Conducting Market Analysis Using the Persona Method
Conducting Market Analysis Using the Persona Method
In today's blog post, you'll learn about market analysis and the method of personas. We'll show you the benefits of thoroughly understanding your target market and potential customers, how you can proceed, and how we've done it ourselves. At the end, you'll find a practical case study where we look over Zou's shoulder as she creates her personas. Let's start by exploring what market analysis can do for you.
What can you gain from a market analysis?
Imagine you have a great business idea: you want to sell vegan food in your city. To implement this idea successfully, you need a solid plan. This plan begins with a SMART goal (see Defining Goals). A specific goal helps you make clear decisions: Should it be a snack bar or a restaurant? Which dishes will you offer? What will your opening hours be?
Without thorough market analysis, you risk making wrong decisions that could lead to a lack of customers. Perhaps you choose the wrong location where people mainly prefer ribs and kebabs. Or you open only in the evenings, even though your snack bar is in an industrial area that's deserted at night.
Comprehensive research and market analysis help you minimize these risks. It's not about discarding your ideas but finding the right conditions for their implementation. You structure your thoughts and focus on the most important aspects.
What Can You Offer Your Customer?
Your potential customer has a need — in the case of the vegan snack bar, it's hunger. But not only vegans are hungry; all people are. A good approach to understanding your customer is to identify the needs your product fulfills. Often, it's multiple needs. A brainstorming session can help you discover these.
For example, your vegan snack bar can not only satisfy hunger but also meet the need for social interaction, fulfill the desire for healthy eating, or provide inspiration for new recipes. The more needs you identify, the better you can assess why people might want to use your product.
What Is the Competition Doing?
Analyze the market by looking at similar products that already exist. Sometimes this is straightforward, especially if you want to offer an existing product at a lower price. If you want to offer something new, look for possible substitutes — alternatives that fulfill the same need of your potential customers.
In the vegan snack bar example, the major need might be to satisfy hunger but your customers could fulfill this need at other restaurants, snack bars, or even supermarkets with salad bars. In the first step, you should consider the needs generally to get an overview of the market.
In the next step, you can add more specific needs and evaluate which of your competitors' products also fulfill these. The more needs both you and a competitor meet, the stronger the competition from that competitor. To find out which needs your competitors' products cover, you can test their offerings, read reviews, or conduct surveys. This way, you learn about the advantages and disadvantages and can work out your unique selling proposition.
Who Is Your Customer?
Now you know what you can offer and what the competition is doing. The next question is: Who are the people who want what you're offering? This is where the persona method comes into play. Imagine creating a profile for your potential customer.
You already know that you fulfill one or more needs of your customers. In the vegan snack bar example, these might be people who live or work nearby, enjoy healthy and conscious eating, and are open to new things. To get to know your customers better, you can search social media for groups that share vegan recipes. Look at what else interests these people, their hobbies, and their age.
Often, you can also find statistics about different social and professional groups. Some characteristics, preferences, and aversions may repeat, helping you characterize your customer group well.
The Persona Profile
Personas are fictional people equipped with the characteristics you've gathered. We created several such fictional persons. For this, we developed a template for our profile. We recommend giving your fictional customer a photo and a name. There are many computer-generated images online that you can use.
Consider which information is important to you. The goal is to imagine the person well and, based on their characteristics, assess which product features they would like or dislike. In the vegan snack bar example, such characteristics might be income, helping you set acceptable prices.
Include not only relevant but also seemingly irrelevant characteristics. This gives your persona more depth and can be helpful later for other questions. Does your fictional customer have pets? Are they single or do they have children? Some characteristics you can verify through statistics, others not. Therefore, it's helpful to create multiple personas covering different combinations of characteristics. But don't overdo it — five personas are often sufficient.
What Do You Do with the Fictional Customers?
Remember the beginning of the article? It was about making many decisions. Your product is just now being developed, and the fictional customers help you decide in which direction to develop it. Which ideas are promising and which are not?
Since your fictional customers are based on statistical foundations, they can help you better assess your future real customers. You can adjust your decisions accordingly, such as when choosing a location. Research which groups of people live in which parts of the city or where companies are located. Look at election results or other statistics and compare them with your personas to find a potential location.
You can also use your personas as a basis for your marketing, especially since you've already identified which needs are fulfilled by your product.
Summary
In summary, you can proceed as follows:
- Identify the needs that your product fulfills.
- Analyze the competition to work out your unique selling proposition.
- Create personas to better understand your target audience.
- Make informed decisions based on these insights.
Case study: Zou Creates Personas
In the last article, Mia, Peter, and Zou completed their detailed planning. Now, Zou wants to conduct a market analysis. With the information gained, she aims to identify potential customers and build her marketing strategy.
Need Analysis
First, Zou considers which needs she can cover with the video chat for her future users. Together with her friends, she organizes a short brainstorming session. Besides communication, planning, and data exchange, they identify the need for self-determined handling of personal data, since users can host the video chat themselves.
Competitor Analysis
Next, Zou searches the internet for alternative video chats. She finds numerous paid and free solutions. Many offer additional features like text chat, file transfer, and group chats. Scheduling meetings is also often possible.
The market is large, but Zou doesn't find a self-hosted option. It's often unclear how free video chats use user data. For her, this is the unique selling proposition. Despite strong competition, she is optimistic.
Creating the Personas
Zou finds statistics about video chat users, including age, gender, origin, and professional groups. On social platforms, she searches for people who share their experiences with various video chat programs. She looks at their profiles and interests.
For the profile, Zou creates a template with the following characteristics:
Name and Picture
- Age
- Gender
- Profession
- Usage Duration and Times of Video Chats
- Reasons for Use
- Hobbies
- Marital Status
- Affinity for New Technology
- Devices Used
With the collected characteristics, she creates five personas. For example, the skilled IT professional Heinz, who wants to set up the chat at work. Privacy and confidentiality are important to him. Another persona is an interested retiree who wants to start an IT project with his nephew and finds the idea of having his own family chat exciting.
Zou realizes that the characteristics between Heinz and the retiree differ significantly and creates their profiles accordingly.
Final Note
Personas are fictional people whose characteristics are naturally shaped by clichés and statistics. Nevertheless, they can help you focus your development. The mentioned retiree may statistically use the video chat less often than the IT professional. Therefore, it makes sense to prioritize features important to the IT professional. In the end, personas help you engage with your potential customers to make more conscious decisions.
Share your experiences or ask us your questions about market analysis and the persona method! Leave a comment or discuss with us on X or LinkedIn.