Market Research

Marketing Personas – powerful tool or pointless exercise?

What are marketing personas?

You have probably heard of marketing personas (or buyer personas as they are otherwise known).  The purpose of creating marketing personas is to paint a picture of the audience you are trying to reach.  Used well it can be great tool for segmentation marketing.  But used poorly it can, unfortunately, end up being a pointless exercise. 

Where do marketing personas come from?

Whilst many of us may have seen the end result, it is often not entirely clear how these personas were created, or even by whom.

Perhaps a group of sales and marketing people huddle together in a workshop and “brainstorm” a bunch of personas. 

Or perhaps they were created based on some focus groups that some of your marketing team had commissioned. 

Or maybe they were developed from insights generated from a larger scale quantitative market research survey.  Or perhaps all of these. 

How they were created does matter.  They should of course, be based on a broad group of real actual customers – and not just plucked out of the air based on a customer meeting that one person had with a single customer!

How do they help?

They allow us to bring to life different segments of our market and, in doing so, allow us to better target them and serve their needs. Or do they?

“Segments must be Measurable, Substantial, Accessible, Differentiable, and Actionable.”

Philip Kotler

Unfortunately, sometimes, people can go through a lengthy exercise in creating fancy personas only to find that they aren’t of much actual use.  They can look good.  They look as though they make sense.  You can even bring them to life with infographics, videos and swish artwork.  That’s all cool … but what use are they?

When such an exercise goes wrong you can end up with something that looks very impressive but is hard to relate to any of the questions or challenges that your business actually faces. 

But it doesn’t have to be like that.  Done right, marketing personas can be an extremely powerful business tool. 

So how do you get it right?

Make sure you start with some clear business objectives

First things first.  You must always start with a good reason why you want to create marketing personas in the first place.

That of course means you need to start some tangible business questions.

Obvious questions usually include the following:

  • Who is most likely to buy our products?
  • What makes them buy?
  • How do we reach them?
  • What do we need to do to persuade them to buy?

Once you have these questions you then know what you are trying to achieve. Your success criteria for the entire exercise are then clear and simple – can the personas we have created answer our original questions.  Keep these questions clearly in mind throughout the exercise – they are your guiding light and anchor point for the entire project

Do you need them?

An important question to ask before you get too far with generating your personas is:  “Do I even need to generate multiple market personas” ?

Generating multiple market personas implies you are adopting a market segmentation strategy.  That means you want to divide your customers and prospects into different groups and adopt a different marketing approach for each of these groups.

This more targeted approach can bring great rewards. 

But to develop and execute specific campaigns and strategies to address different market segments requires resources.  Not everyone will have the resources or the time to invest in this.

This comes back to our original questions – why are you doing this?

Sometimes, people develop market personas for the wrong reasons.  Sometimes what you really need is something simpler. 

Maybe all you need is a good profile of your target customers and prospects as a single group.  One group of people who you can focus your marketing resources on, directing a specific approach.

In this case you just need a market profile that simply allows you to describe those people who represent good prospects for targeting to your marketing agency in an accurate and meaningful way.

Make sure Personas integrate into your marketing strategy

Although it sounds very obvious, people can sometimes get this wrong and, when they do, generating marketing personas can be a waste of time.

If you decide you need marketing personas then this should form an integral part of your marketing strategy.  The insight you gain from the personas will help you to design a targeted segmentation strategy that will shape and inform your marketing.

You don’t need to generate marketing personas if you have already determined what your strategy will be.  The whole point of creating them is to help formulate your strategy.

Personas are powerful tool for briefing your marketing agency

When you brief a marketing agency, the first thing they will want will be for you to paint a picture of your target audience.  Who are you trying to reach?  What do you need to say to them?

The more they know about the audience the better.  The more specifically they can then target any media campaigns and the more engaging they can make the messaging.

With well crafted and meaningful marketing personas you should be able to provide them with everything they need to create a very targeted and relevant campaign for you.

How do you know your Marketing Personas are any good?

OK, so you have completed the process of pulling together what you need to create your personas.  You believe they will answer the questions you set out at the start of the process.  Now you need to bring them to life and present them to colleagues, to your marketing agency and your partners.

So now you need to create a concise and meaningful guide that explains what these personas are and why they matter.

By this time you may have been working on the project for a few weeks.  So there is a real risk that you, your market research agency and anyone else closely involved might not be able to see the wood for the trees.  So it is worth taking a step back and looking at what you have, to make sure it does indeed give you everything you need.

You can check this by asking a few basic questions:

  • Is the Marketing Persona clearly defined and easy to understand?  How easy is it to explain to a colleague who has had no involvement in the project?
  • Does it tell you how big/small the market segment it represents actually is?  Is this particular Marketing Persona representative of 50% of your potential market or 5%?
  • Does it clearly outline the opportunity that this market segment represents?  Will these people buy from you?  Will it be an easy or a hard sell?  If your salesman is speaking with one of them, what are the chances that you will make a sale?
  • Does it tell you what this Persona likes and dislikes?  What kind of things are likely to interest and engage with them?  And what might leave them cold?
  • How is this particular Persona different from the other ones?  Can you easily explain why this Persona is different?  What do you need to do differently to engage with this group that you do not need to do with any of the other Personas?
  • What media channels should you use to communicate with this Persona and how is this different from the others?
  • What kind of marketing messages do you need to design in order to ensure that people in this segment will listen and engage with you?

If you are able to reach a point where your marketing personas can be used to provide meaningful and actionable answers to each of these questions, then you know you have created something of real value.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future.  That means understanding change – whether that be changes in technology, culture, attitudes or behaviour. 

If you are looking to create market personas, we can provide a market segmentation services that you enable you to generate these in a structured and successful way.  You can read more about how we do this on our website.

Virtual Future – how will virtual reality shape our future world?

Part 2:  VR beyond gaming

More than just a game

In our last blog we began our discussion of VR by looking at what the future may hold in store for this technology in the world of computer games.  However, whilst gaming still represents the most widely used application for VR and AR at present, this technology has many other applications.

In this article, we would like to take a closer look the potential for these.

Remote working

One of the huge changes covid has forced on our professional lives is the need for virtual working.  The business world has discovered that it is perfectly possible for most office staff to work effectively from home for long periods of time.  Indeed, tools like Zoom and Microsoft Teams have helped to make home working become the new normal.

But a remote working world, for all its video calls, can be an isolating experience.  Yes, we will be returning to the office sometime this year.  But let’s not kid ourselves it will be the same.  Many people will now be working from home as the norm and hot desking in the office when they need to.  The days of the daily commute, five days a week, every week, are gone.

This remote working scenario is ripe for transformation into a virtual world.  Using VR and AR technology can help to humanise the experience, it can make it more real, more interactive and allow work colleagues to participate in a wider range of interactive tasks.

This technology is already here.  One such solution is Spatial; an AR version of Zoom, enabling work colleagues to interact in an AR office space.  You can interact in a more 3D environment rather than just with 2-dimensional video but the technology also offers other tools such as enabling you to share ideas by scribbling on a virtual white board, share content and images in 3D and so on.  No doubt, as time goes by, technology such as this will continue to add features and tools that make the experience even more interactive.

Socialising

In lockdown we have all, to some extent or other, been forced to get used to the idea of remote socialising.  Often armed with a glass of wine and a Zoom call.  Arguably many Gen Zs have been socialising remotely far more than they do in person for most of their lives.  The only thing that’s changed over the past year is that the rest of us have joined them.

Now, I’m not suggesting people are going to abandon the pubs and restaurants any time soon.  In fact, once these places can re-open, I’m sure they can expect a bit of a boom.  Imagine the novelty value of going to the pub with your friends again? 

But that said, I suspect that socialising remotely will remain a much more important part of our lives post-covid than it was before.  For one thing it is a great way to meet up with friends and family who live far away.  No need to travel, just hop on a Zoom call.

Again, as with working, remote socialising tends to lead naturally to virtual socialising.  The ability to interact in 3D in a virtual environment is unlikely to catch on if it is expensive but – as soon as the price is right – this will eventually become a normal way of communicating.  As with virtual reality workspaces, it is more a question of when than if.

Indeed, tools already exist for virtual socialising such as Altspace VR, VR Chat and Rec Room.

Interior Design and Architecture

An obvious application for VR and AR is interior design.  Using this technology a designer can show their clients how they might transform an interior space.  Such a visualisation can make a design look far more real and can be used to show clients what a range of different alternatives might look like. 

Such technology should ultimately make it easy for people to visualise a range of different options and to alter and adjust designs to see how different scenarios might play out.  And what goes for interior design applies equally well to architecture.  Now it is possible to visit an empty plot of land or a building site and use AR to see exactly what a new building might look like.  You can even walk around it to see just what it looks like in its environment from every angle.

Many clients find it hard to visualise what an end design might look like.  VR can show them in a way that is clear, avoids misunderstanding and negates the need for lengthy explanations.

Having a clear virtual view of what the end product will look like before you even need to build, buy or change anything, clearly has the potential to avoid costly mistakes.   Most importantly, it makes it much less likely that designers and builders will hear the dreaded words “Now I see it, I’m not sure I like it like that.”

Engineering and Industrial Design

Technical design work can often involve large teams and often those teams may be working together but are based in different parts of the world.

Here VR/AR has the same potential as in other fields to link remote working colleagues together and enable them to visualise concepts and designs in 3-dimensions.

People can all see how things might fit together and how the finished article might look.  This can be particularly important if the physical styling and appearance of the end product is key.  It is much better to spot potential problems in a virtual world and correct them, rather than having to wait until an expensive prototype has been created.

Like architecture, the key benefits will come from remote teamworking and the ability to visualise the end product fully before you need to start spending serious money on making it real.

As with other fields, the barriers will be all around cost and, given the data hungry nature of engineering design work, the ability of the technology to cope well with that.  The ROI will become simpler and easier to justify, as the technology improves and costs come down.

Some companies have already been using this technology for a while now.  Businesses like Jaguar Land Rover and Arup have been deploying VR in design for over a decade.  In time smaller businesses will inevitably follow.

Healthcare

Another field where we might expect to see VR make increasing inroads is healthcare.  Here the technology can be used for training in various surgical procedures.  It can also be used to help surgeons plan for particularly complex operations.

Students can now study human anatomy extensively with VR, potentially continuing their studies from home if need be.

VR can assist with robotic surgery enhancing the degree of control a remote surgeon has over their instruments during a procedure and providing them with a much clearer visualisation of what is happening than would be possible just by looking at a video screen.

Other Applications

VR’s inherent ability to visualise and simulate makes it ideal for any training application where people need to interact with complex technology or a difficult environment.  It can safely create realistic simulations that help prepare people for working in demanding and potentially dangerous work environments.  It also enables students and tutors who may be scattered in remote locations to come together and interact as a group.

As the technology improves and the costs come down, it is inevitable that we will see VR become increasingly used as a go-to technology for many training applications.

Clearly the primary application for VR in entertainment is gaming.  However, this is not the only one.  VR can be used to enhance rides in theme parks or perhaps even to create an entire VR experience as a theme in itself.

VR can create spectacular interactive 3-dimensional landscapes and environments.  The potential to use this technology to create something of great artistic beauty can deliver entertainment in the form of a sense of wonder.

Could we perhaps be engaging with VR films or other entertainment experiences in the future?  I am sure we will, in time.

The Future

Given the wide range of different potential applications we could be looking at a world dominated by VR technology at some point in the future.

The fact that covid has rapidly accelerated the extent to which the world works and interacts remotely can only serve as an accelerator for the adoption of new VR applications.  The only question is how fast will this happen?

Unfortunately, VR has suffered considerably from over-hype in the past.  I am sure we can all remember the heady prophecies of 800% growth over four years and such like.  In a way, predictions such as that have done more harm than good for the industry and run the risk of creating a sense of the “boy who cried wolf”.

We may not see a sudden, spectacular, VR revolution but I believe we will see a steady evolution and a sustained growth.  One day we will wake up and all of a sudden it will seem as though VR is everywhere.

For the VR industry it is important to remember that VR itself is only a technology.  For a technology to succeed it must have applications.  So the real challenge, beyond improving the technology, is to identify and develop a meaningful range of products for which there is real demand.  And here it helps to start by taking some advice from Steve Jobs:

You’ve got to start with the customer experience and work back toward the technology, not the other way around.” 

In this context that means looking for potential situations that would benefit from the visual power of VR – i.e. where visualisation can add real value.  Its other key benefit is its ability to operate virtually, bring people in different locations together in a single experience.  Those two things in combination represent the key to developing killer applications.

Identifying and refining how these applications work, overcoming customer objections and reservations and then successfully communicating the benefits of the technology all require a good understanding of the potential market.  This would be where market research can help of course.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future.  That means understanding change – whether that be changes in technology, culture, attitudes or behaviour. 

We provide a wide range of market research and data services.  You can learn more about our services on our website.  Also, please check out our collection of free research guides for more information on specific services offers.

Sources & Links:

Spatial

VR Chat 

Altspace VR

Rec Room

British Interior Design Institute

Ingenia

New Medical

VRSYNC

Covid in Numbers – why have some countries suffered more than others?

As vaccinations roll out, we are beginning to see some light at the end of the covid pandemic tunnel.  It will take a few months yet, but it seems almost unreal to think that by the end of 2021 we may finally be back to some kind of post-pandemic normality.

Now seems like an appropriate time to take stock.  What might we learn from the traumatic events of the past year?  We might ask ourselves the question – why is it that some countries appear to have faired so much worse with Covid than others?  How have some countries experienced relatively low death rates, whereas others have experienced such tragically high numbers?

The Worst Hit

If we take a look at the numbers, the worst hit of the larger countries include many European nations (eight from the top ten worst affected) as well as the USA and Mexico.  All ten have experienced more than 150 deaths per 100,000 population.  The worst affected at the time of writing is the Czech Republic, with over 230 deaths per 100,000.

Other countries have escaped relatively lightly.  Amongst the other European nations Germany has suffered significantly less – ie, experienced a death rate less than half that of countries like the UK, Belgium and Hungary.

Healthcare Quality

One thing we might look at is the quality of healthcare.  More developed countries generally have more established, advanced and comprehensive healthcare. That being the case, such nations should be better placed to deal with a pandemic such as covid.  Unfortunately, it is plain to see that there must be a lot more to it than this; with countries like the USA, UK and Italy all suffering badly despite their relatively advanced healthcare systems.

India has a comparatively small proportion of deaths (under 12 per 100,000 on official figures).  Despite this, India’s healthcare system is ranked only the 112th most efficient healthcare system in the world according to the WHO.  The USA is ranked 37th, the UK 18th and Italy 2nd.  Clearly there must be other factors at play.

One factor is potentially under-reporting.  One source estimated that this could mean that the true level of covid deaths is as much as five times larger than the official numbers in India.  However, even taking that into account, India’s death rates have still been significantly lower than those of the ten hardest hit nations.

Whilst the standard of healthcare has no doubt played some role here, there are clearly other aspects involved.

Population Demographics

One factor is population demographics.  Older patients are much more likely to become seriously ill and die from covid than younger ones.  Here India’s age demographics counts in her favour. 

Only 6% of India’s population is aged over 65.

Compare this to most European countries and the difference is striking – with around 20% of population in the hardest hit European countries being aged over 65.  Italy was the most vulnerable in this sense, with 23% aged over 65 before the pandemic hit.

Of the 10 hardest hit countries, 8 were nations where 19% or more of their populations were aged over 65.  The USA has a slightly younger demographic (16% over 65s) which would help to limit its vulnerability a little but is still clearly more exposed than somewhere like India.

Mexico represents the odd one out here.  Only 7% of Mexicans are aged over 65, giving the country a youthful demographic that is closer to that we see in countries like India.  We must therefore look for other explanations as to why Mexico has suffered so badly.

Urbanisation

Covid spreads best in environments where people live in close proximity to each other and, in general, people living in towns and cities are more likely to live in closer proximity with others.  Indeed, although India in general has seen lower death rates, it has nevertheless suffered more in major urban centres like Mumbai.

Many of the countries that have been worst hit have high levels of urbanisation which has likely contributed to higher death rates.  Belgium has an particularly high level of urbanisation (with 98% of its population living in urban environments), making it especially vulnerable in this sense.  Several other countries on the list have high urbanisation levels (80%+), namely the UK, USA, Mexico and Spain.  A country like India has much lower level of urbanisation overall (36%), which means its population is more widely dispersed and people in more rural environments are therefore less likely to come into frequent contact with others who might be affected.

Lockdowns

The lockdown measures taken by different countries at different times would also have an impact.  However, as these measures are often taken in response to the pandemic getting out of control in the first place, it is no surprise to find that many of the countries with the worst rates have had to impose longer and stricter lockdowns.

According to the Oxford Covid Government Response tracker those countries on our list that have taken the strictest measures for the longest periods of time over the course of the pandemic would include the UK and Italy.  This has not prevented either country from registering high rates however, although it has no doubt helped to prevent the problem getting even worse.

Based on these measures, those countries which have been laxer from this list would include Bulgaria (most notably), the Czech Republic, Hungary and Belgium.  So, it is possible that in these cases a more relaxed approach has contributed to a higher death rate.

Test and Trace

Another factor would be the efficiency of a country’s testing and tracing regime.  On this measure Mexico does especially badly, having only managed to test 41 out of 100,000 people in its population to-date – far fewer than any other country listed.

Nevertheless, the UK has now tested 1,585 people out of 100,000 – more than any other country on the table.  Despite this, the UK still has the third worst death rate overall.  But here the devil lies in the detail.  The UK has massively improved its testing regime over the course of the pandemic but, initially, the UK lagged behind somewhat.  During the first 60 days after the first five UK deaths the British managed to test just 23 people in 100,000.  This compares poorly to a number of other affected countries. 

Germany’s lower death rate overall is partly down to its test and trace efficiencies, especially during the early phase of the pandemic.  The Germans managed to test 37 people in every 100,000 during the first 60 days after their fifth death.

Of all the countries on the list, Mexico stands out as the most behind on test and trace at every stage of the pandemic.  No doubt this is a major reason as to why the country now ranks so highly in terms of death rates.

International Travel

Another factor is the level of international travel.  Countries that experience a large volume of people travelling through their airports and transport hubs are more likely to import covid from overseas. 

Of course, travel restrictions now apply across many nations but this was not always the case.  The UK and the USA would, under normal circumstances, see significantly more international traffic than most other countries.  And so they, along with Hungary, would have been most exposed to importing infection in the absence of strict border controls and quarantine measures.

The Czech situation

It is worth taking time to consider the Czech situation, since this country has experienced the most serious problems to-date. 

In terms of many of the risk factors nothing immediately stands out that would explain why it tops the list.  The level of urbanisation is high but not unduly so at 73%.  Likewise, its population demographic is not notably different from many other European countries (20% aged 65 plus).  It also receives limited international traffic compared to many other countries.

However, over the course of the pandemic its lockdown measures have been the second laxest of the ten worst affected countries.  It is also the case that its figures for test and trace do not appear as comprehensive as many others (although it appears to be testing a reasonable amount of people now).

According to Dr. Rastislav Maďar, the dean of the University of Ostrava’s medical school, the Czech situation can be attributed to three key mistakes.  The first of these was a failure to make mask wearing mandatory, the second a decision to open shops in the run up to Christmas and the third a failure to react quickly enough to the presence of new strains in the new year.

Key lessons learnt

Hopefully, it is clear to see that no single factor or measure can in and of itself entirely explain why any particular countries experiences a high death rate.  There are many factors working together in combination. 

However, the nature of the pandemic is such that it is clear that just a few missteps at any stage can very quickly lead to the situation rapidly deteriorating.  Hopefully, we can all learn from that and avoid making any future silly mistakes in the final stages of the pandemic.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future.  That means understanding change – whether that be changes in technology, culture, attitudes or behaviour. 

We provide a wide range of market research and data services.  You can learn more about our services on our website.  Also, please check out our collection of free research guides for more information on specific services offers.

Sources

John Hopkins University https://coronavirus.jhu.edu/map.html

United Nations https://population.un.org/wup/Download/

Our world in data: https://ourworldindata.org/grapher/covid-stringency-index

Worldbank: https://data.worldbank.org/indicator/SP.POP.65UP.TO.ZS?name_desc=false&view=chart

ITV https://www.itv.com/news/2020-12-09/is-indias-covid-19-death-rate-five-times-higher-than-official-figures-suggest

CNN https://edition.cnn.com/2021/02/28/europe/czech-republic-coronavirus-disaster-intl/index.html

Smartphones 2021: Life in a maturing category

The Smartphone market of 2020 has been something of a roller-coaster ride for many manufacturers.  The Covid pandemic has clearly had a big impact with many people tightening their belts due to reduced incomes.  However, on the other hand, the introduction of 5G has created an incentive to upgrade to newer models. On balance the year has come out negative.  Gartner estimates 2020 sales were, in the final analysis, a full 12.5% down on 2019.  Q4 saw a more positive picture, bolstered by the holiday season, and launch of several new phones, like Apple’s iPhone 12.  Nevertheless, Q4 still ended up 5.4% down overall.  With covid likely to have an ongoing impact in the first half of 2021 the jury is out as to whether such things as the 5G rollout and new model launches will be enough to help stimulate a imminent reversal in this trend.

Market Maturity

There was a time when virtually all analysts and market researchers were happy to post a seemingly endless procession of graphs proclaiming a Smartphone market that seemed destined to continue experiencing exponential growth indefinitely.  And ten years ago, they would have been doing so with good cause.  But today, although it is true to say that the recent slump is largely down to the extraordinary nature of the pandemic, it is not the only factor serving to depress sales.  The other key factor is market maturity. 

Looking back at 2019 and 2018, in terms of units sold at least, globally the market has been flat.  Individual manufacturers have been able to buck this overall trend with innovation or by maximising revenues from similar volumes, but we are clearly looking at a more mature market now than was the case ten or even five years ago.

5G Rollout

However, with 5G now being rolled out and new 5G models being launched, this is likely to provide a growth stimulus over the coming year.  5G rollout is still at an early stage, in the UK, Ofcom stated that only 1% of UK Smartphone users were on 5G in September 2020.  However, in countries like the UK, rollout can be expected to proceed apace during 2021 and we are likely to have very widespread coverage during 2022.  Other western countries are likely to see a similar adoption trend. 

Taking into account the ongoing negative impact of Covid, a reasonable view would be that 5G rollout in itself is likely to stem but not necessarily reverse sales declines in the first half of 2021.  However, by the second half of the year we might see 5G starting to have a significant impact.

Camera Wars

In the age of selfies, Instagram and TikTok, the ability of phones to provide great quality visual images is clearly a key factor in their appeal.  The phones on the market today now offer a quality of camera that could not even have been dreamed of a few years ago.  Having the best camera that can take the best pictures and make the clearest videos has become almost like an arms race amongst the higher end phones.

Indeed, 2020 has seen a gradual move away from smaller screened phones.  Larger screens mean larger images and provide a better experience when, for example, watching a film or a video clip.  The trend is going to continue to favour devices that can provide great images.

However, many phones can now provide this, so the question is how much higher quality do people want?  There is of course a technical limit to the human eye itself.  It is pointless having a camera that offers more than 52 megapixels because the human eye is unable to resolve images of higher quality than this.  There is also likely to come a point of diminishing returns, even before we get to 52 megapixels.  Perhaps now it is more important to have cameras that cope well with poor lighting, or which have great zoom or strong video editing functionality etc. 

Maybe future opportunities exist here for identifying niches of phone users who have requirements for specific kinds of camera functionality.  It is likely to become more complicated than simply continuing to stick more powerful cameras into phones.

Foldable phones

Samsung is continuing to pursue the foldable phone route to achieve differentiation.  So far the foldable phone remains a high-end product and, by and large, a product that appeals to the tech-lover rather than the mass market.  However, as this technology continues to evolve it may become an increasingly important sector of the market.

Concerns remain about the robustness of this technology in some people’s minds and, currently, it remains expensive.  That said, we might consider what it has going for it that might see it really take off in the future.  Issues over robustness and cost represent two objections that can probably be overcome.  However, just because the reasons “not to buy” can be made to disappear – what about the reasons to buy?  Why bother with a foldable phone at all?

As a concept the foldable phone offers two potential advantages that will count in its favour.  First, as it is foldable, it allows you to carry a larger screen around with you.  A large screen means bigger images – better for watching videos and for photos in general.  That is a significant potential advantage in the modern world.

The second advantage is that, because these phones have bigger screens, it is easier to use them in a split screen mode.  Split screen or dual screen working is now virtually a ubiquitous practice when working on PCs – so why not mobile phones?  Many people already do it, although the smaller screen size can be limited and not all apps run well in a split screen.  Some of the tech here needs further development but ultimately one of the main USPs the foldables can potentially offer is a better split screen experience.

Adapting to a Maturing Market

Perhaps it is all too easy to view the prospect of a maturing market with dread.  5G may provide a welcome boost over the next two years but does not alter the basic dynamic that most people now have Smartphones and, what’s more, many of them have fairly powerful Smartphones.

But if we look at other mature markets there are a variety of different ways in which brands are able to navigate them effectively – a number of different strategies that can be adopted to maximise the chances of success as the Smartphone market continues to mature.

The Way Ahead

  • Niche marketing:  If you are not already one of the dominant players in a mature market then it is difficult to significantly improve your market position without making a substantial investment.  The alternative to this is niche marketing – to identify and target specific segments and particular segment needs rather than the whole market.  If you are up against large, well established competitors then marketing to particular segment needs are often the only way to make any headway.
  • Product innovation:  Having an innovative product or, at least, a product that includes some design features that mark it out from the competition, is another way to stand out from the crowd.  The difficulty is that innovation in a mature market often costs a lot of money.  That said, looking for creative ways to stand out is a key way in which brands can thrive in mature markets. And it doesn’t always need to be ‘bleeding edge’. Sometimes a clever application of existing technology can offer a real competitive advantage.
  • Branding and design:  Standing out can be as much about branding as it is about product functionality.  In the Smartphone market Apple has been especially successful in using its brand and design aesthetic to promote its phones.  Many Apple customers are Apple customers as much because of the brand and the design as because of the technology itself.  So, branding and design can definitely have an impact.
  • Customer Loyalty: As markets mature, brands naturally become increasingly dependent upon repeat business from existing customers and less and less reliant on finding new customers.  For that reason, promoting brand loyalty and looking for ways to keep your existing customers engaged with your brand become increasingly important.  In mature markets not many people switch brands and finding new customers to the category will be a rarity.  Promoting customer loyalty is therefore a critical tool.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future.  That means understanding change – whether that be changes in technology, culture, attitudes or behaviour. 

If you would like to learn more about the services we can provide in terms of helping the product development, brand building, identifying future trends and new segment opportunities please check out our collection of free research guides for more information.

Links & sources:

https://www.gartner.com/en/newsroom/press-releases/2021-02-22-4q20-smartphone-market-share-release

https://www.ofcom.org.uk/__data/assets/pdf_file/0024/209373/connected-nations-2020.pdf

Starting out: how market research can help bring new concepts and business ideas to market

Market Research has long been recognised as an important tool in facilitating the development of new products.  This will be particularly important if you are trying to attract investors.  But how exactly can it help?  And what kind of research would be of most use for your business?

First things first

The most important point to make here is that there is no one-size-fits-all answer to such questions.  It all depends on your situation.

At the early stages of a new business venture, you may have several unanswered questions about the product you need to create and the market you plan to sell to.  Some things may be quite clear, others a complete mystery.  Perhaps you already have some data on your market or perhaps your past business experience means you already understand certain things very well. 

So, the first thing to do is to create a list of the things you need to know that you do not know already. That should give you a clearer idea of the kind of market research you might need. 

To help in this process, let’s look at some of the key questions many people have when starting out on a new business venture and, in each case, consider how market research can help.

Product Development:  What should the final product look like?

Some people might start with a blank sheet of paper and some very rough ideas.  Others may start with a much more specific vision of their product that just needs some further refining. 

If you are literally starting with a blank sheet of paper and some very rough ideas, then you might want to consider what Steve Jobs once said about product design “You’ve got to start with the customer experience and work back toward the technology, not the other way around.” 

A good place to start is to look at the market as it is today – what do people like / dislike about the products that are already available?  Are there any emerging trends you need to be aware of?  And, if you were to ask a potential customer what they’d like to see in future – what would they say?

Market Research can be of immense value at this early stage, helping you turn rough ideas into a more tangible reality.  At this point any market research you undertake is likely to be highly exploratory.  You might not even have any tangible concepts to test as yet; in which case the very purpose of the research will be to help create some tangible concepts based on what you learn about your market.

However, it might be that you already have a well-defined concept and the challenges you face are more about refining the details.  In this case, you can opt for more direct forms of market research where you test and perhaps compare different concepts that are fairly well developed.

Market research will help you to start any development decision-making process from the viewpoint of the customer experience and refine your ideas from there.  We would use a different approach depending on whether you need develop a detailed design from a blank sheet of paper or choose the best idea from a shortlist of concepts, or just to refine and tweak the final product.  It’s all about horses for courses.

Understanding the market: How big is it?  Who are the competitors?  How do people buy?

Investors and other stakeholders often like to see evidence to support any new idea.  Is the market big enough could be a key question that needs answering – but not always.  If we are talking about a market that is well established and where everyone accepts it is indeed a big market, you are much less likely to need to find the data to convince people. 

But if you are dealing with a new area, or a niche area, the exact size and potential of your market may be an unknown quantity.  Then you may need to think about getting hold of some market research to demonstrate that there is a good business case for what you are planning.

If you are aiming to be a new entrant in an established market then the last thing you want to do is to begin by making some avoidable schoolboy errors.  An established market will have established competitors – each of whom will have their own strengths and weaknesses.  Customers in such a market will be used to buying products in a particular way; they may have strong expectations in terms of the channels they are willing to use, how they buy and what information they expect suppliers to share with them etc.  Understanding the current market dynamics is likely to be a key area to look at, if you find yourself in unfamiliar territory.

Marketing:  Who should I be marketing and selling my product to and how?

You might have a great product but who are you going to sell to?  At some point you will probably need to sit down with a marketing agency and brief them on what you want.  One of the first thing they will want to know is a detailed description of your target audience – what kind of people do you want to reach?

The more you know about your target audience in advance the more targeted (and hence more successful) your marketing can be. 

If you use market research to profile your target market you will get a clear idea of who you need to aim for, why and how. 

Knowing who you need to reach in terms of simple demographics is all well and good.  But often it helps to be a lot more specific than that.  Knowing more about your audience in terms of their interests, their media preferences, product format preferences and other aspects of their lives can all help ensure your marketing is better targeted.

You can also use market research to help understand how you might position your offering with such an audience.  What messages are they likely to respond best to and which are unlikely to resonate?  Understanding their likes, dislikes and interests will all help to determine that.  If you have specific promotional concepts in mind, you can test these directly.  This all helps to refine what you’re doing to ensure it hits the right notes.

Pricing: How much can I (should I) charge customers?

Pricing can sometimes be a key area you need to think about – especially if you are dealing with a price sensitive market.  You might be able to get a good feel for this just by researching what competitors are charging but sometimes it is not necessarily possible (or desirable) to do this.

Market Research can help in such cases by reaching out to potential customers and testing what pricing strategy is likely to deliver the optimum results.  Pricing research can provide your financial people with the information they need to model various pricing options and to understand how different pricing levels might impact on demand.

Market Research can help with any new venture/product concept

By taking time to think about the questions you need answering and why you need them answered, you can obtain a clear view of what kind of market research you might need. 

Hopefully, some of the questions we’ve raised here will help to spark some ideas in that thought process. 

But once you have your list of questions, you can then think about getting some answers.  Some of these you might be able to find answers to yourself but some you might need help with.  At that point you are ready to seek the help of a market research agency.

A market research agency can provide you with advice and guidance as to what form of research might be most appropriate.  Speaking with an agency will help to clarify your thinking and provide you with some tangible options to consider.

If you would like to find out more about the kind of services our agency can offer, or if you have particular questions you’d like help with, please contact us for more information.

The Rise of the Female Gamer

One half of all gamers are women

Gaming is fast becoming as much a female hobby as a male one.

Once upon a time we used to think of gamers, almost exclusively, as young, heterosexual, white, and male.  That is no longer the case.  Gaming is now a popular pastime and today’s “gamers” are a more diverse community than ever before.

These days, around half of all gamers are women – a fact confirmed by more than one 2020 survey reported on UKIE’s ukiepedia site.  Despite this, many women who play games (two-thirds) do not regard “gaming” as one of their hobbies. 

Why don’t women see themselves as gamers?

So why is this?

Perhaps some mostly only play casual games on mobile devices and are less inclined to regard this as “proper” gaming.  Or perhaps some have come to the hobby so recently that they don’t yet see themselves as gamers. Or perhaps the traditional image of the gaming community as a male dominated sphere makes some women reluctant to overtly identify with it.

Anecdotally, women are still a lot less likely to buy from sites such as Steam and, although accurate figures on such sites are hard to come by, there is some evidence to support this.  One 2015 analysis estimated that only between 4% and 18% of visitors to the Steam homepage were actually women.  Now this may well have changed but it does suggest that there are certain gaming environments where you are less likely to find a female gamer. 

Whether or not women as yet represent half of the gaming market in value terms is an open question.  However, they clearly now represent one half of all gamers.  And, no one would argue that, if provided with the right products, women will not spend as much as men.

But if this potential is to be fully realised, we first need to consider what factors, if any, might be holding things back.

What’s putting women off?

One factor that we certainly can’t afford to ignore is that some (possibly many) female gamers have been put off by the toxic misogyny that has been present in certain sections of the gaming community.  This came to an unpleasant head in 2014 with the gamergate controversy.  Attitudes and incidents of this sort will no doubt discourage at least some women from identifying too closely with the gaming community.  It is particularly likely put off others from engaging in some multiplayer games, where they are more likely to encounter such unpleasant behaviour.

Qualitative research has suggested that the online multi-player environment can be particularly problematic for women gamers.  This study suggested that female gamers did, for example, seek to “…mitigate online harassment, including actively hiding their identity and avoiding all forms of verbal communication with other players.”   This may explain, at least partly, why only 33% of women who play games are happy to self-identify as gamers.

When the hobby gets things right

All that said, some studies suggest the hobby is catering more for female gamers than used to be the case.  A 2016 study by Indiana University analysed 571 gaming titles over a 31 year period and claimed that there had been a decline, since 2005, in the level of sexualisation of female characters. 

It is also the case that there will also be certain spaces where you’d be a lot more likely to find female gamers.  Many would argue that female gamers become a lot more significant when it comes to mobile and casual gaming.  For certain games, the female audience can approach 80% but for others it can be as low as 8% and for others closer to 50/50. 

Clearly some games have done a great job of attracting a significant female following, for instance, by offering strong and interesting female character choices.  Games like Horizon Zero Dawn may be an example of this.   As Malindy Hetfield wrote on Polygon: The complex representation of women in different social spheres throughout Horizon Zero Dawn is one of its best features.

Game developers who make the effort to understand and cater for the female audience can potentially unlock a significant future market. All it requires is a good understanding of what that market wants and the ability to develop and market it in an authentic and appealing way.

One potential issue here is the fact that women still represent a minority of people working in the games industry.  UKIE’s 2020 game industry census reported that women make up only 28% of the workforce.  Getting women more involved in the creative process of games development can surely only enrich the end result.

Tapping into the female gamer audience

However, one size is unlikely to fit all and, with so many women now playing games, it would be wrong to think of them as a single homogenous audience.  Some women may prefer casual tile matching games and puzzles but others like enthralling RPGs, or racing games.  The future is likely to see a variety of different female audiences emerge within different gaming genres. 

Tastes are evolving and changing over time and if game developers can find creative ways to tap into the female gaming market, the potential opportunities are clearly significant.  The challenge is to find the right audience and understand how best to reach them with the right products and messages.

We can help in this process by providing audience profiling and segmentation market research services.  If you’d like to find out more about these services, please contact us for more information.

Building brand is key but is the brand funnel still relevant?

Building a strong brand

Every marketeer knows that building a strong and distinctive brand image plays a critical role in business success.  You only need to look at brands like Apple, BMW and Coca Cola to see the power of brand image in action. 

No one doubts that brand building is as important today as it always was.  But what about the brand funnel?

The classic brand funnel

The classic brand funnel has been used to describe how potential customers progress along an emotional journey that has several distinct stages.

First, they become aware of a brand, then familiar, then they desire it enough to consider buying it and then, finally, they buy (if all goes well). 

Not everyone completes this journey.  Some may not even make it before the first one or two steps.  This being the case the role of marketing is to find ways to move as many people as possible through the funnel as quickly as possible.

The old model

Back in the days before digital marketing and the internet, the process of moving potential customers through different stages of the brand funnel was a slow one.  It you are relying on such things as TV advertising, magazine advertising and billboards you have no direct connection between the advert and the sale. 

Sure, a person can see your ad as they walk past a billboard, but they had no way to engage with it or to buy your product.  All they could do was look at the ad and (hopefully) remember it. 

In such a world memory is very important.  The gap between someone seeing an advert and actually visiting a shop where your products are sold could be days, maybe even weeks. 

Times have changed

These days someone can see an ad and instantly go to the online shop to buy your product, all within a matter of a few minutes.  There is a direct connection between advertising and sales that rarely existed in the old pre-digital world. 

Previously there was no direct way to measure how many people had seen a billboard ad or what impact it had had on them.  Now we can see how many people engage with ads and how many of these click through to buy a product.

So, do we even need to worry about the brand funnel anymore? 

Some people have even claimed that the brand funnel has now been ripped apart by the digital environment.  That it is an old, irrelevant model for a non-digital age.  But they would be wrong.

How the funnel works in a digital age

Think about what happens when someone encounters a digital ad for a brand they have never seen before.

The first thing that happens is they see the ad.  That’s the first stage of the brand funnel – awareness.  No one ever bought anything they weren’t aware of.

Next, they absorb the messaging in that ad.  Assuming it hits the mark, they are now more familiar with the offer.  That is the second stage of the funnel. 

Thirdly, let’s say our imaginary customer’s interest is engaged.  If all goes well, they will click through to the online shop – they are now considering a purchase.  Then they make the purchase (we hope).

They have still gone through the exact same process – the only difference is that it has taken minutes, not weeks.

Understanding longer term impacts matter

But digital advertising does not just have a measurable immediate impact. 

Many people see a digital ad and simply don’t engage with it.  Or perhaps they visit your website and buy nothing.  So digital marketing can have a minimal impact in the initial instance.  This might be regarded as a failure, but is it?

As in the pre-digital age, many people might see a digital ad and pretty much walk on by.  However, over time a combination of marketing initiatives may make them more familiar with what you do until, perhaps months later, they buy.

In such instances the classic brand funnel still applies.  That is because digital advertising can have a longer-term intangible influence on brand perceptions as well as delivering immediate sales results.

The role of advocacy

One thing which we know is a lot more important these days is brand advocacy.  This is especially the case when it comes to customers willing to give positive reviews and ratings for your products online.  It can play a critical role in converting interest into sales and many customers will actively seek out such reviews online to help them make their decision.

This is a new phenomenon of the internet age – and an especially important one.  Promoting advocacy is therefore a key goal for marketeers.

However, as it turns out this isn’t new – it is just more.  In the days before the internet we had a name for this phenomenon – it was called “word of mouth”.  Everyone knew it was important but of course it was incredibly difficult to measure, let alone influence. 

Advocacy has always a key element in the brand funnel.  All the internet has done is made this a lot more visible and measurable. 

What we now need to be able to do is really understand what makes some people become advocates and others not – and how we can influence this process.

The role of brand tracking surveys

As we can measure many of the immediate results of a digital marketing campaign we don’t need a brand tracker to measure this. 

However, if we want to build our brand over time, we still need to consider the cumulative impact of our marketing on brand perceptions (beyond the short term measurable impacts). 

That said, we need to carefully design any brand tracking survey to ensure it can deliver something of value.  And that means looking at how we can use such tools to deliver some of the things that the more immediate and direct measures we can get from the internet might not be able to tell us. That means using trackers more to:

  • Explore why people fail to engage.
  • Investigate why people fail to move all the way through the funnel.
  • Understand what we might try in future that can engage such people.
  • Look at what aspects of our brand image we should focus on in future campaigns.
  • Understand negative and positive aspects of our brand image we need to address.

Where brand trackers can become bogged down and stale is when they are used solely for tracking what has happened and never for testing any forward-thinking ideas.  Ultimately brand tracking surveys can only remain relevant if they are able to elevate what they deliver from simple metrics monitoring to providing insight for actionable change.

If you’d like to learn more about using market research to manage your brand image please feel free to contact us or have a look on our website for more information.

How Covid is shaping the future of language learning

A boom in online language learning

Covid prompted a boom in online language learning in 2020.  The obvious beneficiaries of this have been the providers that specialise in online learning apps – of which Babbel and Duolingo are the most prominent.

During the initial period of lockdowns (March 11 – April 30 2020) Duolingo reported a 67% increase in new learners compared with the same period in 2019.  The take-up of their app fell off again somewhat during May and June but picked up again from July.  Overall, the number of new learners recorded each month remained high into the autumn of 2020; higher than the comparable month in 2019 in each case.

Babbel reported that they passed the milestone of having sold 10 million subscriptions in 2020.  This has been driven by a significant increase in subscriptions (especially during periods of lockdown).  The fastest growth has come in the German (their home market) and US markets where they claim 200%+ sales growth.

However, the lockdowns and social distancing restrictions have also meant that language schools that have historically offered mainly classroom based learning have also been offering more tuition online.  Wall Street English announced in September that they had moved 170,000 students to a proprietary online learning solution.  And the British Council announced in June that they had moved 75,000 English language students from classroom to online learning.

The short-term impact of Lockdowns

Obviously, lockdowns have meant that people are stuck at home, looking for things to occupy their time.  Activities such as home baking, yoga and gaming have all thrived during the pandemic (it’s not all been about just watching box sets).  It is therefore little surprise to find an increased interest in learning a language.

The extra free time that lockdown grants us is an opportunity to do some of those things we have been putting off for a long time / never had time to do before. 

The extent to which this is happening was revealed in a survey commissioned by the British Council back in November.  This found that 10% of people in the UK had started learning a language (or returned to learning one) since the first lockdown. 

All the figures demonstrate that there has been a marked increase in online language learning during 2020.  But 2020 was far from a normal year and one must wonder what impact all this will have on language learning in the longer run?

Longer-term impacts

Whilst the lockdowns have prompted a greater interest in language learning (as they have in other activities like home cooking), we need to ask whether this will represent a sustained longer-term trend or simply a temporary response to a highly abnormal situation.

The British Council reported that much of the increase came from people using their phones to access language learning apps and podcasts.  Such things are easily accessed and do not necessarily require a major commitment (as would be the case when finding and signing up for a more formal/extensive online course).  No doubt many of these people, once they start learning, will continue with it and maybe therefore be in the market for something more substantial in future.  However, it is inevitable that some will fall by the wayside once the world starts opening again and the distractions of work and leisure outside the home begin to encroach once more on our time. 

That said, 2020 has seen more people than ever before make a start on a language learning journey.  The challenge for language learning providers will be to capitalise on this and offer the right mix of learning experiences to encourage them to continue with their journey in the post-Covid world.

After Covid

The other question relates to what balance of online vs classroom learning students might desire in the longer run?  Right now, with lockdowns still very much a feature of life for many countries around the world, the choice is online or nothing for many people.  But once choice returns, what then?

Of course, people do not necessarily want an either/or choice here.  Becoming more open to an online experience does not necessarily preclude the desire for an in-person experience.  Many people may well wish to opt for a blended experience in future.  And whilst the lockdown experience has clearly boosted online language learning it is unlikely to kill demand for in-person learning entirely.

For one thing, once the current pandemic is finally done and lockdowns become a thing of the past, a lot of people are likely to crave more social interaction.  So many people may well find the in-person experience that a classroom can offer has a refreshing appeal.

However, things have clearly changed.  A great many people have had the opportunity to explore online language learning over the past year.  It therefore stands to reason that this will have grown demand for this form of learning in the future.  Perhaps this change was coming anyway, and perhaps all Covid really did was accelerate it. 

The future for language learning, like so many things, will see online experiences assume a much greater importance than was the case in the pre-Covid world of 2019. 

Discovering the Future of Cloud Gaming

People keep talking about it, but will 2021 finally be the year that cloud gaming comes of age?  Will we be seeing an end to discs and downloads as gamers discover a new age of streaming?

The emergence of new services

At the end of 2020 new Cloud gaming services like Stadia, Microsoft’s Ultimate Game Pass and now Amazon’s Luna began to emerge as serious, more rounded, offers.  However, let’s not get too ahead of ourselves, many of these services remain at an early stage of development.  Clearly, the ability to offer a wide range of good quality game content, that works well on many different platforms, represents two essential preconditions that need to be met before these services can make a real impact.  Progress is being made but there is still a long way to go.

The elephant in the room – internet connectivity

The elephant in the room, of course, is the quality of the player’s internet connection.  Looking ahead, you can see how developments like 5G will open up the potential for streaming to mobile, and broadband services in general can be expected to help expand this market. 

That said, the situation today is that many people lack an internet connection that can adequately stream these services as they stand.

This means that the sweet spot for these services at present will be those people with a good broadband connection, who aren’t wedded to the idea of having the latest and greatest console/PC set-up.  The big question is – how small/large is this sweet spot? 

The sweet spot

Those in the sweet spot will include those new to gaming, who are not particularly devoted to a specific hardware set-up.  The PS and Xbox lovers seem keen to continue to invest in consoles.  So too, I would argue, the hardcore PC gamer.  I am sure that some of these people will be happy to experiment with game streaming.  As they are likely to be open to experimentation with any new developments in gaming.

However, there may be newer audiences emerging in terms of people who have taken to gaming a lot more during lockdown.  Another group might be the older generations of gamers – people more likely to have old/outdated gaming platform set-ups.  A third group to look out for would be female gamers – less wedded to consoles and PCs and far more at home gaming on a mobile device.

Cloud gaming might provide these people with a relatively quick and easy way to play new games without needing to get the latest consoles.  Obviously, these services will need to effectively connect with these people and get their messaging right.  After all, many of these people are a different audience from the hardcore gamers currently queuing up to buy the very latest consoles. 

The need to promote real benefits

There is also a potential problem here – and that is that I wonder if they are even promoting the right benefits?

To use these services effectively at the moment you must have a great internet connection.  I suspect that those gamers with great connections are also likely to be the same people with the latest Xbox / PS console or with high powered PCs.  They will be the very same people who have easiest access to the latest games because their tech can handle them.  They are also likely to be the people who will suffer the least from problems when downloading games. 

As a result, some of the benefits that cloud gaming often talks about are least likely to be issues for people with the best internet connections.  So, what is the point of pushing the message that you do not need the latest hardware, if the people with the fastest, most reliable speeds have the latest hardware anyway? And what is the point of telling them that they do not need to worry about slow downloads or troublesome upgrades when it is not a problem, because most of them have top-end fibre connectivity? 

So, the big question is, what other benefits are these services offering? 

Content is King

The obvious key requirement for these services to have any future at all will be for them to offer a strong library of relevant content.  Because for any streaming service, content is king after all.  Offering a few dozen titles (not all of which work on all platforms) is not that great to say the least.  100 titles – so what?  Steam offer thousands of titles!  Once people can be sure, for example, that all Xbox games are available for streaming on Ultimate Game Pass – then we would be cooking on gas.

At present content libraries are a bit scant, although they are growing.  The appeal of a streaming service will be limited by the range and quality of the content it can offer and its ability to deliver that content on any platform with consummate ease.

Just compare these services with successful, mass-market, film or music streaming services.  Netflix UK offers 6,500 films and box sets, including much unique content, available over pretty much any platform you could want.  Currently, cloud gaming services come nowhere near offering that kind of choice.  And if those services can take one lesson from film and TV streaming, it will be that the provision of attractive original content is likely to be the most important determinant of longer-term success (or failure).

The Right Business Model

Finally, these services are going to need to find the right business model for delivering cloud gaming.  Currently, things are at an early stage and, I suspect, many providers are still feeling their way.

The benchmark standards have already been set by the music and film streaming services.  These are the standards by which cloud gaming will ultimately be judged. 

Netflix UK deliver their service for an all-in cost of £84-£168 a year.  Now, buying a film on a DVD is generally cheaper than buying a game on disc so, granted, it is not 100% comparable.  That said, film and music streaming services have, in many ways, set expectations in consumers’ minds as to how successful streaming services should work. Which is that an all-in price provides access to a large amount of content.

On the other hand, Amazon’s film and TV streaming works a little differently in so far as you get access to a lot of free stuff and then pay extra for the premium content.  That works because there is a lot of essentially free content. 

So, when all is said and done, cloud gaming is likely going to need to develop an approach like the models that have been shown to work well for film and TV.  And that, of course, brings us back to the need for content.

A year of evolution rather than revolution

On balance, 2021 is more likely to prove to be a year of evolution and experimentation rather than one of revolution.  It is likely that these services will need this time to build their functionality and gaming libraries.  In addition to that, they will probably go through a period of experimentation whilst they get their business models right.  

That said, it is quite possible that by the end of the year we may see some of these services develop the necessary content libraries, business model and technology to start making a more serious in-road into the traditional gaming market.  The potential is there – at the end of the day, if it can work for film and TV then it can work for gaming.  But there is still a fair journey to go before realising that potential.

Assessing the Impact of COVID on Retail and Online Shopping

A far from reasonable year

COVID has had a huge impact on most businesses over the past year.  One of the sectors which has seen some of the most significant change is retail.  Lockdown restrictions have hit some parts of retail harder than others and prompted an unprecedented acceleration of the general trend towards more online shopping.  In this article we will examine some of the key changes revealed by UK national statistics, taking stock of what happened and its longer-term significance.

Back at the end of 2019 (remember then?) UK retail was reflecting on another year of modest growth. It was another year in which our shopping habits continued to move increasingly online at a steady albeit not spectacular pace. Overall retail sales were up a modest 3% and the proportion of business done online had edged up from 18% to 19%.

In the absence of any global pandemic a reasonable person would have predicted that 2020 would have seen a similar modest 3-4% rise in retail sales overall and a steady increase in the amount of online shopping from 19% to 20% or maybe 21%. 

But 2020, as it turned out, had no intention of being a reasonable year.

Now here we sit at the start of 2021, reflecting on a year in which retail growth has overall remained flat and the proportion of business done online has rocketed up to a staggering 28%.  That has led to a massive 10% decline in offline sales, hitting the high street hard.

And now we are looking at the prospect of old high street names like Debenhams and Topshop being snapped up by the new e-kids on the block in the shape of ASOS and Boohoo.  Who would have predicted that at the end of 2019?

Can the High Street bounce back?

Of course, much of the growth in online retail has been driven by the fact that COVID restrictions have meant that people have been forced to buy online.  At various times in 2020, pretty much nothing was open on the High Street except for supermarkets, chemists and convenience stores.  But the big question that many people are wondering is whether, once this pandemic is finally behind us, how many people will return to the high street and how many will continue to shop extensively online?

There is some evidence that we can expect to see at least some bounce back.  We can see that from a closer look at the 2020 data.  Q2 of 2020, when the first lockdown came into effect, saw the biggest drop in offline sales.  31% of retail business in this period was done online; up from 21% in Q1.  However, once the High Street started re-opening in Q3 sales did start to pick up.  And, whilst the level of online retail business continued to rise, it fell back from 31% of the total to 27%.  This suggests that, when COVID is behind us, we can expect to see some migration of shoppers back to the high street.

But how much of a recovery might we expect?  Can we expect the High Street to return to something like a healthy (if diminished) condition? 

Without question we would expect to see a short-term uplift.  People have been locked in for a while now, so being able to shop on the High Street without worrying about social distancing and COVID will have a strong novelty appeal.  High Street retailers will then have a short window of opportunity to persuade people to stay on the High Street rather than returning online.

That said, some might argue that COVID has simply accelerated a process that was happening anyway.  The historic trend has been for online to take an increasing share of retail sales.  This has been evident for years now; the last decade having seen the proportion of online sales climb steadily from 7% in 2010 to 19% by 2019.  Now, whilst the jump to 28% in 2020 clearly results from exceptional circumstances, the fact remains that many people have now grown used to shopping online.  Many customers are more comfortable with shopping online now, which was not the case back in 2019.  So, we can be sure that the proportion of online shopping is not going to drop back to around 20% again. 

But not all sectors of retail have been equally affected

Looking at the details beyond the headline figures reveals a more interesting story.  For not all sectors of retail have been equally affected by COVID and, as a result, a migration to online sales has occurred far more rapidly in some sectors than others.

Food retailing has held up well but has still seen a gradual move online

If we look just at food retailers (defined as businesses whose retail stores primarily sell food, like butchers, bakers, supermarkets and convenience stores), we have clearly seen some movement to increased online shopping.  However, this has been more gradual than that seen elsewhere. It remains the case that over 90% of sales continue to be made instore. 

This sector has doubtless benefited from the fact that its stores have been able to remain open throughout the pandemic.  Indeed, during the periods of the strictest lockdown restrictions, food retailers could remain open while most other retailers were shut.

However, food retail does have certain characteristics that would encourage consumers to continue to shop in store.  When it comes to buying fresh food, many consumers want to pick the product in person rather than leave it to chance.  Freshness is not something you can easily judge online.  So then the question is, how much would you trust the order picker to pick the freshest product?  (Of course, if all you buy is packaged and processed food then this is clearly much less of a barrier to shopping online.)

Another limitation on online shopping here is the whole question of supply.  Early on during lockdown, home delivery services were put under great strain.  At times it was difficult to book a delivery slot from a supermarket, which naturally limited how much business it was possible to do online.

We can expect to see more online shopping, but even given the pressures created by a global pandemic, instore sales of food products continue to remain very resilient.  The future here will be one of a steady migration to an increased level of online business, but physical stores will continue to remain the key channel to market.

Non-Food Retail stores have been hardest hit by the pandemic

Other retailers have been a lot less fortunate and have had to endure long periods of enforced closure during lockdowns.  This has clearly had a dramatic impact on sales and has forced a much higher proportion of business online.  In-store sales have dropped from £150 billion to a little under £113 billion in a single year.  Over the same period, online shopping has seen a dramatic increase from £27 billion to just over £41 billion.  And these numbers don’t even include any of the pure-play online retailers, like ASOS and Boohoo.

Unfortunately, the growth of online sales here was not enough to offset the decline seen in store.  These figures underline the harsh trading realities that have seen the demise of such well-known high street brand names as Debenhams, Top Shop and Dorothy Perkins.

Here the migration online has been gathering pace for a while, but the past year has seen a particularly dramatic acceleration in that trend.  This form of retail increasingly needs to rely on a strong online presence to survive.  In a way, many of the principles of the High Street still apply online – you need an attractive storefront, your store needs to be easy for the customers to navigate and the products need to be well presented (and of course you still need the right mix of products).  A strong brand image remains just as important online as in the High Street.  The media through which sales are conducted may be changing fast, but many of the underlying criteria for success remain the same.

The rise and rise of the pure-play online retailers

Retail businesses that have no stores are, as you would expect, primarily the pure-play online businesses.  These businesses have had a great 2020 with sales increasing by around one third. 

However, a small amount of business here is not done online.  This would include such businesses as mail order catalogues, telephone selling and automated vending machines.  This type of retail saw a modest rise in 2020, no doubt driven in no small part by the ability of these models to continue to operate during lockdown (and potentially even benefit from it).

Nevertheless, the big story here remains the rise of the online retailers.  No doubt we can expect this sector to continue to see significant growth into 2021.

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