Market analysis and the method of personas

In today’s blog post you will learn about market analysis and the method of personas. We’ll show you what you can gain from looking at your target market and potential customers, how you can proceed and how we did it. At the end you will find a case study in which we will look over Zou’s shoulder as she creates her personas. Let’s start with the benefits of a market analysis.

What can you gain from a market analysis?

Let’s say you have a business idea and you want to sell e.g. vegan food in your city. To implement this idea you need a plan and for a plan you first need a “smart” goal (see definition of goals Link ). An important characteristic of a goal is that it is specific. So you should decide, do you want to open a snack bar or a restaurant, what dishes do you want to serve, at what hours do you want to open, etc. For all these questions you will certainly have an answer, an opinion and some initial ideas. However, there is a risk that you will make the wrong decision and end up with a lack of customers. The reasons for this can be manifold. For example, you have chosen the wrong part of town, where mainly people who prefer spare ribs and kebabs live. Or you only open in the evening, but your snack bar is located in an industrial area where people don’t come in the evening. Extensive research and market analysis can help you minimize these risks. It’s not about throwing out your ideas and just offering what an anonymous market tells you to offer. Rather, a market analysis helps you find the right constraints for your ideas, structure your ideas, and focus on the most important ones.How do you approach your market analysis?

What can you offer your customer?

The potential customer of the vegan snack bar is hungry. This includes vegans but also all other people who are hungry. A good approach to get to know your customer is about what needs you satisfy with your product. Often it is not just one need that you can fulfill with your product. It is therefore a good idea to brainstorm ( Link ) about this. The vegan snack bar, for example, can also satisfy the need for socializing or the desire to eat healthy, get new recipe ideas, etc. The more you can think of, the better you can assess why people want to use your product.

What is the competition doing?

The way we went about it was to look at what similar products already exist on the market to meet the needs of our potential customers. Sometimes this is easy, for example, if you want to offer an existing product at a lower price. But if you want to offer a new product, then look at what substitutes there might be for your product. This can be anything that can satisfy a similar need of your potential customers. In the vegan snack bar example, one need your potential customers may have is to satisfy their hunger. Based on this, your potential customers can satisfy their need in other restaurants and snack bars but also, for example, in supermarkets that have packaged food or a salad bar. In the first step, keep the considered needs general, this will give you a good overview of the offers that are available on the market. In the next step, you can add more specific needs and evaluate which of your competitors’ products also meet these needs. The more needs both you and a competitor serve, the stronger the competition. To find out which needs your competitor’s products can cover, it is helpful to test their products, read reviews or start surveys. Anything that helps you get to know the third-party products and their advantages and disadvantages. Through this comparison you will be able to find out what your unique selling proposition is.

Who is your customer?

You now know what you can offer your customer and what your competition has up their sleeve. Now the question is, what kind of people want what you offer? This is where the method of personas helps you. Think of the method as creating a profile for your potential customers. What you already know is that you can satisfy one or more needs of your potential customers through your products, otherwise they would not be customers. In the example of the vegan snack bar, this could be people who live or work nearby, like healthy and conscious food and are open-minded for new things. To get to know your customers better you can, for example, search social media for groups that share vegan recipes. Look at what else these people are interested in, what hobbies they have, how old they are, etc. You can often find statistics about different social and professional groups. Some of the traits, likes and dislikes you find may be common, which may well characterize your customer group.

The profile

Personas are fictitious people, which you equip with characteristics that you have just gathered. We created several of these fictitious people. To do this, we first created a template for the profile. We recommend that you also find a photo for your fictitious customer and a choose a name. There are good computer-generated portraits on the Internet for this purpose. Choose a suitable photo, so you can better identify with the person. Now think about what information about the person is important to you. The goal should be that you can imagine the person well and can evaluate which product features the person would find good or bad based on their fictitious characteristics. In the example of the vegan snack bar, such features could be the income of your potential customers, which would enable you to set a price. Include not only relevant, but also supposedly irrelevant characteristics. This gives your person more depth and often helps you later for other questions. For example, does your fictitious customer like pets, is she single, does he have children and so on. Some of the characteristics you will be able to verify through statistics, others not. That’s why it helps to create several personas covering different trait combinations. Since too many personas don’t help either, we created five fictitious customers for ourselves.

What do you do with the fictitious customers?

Do you remember the beginning of the article? It was about that you need to make a lot of decisions. Your product is just now coming into being and the fictitious customers will help you to decide in which direction you should develop your product. Which ideas are purposeful and which are not. Because your fictitious customers are based on statistics, they can help you to better anticipate your future, real customers and you can adjust your decisions accordingly, e.g. when choosing a suitable location. Research, for example, which groups of people live in which part of town or which companies are located where. Take a look at the last election results of the districts or other statistics about your city. And then match these results with your personas to find a potential location. You can also use your personas as a basis for your marketing, especially because you have already worked out which needs are fulfilled by your product.

Summary

In a nutshell, you can think of it like this. When asked what decision you should make, you first look at your product and the needs it meets. Then you look at your competitors. Through this comparison, you see what advantages your product offers. Then you check which people have the needs that are fulfilled by your product. By analyzing the characteristics of these people, you identify your target audience. With a focus on your target audience and the benefits of your product, you can then make informed decisions.

Process of market analysis
Process of market analysis

The case study

In the last article, Mia, Peter and Zou have completed their detailed planning ( Link ). Zou now wants to conduct a market analysis. With the information gained, she wants to identify potential customers and build her marketing strategy. First, Zou considers which needs of her future users can be covered by the video chat. Therefore, she organizes a short brainstorming session with her friends ( Link ). In addition to the need for communication, planning, data exchange, etc., they also think of the need for self-determined handling of personal data, since users will host the video chat themselves.

As a second step, Zou searches the Internet for alternative video chats. She finds a number of paid and free solutions. In addition to video chat, these also offer text chat and sometimes file transfer. Group chats are also possible, as well as scheduling appointments. The market is large, but a self-hosted variant, Zou does not find. It’s also often unclear how free video chats reuse user data. For her, that’s their unique selling point, and even though competitive pressure is high, she’s in good spirits.

Many of the big players provide user statistics, such as how many companies use the software and how many private users there are. Other statistics provide information about the age and gender of the users. She finds information about the countries of origin and occupational groups that use video chats. On social platforms, she looks for people who share their experiences with different video chat programs. Zou looks at their profiles and also of those who shared the post. This also gives her some information about hobbies, likes and what the people dislike. After many hours of research, she has collected a variety of characteristics.

For the profile, Zou creates a template that includes the following characteristics: Age, gender, occupation, time and duration of video chat use, reasons for use, hobbies, marital status, affinity for new technology, and devices used. She also includes a field for a name and a picture. With the characteristics she has collected, she now creates 5 people. For example, the savvy computer scientist who wants to set up a video chat at work. As Zou has often read that data protection and confidentiality are very important for companies, she includes this in the profile for the computer scientist, she calls him Heinz. She also found a statistic about computer scientists. Their biggest hobby is programming, followed by video games, which she also includes. In terms of end devices, most computer scientists use PCs, mostly with the Linux and Windows operating systems, followed by cell phones – mostly Android, and lastly tablets. She also tries to find out which websites and forums Heinz could use. To do this, she checks links in social networks. In the end, her profile is well filled and she can easily imagine Heinz. Another person could be, for example, the interested pensioner who wants to do an IT project with his nephew. He finds the possibility to have a separate chat with his nephew and their family a nice idea. Zou realizes that the characteristics will be very different between Heinz and the retiree, and she gets to work right away.

Final note

It should be mentioned once again that personas represent fictitious people and their equally fictitious characteristics are naturally shaped by clichés and statistics. Nevertheless, personas can help you to focus your development. Statistically, a pensioner from the case study will perhaps use the video chat less often than a computer scientist. Therefore, it may make sense to prioritize features that are important to a computer scientist. In the end, personas should help you to deal with your potential customer and make more conscious decisions.