Psychographic segmentation

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Psychographic segmentation has been used in marketing research as a form of market segmentation which divides consumers into sub-groups based on shared psychological characteristics, including subconscious or conscious beliefs, motivations, and priorities to explain and predict consumer behavior. [1] Developed in the 1970s, it applies behavioral and social sciences to explore to understand consumers’ decision-making processes, consumer attitudes, values, personalities, lifestyles, and communication preferences. It complements demographic and socioeconomic segmentation, and enables marketers to target audiences with messaging to market brands, products or services. Some consider lifestyle segmentation to be interchangeable with psychographic segmentation, marketing experts argue that lifestyle relates specifically to overt behaviors while psychographics relate to consumers' cognitive style, which is based on their "patterns of thinking, feeling and perceiving". [2]

Contents

History

In 1964, Harvard alumnus and social scientist Daniel Yankelovich wrote that traditional demographic traits—sex, age and education level—lacked the insights marketers needed to inform their strategies. He suggested to use of non-demographic segmentation to help companies better predict consumer behavior, to improve product development, distribution, pricing and advertising. [3] Around the same time, market researcher Emanuel Demby began using the term ‘psychographics,’ to reference variations in attitudes, values and behaviors within a specific demographic segment. [4]

Within a decade, Arnold Mitchell and others at the Stanford Research Institute developed the Values Attitudes and Lifestyles (VALS) psychographic methodology. Despite critics—including Daniel Yankelovich— it was embraced by leading marketers, prompting Advertising Age to call VALS "one of the ten top market research breakthroughs of the 1980s." [5]

Advantages and disadvantages

Advances in computing power and the era of big data has fueled the use of all types of segmentation. By applying analytics to break down the marketplace of consumers into smaller groups, marketers and advertisers can profile and target key audiences more effectively. Each type of segmentation offers pros and cons.

Segmentation typeAdvantagesDisadvantages
Demographic and socioeconomic segmentation groups people by gender, age, ethnicity, income, education, geography and other physical or situational characteristics.
  • Easy to identify and target consumer groups, such as millennials, Hispanics, or women 25 to 35 years old.
  • Demographic and socioeconomic data is readily available through many third parties.
  • Broad classifications assume everyone in the segment thinks alike.
  • A one-size-fits-all approach to consumers based on demographics or socioeconomics offers limited effectiveness.
Behavioral segmentation groups consumers by their behaviors.
  • Tracking behaviors has become much easier in the era of big data and digital engagement along individual consumers' clicks along the path to purchase.
  • Targeting is driven based on proven consumer habits and practices.
  • Not all consumer behaviors have the same motivations behind them.
  • Messaging based on behaviors will not be equally persuasive for individual consumers who behave similarly but for different reasons.
Attitudinal segmentation groups consumers by shared attitudes and emotions about a particular subject, product or service.
  • Connects with consumers' articulated beliefs and needs about a specific subject.
  • Difficult to target consumers within a population unless they participate in an attitudinal survey.1
Psychographic segmentation groups consumers by shared values, beliefs, emotions, personalities, interests and lifestyles.
  • Understanding consumers' unarticulated needs and motivations empowers marketers to develop more compelling messaging.
  • Difficult to target consumers within a population unless individuals participate in a psychographic survey.1
  1. Attitudinal and psychographic segments may be projected across a population through predictive modeling based on many variables, though the accuracy may be greatly reduced.

Ultimately, the argument for any type of segmentation is to identify high-yield target markets that are likely to meet growth potential, profitability, or other specific goals.

Methods of model development

The traditional way to develop a psychographic segmentation model has been through a market research study surveying a statistically representative sample of a target audience. That target audience could be representative of the general population, a specific demographic or socioeconomic group, a population of consumers who utilize a certain product or service category or any group of people relevant to one’s research or business objectives.[ citation needed ]

The first step is the development of a robust questionnaire consisting of a series of attitudinal statements, often using a Likert scale (e.g., Strongly Agree = 1, Agree = 2, Neither Agree Nor Disagree = 3, Disagree = 4, Strongly Disagree = 5), to assess consumer beliefs about a given subject. Consideration should be given to dimensions that will differentiate consumers in the market, such as attitudes and beliefs about a certain topic or behaviors in a specific situation.[ citation needed ]

A factor analysis using statistical clustering procedures is conducted to examine response patterns to the survey questions. Natural clusters or segments emerge from groups of respondents who answer the survey questions in a similar manner. A useful illustration is a scatter plot with all of the respondents' answers that shows clusters of respondents who answered the survey questions similarly. Taking all the survey questions into account, consistent groups — or psychographic segments — are identified.[ citation needed ]

Statistical analysis of the respondents' answers can also identify an algorithm that uses a subset of the survey questions to classify consumers according to the psychographic segments. This could involve five, ten, fifteen or other limited set of questions that effectively categorize consumers by segment.[ citation needed ]

In addition to using surveys to gather psychographic data, experts[ who? ] suggest that social media monitoring and analytics can also help marketers identify trends in consumer interests, attitudes, sentiments, and psychographic clusters. [6]

After using quantitative marketing research to identify psychographic segments, many marketers and researchers will follow up with qualitative research (e.g., focus groups and one-on-one interviews) with members of each psychographic segment. This allows for additional insights and translation of the quantitative data from the perspective of each segment. This is a useful step for helping to prevent bias in the researcher’s interpretation of the data, as researchers may view data through the lens of their own attitudes and motivations.[ citation needed ]

The optimal psychographic segmentation model should meet several criteria:[ citation needed ]

  1. It provides the most differentiation when comparing segments.
  2. It produces segments that are internally consistent.
  3. It provides actionable insights.
  4. It creates solutions that are stable and reproducible.
  5. It balances predictability with practicality.

A psychographic segmentation model should be able to accurately predict the segment to which a consumer belongs with an acceptable level of confidence. Often there are trade-offs involved. For instance, a model may attain a higher level of predictability with a greater number of segments, but too many segments become unwieldy and infeasible to juggle when operationalizing the model. This also pertains to the number of questions used in the algorithm to classify consumers by segment. More questions may be more predictive, but there are diminishing returns past a certain number of questions, and too many questions decrease completion rates among consumers.[ citation needed ]

Examples of psychographic segmentation use

Consumers recognize that modern marketers and advertisers collect a wealth of data about prospects and customers. As a result, consumers hold brands to a higher standard. Individual consumers expect greater relevance and personalized brand experiences in exchange for the information they share. These expectations, in turn, have increased the need for psychographic segmentation.

Retail industry

Marketers of educational/entertainment technology for the family (e.g., e-readers and video game systems), for example, can identify key audiences based on family income, ages of children in the household, or other demographic indicators. However, these factors do not identify the "why" behind purchases. Using psychographic segmentation, marketers can drill down to types of purchasers: [6]

Understanding these psychographic variations among likely consumers allows marketers to fine-tune keyword targeting to appeal to these distinct sub-groups.

Similarly, a retail drugstore chain uses a combination of segmentation to identify a super-user who is motivated by a sense of responsibility for family. Marketing strategies are therefore focused on a customer persona of a woman in her early 50s who manages medications for her children, herself and her spouse, and her aging parents. [7]

Travel industry

Business travelers have different needs and expectations than vacationers. However, marketing to such broad categories alone fails to capture motivations and personal preferences. Within the broad segment of Leisure Travelers, for example, travel brands can use psychographic segmentation to drill down to identify individuals as 'novelty-seeking' versus 'familiarity-seeking' consumers, and then customize campaigns based on the most relevant travel style. [8]

Knowing that a consumer is 'familiarity-seeking', for example, could lead a travel brand to market guided tour travel packages to that consumer; a 'novelty-seeking' consumer could be targeted with a build-your-own tour package.

Healthcare industry

The healthcare industry faces an ongoing mandate to engage patients more effectively to address chronic disease and engage in healthier behaviors. However, experts note that segmentation based on demographic or socioeconomic factors falls short on motivating engagement. Similarly, one-size-fits-all programs based on a shared diagnosis do not lead to high adoption rates of recommended behaviors. [9]

Psychographic segmentation applied to healthcare consumers [10] can help healthcare organizations, health insurance providers, healthcare-related retailers and others classify individual consumers according to whether they:

Segmenting healthcare consumers by these factors allows one to customize messaging (whether verbal, print or digital) to appeal to individual motivations to improve overall engagement, drive behavior changes, boost adherence to care plans or increase adoption of medical devices and apps. [11]

The use of psychographic segmentation and insights have been demonstrated in a clinical setting to improve outcomes, from helping patients with diabetes achieve personal health goals [12] to reducing hospital readmissions following surgery. [13]

Related Research Articles

Marketing research is the systematic gathering, recording, and analysis of qualitative and quantitative data about issues relating to marketing products and services. The goal is to identify and assess how changing elements of the marketing mix impacts customer behavior.

In marketing, market segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers based on some type of shared characteristics.

Consumer behaviour Study of individuals, groups, or organizations and all the activities associated with consuming

Consumer behavior is the study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of goods and services. Consumer behaviour consists of how the consumer's emotions, attitudes and preferences affect buying behaviour. Consumer behaviour emerged in the 1940–1950s as a distinct sub-discipline of marketing, but has become an interdisciplinary social science that blends elements from psychology, sociology, social anthropology, anthropology, ethnography, marketing and economics.

Psychographics is a qualitative methodology used to describe traits of humans on psychological attributes. Psychographics have been applied to the study of personality, values, opinions, attitudes, interests, and lifestyles. Because this area of research focuses on activities, interests, and opinions, psychographic factors are sometimes abbreviated to 'AIO variables'.

In marketing, segmenting, targeting and positioning (STP) is a broad framework that summarizes and simplifies the process of market segmentation. Market segmentation is a process, in which groups of buyers within a market are divided and profiled according to a range of variables, which determine the market characteristics and tendencies. The processes of segmentation, targeting and positioning are parts of a chronological order for market segmentation.

A target audience is the intended audience or readership of a publication, advertisement, or other message catered specifically to said intended audience. In marketing and advertising, it is a particular group of considered within the predetermined target market, identified as the targets or recipients for a particular advertisement or message. Businesses that have a wide target market will focus on a specific target audience for certain messages to send, such as The Body Shops Mother's Day advertisements, which were aimed at the children and spouses of women, rather than the whole market which would have included the women themselves.

VALS is a proprietary research methodology used for psychographic market segmentation. Market segmentation is designed to guide companies in tailoring their products and services in order to appeal to the people most likely to purchase them.

Food marketing

Food marketing brings together the food producer and the consumer through a chain of marketing activities.

A market analysis studies the attractiveness and the dynamics of a special market within a special industry. It is part of the industry analysis and thus in turn of the global environmental analysis. Through all of these analyses, the strengths, weaknesses, opportunities and threats (SWOT) of a company can be identified. Finally, with the help of a SWOT analysis, adequate business strategies of a company will be defined. The market analysis is also known as a documented investigation of a market that is used to inform a firm's planning activities, particularly around decisions of inventory, purchase, work force expansion/contraction, facility expansion, purchases of capital equipment, promotional activities, and many other aspects of a company.

The following outline is provided as an overview of and topical guide to marketing:

Customer analytics is a process by which data from customer behavior is used to help make key business decisions via market segmentation and predictive analytics. This information is used by businesses for direct marketing, site selection, and customer relationship management. Marketing provides services in order to satisfy customers. With that in mind, the productive system is considered from its beginning at the production level, to the end of the cycle at the consumer. Customer analytics plays an important role in the prediction of customer behavior.

Technographic segmentation for marketing management is a market research analysis tool used to identify and profile the characteristics and behaviors of consumers through the process of market segmentation. Traditionally market researchers focused on various demographic, psychographic, and lifestyle schemes to categorize and describe homogeneous clusters of consumers that comprise possible target markets.

In marketing, a microsegment is a more advanced form of market segmentation that groups a number of customers of the business into specific segments based on various factors including behavioral predictions. Once identified, microsegments can become the focus of personalized direct micromarketing campaigns, each campaign is meant to target and appeal to the specified tastes, needs, wants, and desires of the small groups and individuals that make up the microsegment. The goal of microsegments is to determine, which marketing actions will have the most impact on each set of customers.

Survey (human research) List of questions aimed at obtaining data from a group of people

In research of human subjects, a survey is a list of questions aimed for extracting specific data from a particular group of people. Surveys may be conducted by phone, mail, via the internet, and also at street corners or in malls. Surveys are used to gather or gain knowledge in fields such as social research and demography.

A target market is a group of customers within a business's serviceable available market at which a business aims its marketing efforts and resources. A target market is a subset of the total market for a product or service.

Targeted advertising Form of advertising

Targeted advertising is a form of advertising, including online advertising, that is directed towards an audience with certain traits, based on the product or person the advertiser is promoting. These traits can either be demographic with a focus on race, economic status, sex, age, generation, level of education, income level, and employment, or psychographic focused on the consumer values, personality, attitude, opinion, lifestyle and interest. This focus can also entail behavioral variables, such as browser history, purchase history, and other recent online activities. Targeted advertising is concentrated in certain traits and consumers who are likely to have a strong preference. These individuals will receive messages instead of those who have no interest and whose preferences do not match a particular product's attributes. This eliminates waste.

Precision marketing is a marketing technique that suggests successful marketing is to retain, cross-sell, and upsell existing customers.

Audience segmentation is a process of dividing people into homogeneous subgroups based upon defined criterion such as product usage, demographics, psychographics, communication behaviors and media use. Audience segmentation is used in commercial marketing so advertisers can design and tailor products and services that satisfy the targeted groups. In social marketing, audiences are segmented into subgroups and assumed to have similar interests, needs and behavioral patterns and this assumption allows social marketers to design relevant health or social messages that influence the people to adopt recommended behaviors. Audience segmentation is widely accepted as a fundamental strategy in communication campaigns to influence health and social change. Audience segmentation makes campaign efforts more effective when messages are tailored to the distinct subgroups and more efficient when the target audience is selected based on their susceptibility and receptivity.

Demographic targeting is a form of behavioral advertising in which advertisers target online advertisements at consumers based on demographic information.

For the purpose of better understanding attitudinal targeting, it can be discussed using the 5 Ws and one H: who, what, when, where, why, and how. David Grossman, author of the article "How To Communicate Better with The 5 Ws and an H", stated this is the essential foundation in understanding the full context of a topic and making it relevant to the audience.

References

  1. ↑ "Psychographics". Merriam-Webster Dictionary. n.d. Retrieved June 28, 2017.
  2. ↑ W. Thomas Anderson; Linda L. Golden (1984). "Lifestyle and Psychographics: a Critical Review and Recommendation". NA - Advances in Consumer Research. 11. Retrieved June 29, 2017.
  3. ↑ Daniel Yankelovich; David Meer (2006). "Rediscovering Market Segmentation". Harvard Business Review. Retrieved June 29, 2017.
  4. ↑ Emanuel H. Demby (1989). "Psychographics Revisited: The Birth of a Technique" (PDF). Marketing News. Retrieved June 30, 2017.
  5. ↑ "VALS™ Market Research". SRI International. Retrieved June 30, 2017.
  6. 1 2 Alexandra Samuel (2016). "Psychographics Are Just as Important for Marketers as Demographics" . Retrieved June 30, 2017.
  7. ↑ Michael Hinshaw (2013). "5 Segmentation Lessons from CVS" . Retrieved June 30, 2017.
  8. ↑ Pamela A. Weaver; Ken W. McCleary; Jiho Han; Phillip E. Blosser (2008). "Identifying Leisure Travel Market Segments based on Preference for Novelty". Journal of Travel & Tourism Marketing. 26 (5–6): 568–584. doi: 10.1080/10548400903163129 .
  9. ↑ Sarah J. Hardcastle; Martin S. Hagger (2016). "Psychographic Profiling for Effective Health Behavior Change Interventions". Frontiers in Psychology. 6: 1988. doi: 10.3389/fpsyg.2015.01988 . PMC   4701903 . PMID   26779094.
  10. ↑ PatientBond (June 22, 2017). Psychographic Segmentation Defined . Retrieved February 25, 2020– via YouTube.
  11. ↑ "Healthcare-Related Psychographic Segmentation". PatientBond. Retrieved February 25, 2020.
  12. ↑ Lola Butcher (March 8, 2016). "Consumer Segmentation Has Hit Health Care. Here's How It Works". Hospitals & Health Networks. Retrieved July 11, 2017.
  13. ↑ Louis Jenis, MD; Tricia Gordon, NP; Thomas Cha, MD, MBA; Joseph Schwab, MD, MS (2017). "Paper 34. The Effectiveness of Personalized Electronic Patient Engagement Messaging Following Lumbar Spinal Fusion: A Pilot Study (Lumbar Spine Research Society 10th Annual Meeting: 2017 Meeting Abstracts)". Journal of Neurosurgery. 42 (4): A1–A40. doi: 10.3171/2017.4.FOC-LSRSabstracts . PMID   28384064.{{cite journal}}: CS1 maint: multiple names: authors list (link)
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