Psychographic segmentation is looking at consumer’s lifestyles, activities, and interests. It is a very effective way of understanding the consumer as a “person”.
But how effective is this segmentation approach for marketing purposes? This article explores the advantages and limitations of using psychographic segmentation bases when identifying target markets.
Covered in this article…
- Introduction to psychographic segmentation
- How psychographic information is obtained
- Advantages of using psychographic segmentation
- Limitations of using psychographic segmentation
Introduction to Psychographic Segmentation
Psychographic segmentation is dividing an overall market into smaller segments based upon various lifestyles, opinions, activities, personalities, and/or other similar factors.
It seeks to understand how people live their lives and is sometimes referred to as lifestyle analysis. By identifying people’s lifestyles, marketers should have a good insight into what products and services to best meet their needs, which brands (or brand image) fit with their view of themselves, plus the best way of structuring our overall marketing mix.
As you most likely know from your study of marketing, psychographic segmentation is just one approach to dividing an overall market into smaller segments. Different marketing textbooks will provide a slightly differing choice of segmentation bases, but will usually include:
- benefits sought, and
- hybrid (a combination of the above)
And remember that each of the above segmentation bases can be broken down further into smaller dimensions. For example, with psychographic segmentation, we can drill down to:
- main activities and hobbies that they are involved in
- key interests
- opinions and attitudes
- personality types
- social class groups
- personal values and what’s important to them
How is Psychographic Information Obtained?
Psychographic information is usually acquired through forms of market research, including observation techniques. For example, with observation, major Internet players like Google and Facebook can profile the psychographics of a user via the websites that they visit, products they purchase, and their online social connections.
In terms of market research, the main techniques are focus groups – where people discuss aspects of their lifestyle – and/or surveys and questionnaires which can add some statistical measure.
A fairly common market research tool discussed in marketing textbooks is known as VALs – which refers to the values and lifestyles of people. This is a segmentation approach built around psychographics that has been developed/fine-tuned in many countries and cultures. It is a combination of values (things that are important to people in terms of how they live their life) and lifestyle (things that they do).
In addition, marketing textbooks also highlight AIO as a summary for understanding the scope of psychographics, where AIO stands for activities, interests and opinions.
Because of the more detailed construction of psychographic segments, as opposed to other segmentation bases, it is often more timely and more expensive to use this approach.
Advantages of Using Psychographic Segmentation
Provides valuable insight into people’s lifestyles and attitudes
One of the more significant advantages of using psychographic segmentation is that you have a very deep and rich insight into people’s lifestyles, attitudes, and personalities.
This information should be helpful in constructing a marketing mix, particularly as we are more likely to be able to tap into underlying emotions and motivations by using psychographics.
This is particularly the case if we can use a combination of psychographic variables in our segmentation approach, rather than rely upon one variable only.
There should be a strong connection between lifestyle and consumer behavior
Although one of the limitations of psychographic segmentation is that you have a heavy reliance on information on the “person”, rather than the “consumer” – there is an obvious connection in many cases between lifestyles and attitudes and purchase consumptions.
As a simple example, somebody who is active in sports, or is an outdoor person – will have needs for relevant sporting and active equipment. And a person who likes to spend their time socializing, will have an increased need for home entertaining, restaurants, potentially home decorations, Uber travel and taxis (to get around easily), and so on.
As we can see, there are some assumptions required, but in many cases, there is a logical connection between lifestyles and consumer behavior.
Additional market research can be added for a richer segment view
Continuing the above point, while psychographics are primarily a form of social research designed to understand the behavior of people, there is plenty of market research that is intended to connect lifestyle variables to consumer behavior.
This means that we can have greater confidence in using psychographic segmentation if we add relevant market research and form a greater overall picture of both the person’s lifestyle as well as their related consumer behavior – which is likely to extent to usage and attitudes of brands and products.
Can help develop deeper understanding of consumers, especially their motivations
As you know in marketing, if we can get beyond the surface and identify core motivations and underlying needs of why consumers buy a product, then we should be able to build a greater connection and cut through with our target market.
When you study consumer behavior, we look at motivations, and many textbooks will utilize Maslow’s hierarchy of needs model as one example of this. This model indicates that many consumer needs come back to underlying and common motivations in life.
This means that product purchases are reflective of basic motivations, such as belonging or self-esteem. This should mean that the greater understanding of these motivations, the more effective our product design and our marketing communications should be.
More likely to deliver a competitive advantage = better understanding of motivations driving their actions
Continuing on with the above advantage, by having greater insight into the consumer and what “makes them tick”, this additional market information and understanding should deliver a competitive advantage to the firm. This is because the firm, as opposed to its competitors, will simply know more and have a better understanding of its target market audience.
When we undertake market segmentation, obviously we are seeking to identify suitable target markets, but the segmentation process should be very effective in generating a deeper understanding of the marketplace. This is far more likely to occur with the use of psychographic information, as opposed to other forms of segmentation.
And can create rich segment profiles and brand personas
Adding psychographic information, either in isolation or in combination with other segmentation bases, will enable us to develop very rich segment profiles.
As you know, segment profiles are a detailed description of our target market. And adding psychographics gives us a good picture of their lifestyle, their views on life, and how they spend their time – all very helpful information for a marketer.
And from a detailed segment profile we should be able to identify a quite useful brand persona – which is a summary representative of our target market encapsulated in a hypothetical “average” customer for that segment. Brand personas are helpful tools to use in marketing as they keep us focused on the needs of the target market.
Effective media targeting in a digital world
While in the past psychographic information was difficult or expensive to obtain, in the digital marketing environment, psychographic detail is far more available.
For example, if you run advertising via the Facebook platform, they will give you many variables to use to target your advertising towards specific lifestyles and interests. Obviously, they are able to obtain this information through observation of the posts that you engage with, as well as your social network. This creates a very rich and powerful view of a consumer, which can be used for media targeting.
It is even possible to utilize psychographics in more traditional media, especially TV shows, radio stations, and magazines. We can make logical assumptions that people who watch certain types of TV shows (reality TV, sports, documentaries) share lifestyles and attitudes in common. Likewise, radio stations tend to target specific interests of people, as do magazines.
Limitations of Using Psychographic Segmentation
Explains the consumer as a person, not necessarily as a consumer
The core limitation of using psychographic segmentation is that lifestyle analysis is primarily designed to paint a picture of somebody’s lifestyle overall, not necessarily their actions and attitudes as a consumer.
This means that we have a rich and deep understanding of them as a person – how they spend their time, what interests them, their views on life, their core values and principles, and so on – but not necessarily how that relates to them as a consumer in terms of product purchases and attitudes to brands.
It should be noted that the above, in the advantages, that we can overcome this limitation by extending our market research and connecting consumer behavior to psychographics.
We still need to connect their lifestyles and attitudes back to their purchasing actions
As mentioned above, relying on psychographic information only is somewhat limited for a marketer. We need to connect lifestyles and attitudes in general back to how that impacts somebody from a consumer viewpoint.
There are two approaches to this. The first is to make “logical assumptions”, which may/may not be correct, and which may result in misleading segmentation and/or understanding of the market segment.
But the second approach is more valid, where we can add to the segmentation profiles by adding additional segmentation bases, such as behavioral and/or benefits sought variables. This will enrich the data and give us both a psychographic and consumer behavior perspective – which would be very effective information in the marketplace.
Often timely and expensive to obtain data
As you may have gathered from the above, as we are talking about rich data, market surveys, third-party data, and so on – psychographic segmentation is a little bit more challenging than some of the other segmentation bases.
As we know, there are multiple approaches to market segmentation, even when we use the same approach – as there are many configurations of segmenting any market.
When dealing with psychographic variables, this challenge becomes even more daunting. Not only do we need to acquire the data through surveys and/or third-party data and/or detailed analysis of our customer database – which is timely and expensive – but we also need to spend sufficient time in ensuring that our segmentation approach is logical and helpful from a marketing perspective.
In other words, it is a much harder segmentation approach to work with, especially as compared to the more simplistic and faster approaches of geographic and demographic segmentation.
May not be as clear to work with inside a company
Often target markets and brand personas are shared within a company, beyond the marketing team, to help explain the target market consumer to other areas of the business. This information sharing is quite simple when the target market is an age group or reside in a geographic area.
However, when explaining a target market that is built around certain aspects of lifestyle, or certain core values to the person, or attitudes or interests – then this is not as clear cut to communicate. And indeed, there is a slight risk that some managers may see this level of segmentation as a little bit of overkill, especially in a small or less professional company.
Segments might be harder to reach and action
When we select target markets, two key criterion that we look for (among others) is that we can reach them through logistics and through media channels, and that we can design an effective marketing mix to better meet their needs.
In terms of media reach, we might need to be very selective about he TV shows that we as we choose to advertise on, for instance. If we are after a precise lifestyle group, then general TV advertising on very popular TV shows is probably not going to be targeted well enough. We need to look at more “niche” TV shows that deliver a more defined audience – all of which takes time and effort to execute.
And in terms of action-ability, while we may have created a clear target market in terms of lifestyles, do we have the ability to effectively meet their needs through product design, product mix, channels, and marketing communications? In other words, can we work with this target market given our resources and capabilities?
A Summary Video outlining the Advantages and Limitations of Psychographic Segments
- The advantages and limitations of geographic segmentation
- The advantages and limitations of demographic segmentation
- The advantages and limitations of behavioral segmentation
- The advantages and limitations of benefits sought segmentation
- The advantages and limitations of hybrid segmentation
- Advantages and limitations of the different segmentation bases