Psychographic segmentation is the type of segmentation that is concerned with the psychological aspects of consumer behavior. It segments consumers based on psychological characteristics including personality, lifestyle, social status, activities, interests, opinions, and attitudes. While it may be a more complex process compared to demographic segmentation, businesses can find psychographic segmentation more useful in several situations. Many times, businesses use psychographic data in combination with behavioral and demographic data to create impactful marketing strategies and marketing campaigns.
Importance of psychographic segmentation:
Psychographic segmentation proves useful for businesses in various situation and particularly in situations where geographic or demographic data may not be sufficient to target the various customer segments. It helps develop more targeted marketing campaigns and connect with various customers groups with higher effectiveness.
The focus of psychographic segmentation is on characteristics like personality traits and values unlike demographic segmentation which segments customers based on characteristics like gender, age, etc. Demographic segmentation can sometimes be too broad to effectively target audiences. The same applies to geographic segmentation. It is where psychographic segmentation proves useful since it deals with the psychological aspects of consumer behavior. It also helps develop more targeted marketing communication for various customer groups. If a business has already collected demographic data, it can use psychographic data for adding more details to the buyer profiles or persona it has developed, which will help it develop better marketing campaigns.
Moreover, psychographic segmentation helps engage with multiple target segments simultaneously in ways that will have the highest impact for each customer group. It does not just save time and money but also helps connect with several customer groups effectively.
Psychographic segmentation can help marketers with several things including:
- To know the consumers’ perception of your products and services.
- To understand consumers’ needs and preferences better.
- To understand existing gaps or pain points related to your products or services.
- To find better opportunities for engaging with customers.
- To develop more effective marketing communications.
How to use psychographic segmentation?
Psychographic segmentation can be used in various ways to understand your target customer segments and to develop marketing campaigns for different target audiences. You can use it to understand the product or services attributes that your customers value the most and accordingly develop better marketing campaigns and serve customers. It can also be used to find opportunities for developing new products and services that might appeal to specific user segment.
Marketers can use psychographic segmentation to develop buyer personas. They can help marketers at understanding potential customers and the reasons behind their buyer behavior. It also helps understand customer journey and make improvements to customer experience.
A buyer persona is a fictional profile of a buyer that can includes various factors including personal preferences, lifestyles, job roles, opinions etc. It helps marketers develop a clear picture of their target audience and achieve superior results from their marketing efforts.
Knowing your customers’ buying habits, lifestyles, job positions and opinions helps understand how you can serve them better. Developing buyer persona is a first step in this direction. For example, there are various types of customers including the ones who are more price sensitive and those who are less price sensitive. So, you can offer the same product to two different classes of customers at different prices. The customers who are more price sensitive will buy the core product at lower price and the customers who are less price sensitive will buy the augmented product with a large number of features at higher prices. Similarly, different customers value different attributes when it comes to customer experience. While some will value price and quality, the others value convenience apart from these things. Some value customer service while the others value brand image. So, if you have developed a buyer persona, you will know how to cater to those motivations better.
Collecting psychographic data using surveys:
Marketers need to collect psychographic data for developing buyer profiles and to target their market audience more effectively. One of the most cost-effective methods of collecting psychographic data is to use surveys. Marketers can use a variety of customers to understand their customers and their lifestyles, social status, personality, activities, interests, and opinions. There are mainly three types of questions that marketers can use in their surveys to collect psychographic data.
Open Ended Questions:
These are the questions that cannot be simply answered in a few words. One cannot answer these questions using a simple yes or no. These questions use a qualitative approach to get a deeper understanding of the respondent’s beliefs, attitudes, opinions and lifestyles.
Likert scale questions:
Likert scale questions are among the most popular and widely used survey questions. These are a type of close ended questions. For example, you can ask the respondents whether they strongly like or dislike a particular service. When you use Likert scale questions to collect psychographic data, the respondents select from the several options on a scale from low to high and vice versa. Likert scale questions are highly effective when it comes to researching popular opinions about particular products and services. These questions use a psychometric test approach to collect psychographic data. For example, how many times you have used our services or how satisfied you are with our services on a scale of o to 10.
Semantic differential scale questions:
Semantic differential scale questions are also close ended questions like the Likert scale questions. These questions are considered most reliable when it comes to measuring the customers’ emotional attitude towards particular products or services. The semantic differential scale questions can be of various types including those which rate products or services on a scale or those which use open ended questions, or those which rank products or brands and the ones that measure satisfaction through ratings. For example, at the end of a customer service chat, businesses ask customers to rate how satisfied or unsatisfied they are with the services offered. The difference between the semantic differential scale questions and Likert scale questions is that Likert scale questions offer a general scale for response (like ratings from one to ten) while the semantic differential scale questions use extremely opposite adjectives on each end of a scale to measure emotional attitude.
Psychographic segmentation variables:
There are mainly five types of psychographic segmentation variables that are used commonly to understand psychographic characteristics and carry out research. These variables explain what drives consumers in terms of purchasing behavior. Equipped with this knowledge businesses are in a better position to serve their customers and increase their profitability.
There are mainly five types of variables that are used for psychographic segmentation:
Personality is an important psychographic variable with a significant influence on people’s purchasing decisions in day to day life. There is an important relationship between personality and buying decisions of a consumer. It also helps explain why people behave a certain way or like specific types of products or value specific attributes. For example, purchasing behavior of extroverted people can be different from the introverted.
There are several factors that affect consumers’ attitude towards businesses and products. From culture to geography and family background, all these factors can have a significant impact on people’s attitudes.
Lifestyle is also a critical variable that affects people’s choices and consumer behavior. It is a critical variable that helps understand people’s needs better and the challenges in their lives that may need a resolution. It helps businesses identify areas where opportunities exist to serve people better or create new products that satisfy the same needs better. Lifestyles can vary based on different factors including occupation, income, education and other factors and can give rise to unique needs for consumers. For examples, the needs of athletes may be unique compared to the needs of accountants.
Social status is also a significant psychographic segmentation variable bearing a critical influence on purchasing behavior and customer preferences. Why one prefers to buy a certain product and not the other can generally be related to the person’s social status or the social strata to which he belongs. Social status or social class affects buyer motivation and whether someone will prefer to buy a basic product or a premium product is affected by his social class. Lower and middle class consumers are generally more price conscious compared to the upper class. So, there are several areas where knowing a potential consumer’s social class will help the business including pricing, marketing, quality and customer service.
Activities, Interests, and Opinions (AIO):
Activities or how the consumer likes to spend his time is also an important variable driving consumer behavior. For example, a soccer enthusiast is more likely to buy Nike’s products in the soccer category.
Opinions are the beliefs and values of consumers and they affect how the consumer will perceive a type of message or marketing communication. The political or religious views of people can have a significant impact on the preferences of consumers and their buying decisions.
Interests are what consumers like to do in their free time or their hobbies. These are the things that a consumer derives satisfaction from and motivates important decisions. So, someone who derives satisfaction in cooking will be more interested in buying quality ingredients and diverse food products compared to cheap or regular products.
Advantages and limitations of psychographic segmentation:
Advantages of psychographic segmentation:
- Get a better picture of your target audience. Through psychographic segmentation, marketers and businesses can achieve a solid understanding of their consumer base and potential consumers than possible through basic demographic segmentation. So, most of the time marketers need to augment the data they have obtained through demographic segmentation with psychographic segmentation data, which makes it easier for them to understand and target their audience.
- Psychographic segmentation has another important advantage. It reveals hidden motivations and attitudes which is not possible through other forms of segmentation. It helps understand what drives people’s buying decisions and helps fill critical gaps in terms of marketing and customer service.
- Psychographic segmentation allows marketers and businesses to develop more targeted marketing campaigns and marketing messages. When marketers have deeper insights related to consumers’ lifestyles, motivations and attitudes, they can develop clear and more targeted messages to target their potential customer segments.
- Psychographic data also enables companies to hack into new customer bases or sell an existing product to new customer segments. For example, a company can use psychographic data to develop customer profiles which it can use to reposition its product so it appeals to new customer segments.
Limitations of psychographic segmentation:
Despite being an important type of segmentation, which enables marketers to craft more targeted messages, psychographic segmentation is not without limitations. There are hurdles to collecting psychographic data and processing it can also be complex. Here are the main limitations of psychographic data.
- Compared to most other types of market segmentation like demographic segmentation or geographic segmentation, psychographic segmentation is generally a more complex process and difficult to carry out. It requires participation in psychographic surveys and in several situations, customers may be less than willing to share sensitive data with marketers.
- Psychographic segmentation also becomes complex due to the reason that it requires clearly defined standards. Otherwise, the outcome will be ambiguous and inconsistent.
- Psychographic segmentation can also be risky in several cases where it becomes difficult for the marketers or company to arrive at a clear conclusion. While psychographic factors reveal why consumers might be interested in your product, they are not always the direct cause behind the purchase. So, unless you focus on other aspects and support the psychographic data with demographic and behavioral data, your marketing messages can be inconsistent. The results derived from psychographic research can also be misleading in some conditions and therefore require proper evaluation based on standards.
- Meaningful psychological data is not always easy to find. Marketers or research companies might need to invest money, time and other resources to collect meaningful psychographic data. In many cases, collecting psychographic data might require the use of both quantitative and qualitative data.
Developing questions for surveys to collect psychographic data can be difficult because it is common for marketers to rely on assumptions about their target market.