time you hear someone say they have ‘insight’ into the market, scrutinise this closely, for it may simply be assumptions with no true understanding nor insight at all.