Market segmentation and personas are two different techniques that are often perceived as conflicting methods, but they are actually complementary tools that organizations can use to design and sell successful products.
The value of market segmentation
The marketing profession has taken much of the guesswork out of determining what motivates people to buy. One of the most powerful tools for doing so is market segmentation, which groups people by their distinct needs to determine what types of consumers will be most receptive to a particular product or marketing message. These groups form a consumer model.
To develop these models, marketers classify consumers according to a set of demographics and geographic variables such as age, race, education, and location. More sophisticated consumer models also include psychographic and behavioral variables like attitudes, lifestyle, values, ideology, risk aversion, and decision-making patterns. Other classification systems such as VALS segmentation and PRIZM clusters can add greater clarity to these models by predicting consumers' purchasing power, motivation, self-orientation, and resources. These consumer-modeling techniques are not only able to forecast marketplace acceptance of products and services, they can also be powerful tools for convincing executives to build a product. After all, if you know X people might buy a product or service for Y dollars, then it is easy to evaluate the potential return on investment.
However, understanding why somebody wants to buy something is not the same thing as actually defining the product—what it is, how it will work, and how it will be used. Market segmentation is a great tool, but it's not an all-purpose one, and when segmentation is used to solve product definition problems, the results are often suspect. For example, one of our clients spends a lot of money every six months on user research (which is both unusual and commendable). At the beginning of our project, ten reports were thrust into the team's hands with the expectation that somehow we would be able to design the product using only the data in the reports, without conducting additional user research or analysis. The problem was that the reports contained statements like "a third of all baby boomers loved the idea" and "less than 33% of users over fifty would buy it in the next two years." This kind of information may be valuable from a marketing perspective, but it isn't specific or detailed enough to determine exactly which features or information to include in the product, or how to prioritize their accessibility. For example, market segmentation information might suggest that a particular e-commerce site appeals to the needs of consumers on a tight budget. But then what? How do you design the site to meet the needs of those consumers?
What is needed is a product definition tool that takes the guesswork out of the process—a tool that provides insight into what motivates people to use a product, so that well-grounded decisions can be made about features and how they are presented. The tool must be every bit as effective in determining the definition of a product as market segmentation is at forecasting market acceptance.
The value of personas
Cooper has found success in defining products by creating user models we call personas. Personas are a set of fictional, representative user archetypes based on the behaviors, attitudes, and goals of the people we interview in our research phase. Personas have names, personalities, pictures, personal backgrounds, families, and, most importantly, goals; they are not "average" users but specific characters. A persona is a stand-in for a unique group of people who share common goals; at the same time, persona characteristics encompass those of people in widely different demographic groups who may have similar goals. (For more information on crafting personas, see Kim Goodwin's article, Perfecting your Personas.)
For example, people across all demographic boundaries have similar goals when using an ATM: to get cash quickly and to complete other transactions with as little hassle as possible. These goals can guide a design team responsible for developing a new ATM by helping to determine appropriate functionality, prioritize the feature list, design the interface, refine the scope of the target audience, and even uncover new market niches for a technology. Personas bridge the gap between market segments and product definition.
How do you select the right personas? At the beginning of every design project, designers conduct qualitative research that includes reviewing the client's market segmentation and demographic data. Designers also interview stakeholders, customers, and users, in order to gain insight into the product domain and user population. This information feeds directly into the types and characteristics of the personas.
Personas and market segments provide different kinds of information. Market segmentation provides a quantitative breakdown of the market, while personas provide a qualitative analysis of user behavior. These two techniques also serve different purposes.
Market segmentation identifies attitudes and potential buying habits, such as those illustrated in the following example:
In a survey of 150 people, participants were asked about Rear Seat Entertainment (RSE) systems. It was found that most respondents believed it was a "lifestyle" purchase for parents trying to entertain or distract their kids while driving. Most felt that the system was appropriate for children between the ages of 4-15yrs, as children needed to be old enough to use headsets as well as some form of remote control. Among the high quality brand names mentioned were Sony, Hitachi, Magnavox and Nintendo. High system prices were cited as a barrier to purchase in the next two years. However, many expected prices to fall significantly over the next five years.
Personas, on the other hand, reveal motivations and potential usage patterns. A consumer's motivation is what gets them interested in using a product. For example:
Kathleen is 33yrs old and lives in Seattle. She's a stay-at-home mom with two children: Katie, 7, and Andrew, 4. She drives the kids to school (usually carpooling with 2-3 other kids) in her Volvo wagon. Kathleen is thinking about buying the Sony rear-seat entertainment system she saw last weekend at Best Buy to keep the children occupied on the upcoming trip to see family in Canada.
She doesn't want to be distracted by the noise from the videos or games so wants to make sure she can set the sound to be heard only in the back seat. Kathleen also wants to make sure her kids are watching appropriate programs; therefore she wants some channel controls close at hand, but she thinks Katie should be able to control the system most of the time so she won't be distracted.
From this example, the designers can ascertain that Kathleen does not necessarily want her kids to be wearing headphones for an entire journey, as she likes to talk with them on their trips, and that she may want Katie to have some control of the entertainment system from the back seat.
Both market segmentation and personas provide useful information; one informs the other. Using the appropriate tool for the task at hand without bending, adding, or removing from either can provide a rich, complementary set of user and consumer models, that can ultimately create a useful and more successful product definition than either could in isolation.