Understanding Psychographic Segmentation

What is psychographic segmentation?

Psychographic segmentation , also known as lifestyle segmentation, is one of the four main segmentation bases used in segmenting consumer markets, with the others being geographic, demographic, behavioral (which is sometimes also split down into benefits segmentation).

As you may have guessed, the word “psychographic” the combination of psychology and demographics – originally coined by an academic (Demby) in the 1970s.

A simple way of looking at psychographic segmentation is to think of it as lifestyle analysis – understanding how people live their lives. In particular, considering how they spend their time, their activities, their key interests, their values and opinions, as well as their personalities.

In marketing textbooks, it is common to see the letters AIO listed to frame psychographic segmentation, where the letters stand for Activities, Interests, and Opinions. It is important to note these are general lifestyle interests and opinions, not opinions necessarily related to brands and purchasing activities.

In other words, with psychographic segmentation, we are seeking to understand the person as a “person”, rather than a consumer. As a result, this approach segmentation is also used in social research and other forms of studies, not just marketing.

Potential variables to use for psychographic segmentation

Under each of the major segmentation bases, there is a choice of segmentation variables that we will select from to help segment our market of consumers.

The key ones for psychographic segmentation include:

  • Socioeconomic status (a measure of social class)
  • Formal values and lifestyles segments, known as VALS (often generated by market research companies)
  • Key attitudes, beliefs, opinions, interests, activities (AIO)
  • Key personality traits
The role of demographic segmentation and variables with psychographic segmentation

Like with the other segmentation bases, demographic information is often used to supplement the segment profile that has been developed through the use of psychographic variables.

The choice of psychographic variables to use

Social economic status and/or social social class

Social class is structured around related demographic variables and typically include income, occupation, education, and may also include a measure of wealth and geographic residency (quality of neighborhood).

When used in combination, these demographic variables are used to allocate people to its particular social class. In everyday language we may use terms such as:

  • upper class
  • upper-middle class
  • middle class
  • lower upper-middle class,
  • lower class.

Please note there are multiple classification approaches possible for social class.

In some countries, social class is quite structured and fixed and is a key part of the overall culture. Whereas in other countries, social class can be more fluid and less obvious, and people may improve their social class through education and occupation.

In addition to the upper/middle/lower social class structure, sometimes the classification is expressed using a series of letters, such as AB, C, D, etc., where AB is the highest. Please see this external article on further discussions of this social grade classification system.

So why is social class allocation considered to be a psychographic variable, when it is derived from demographic variables?

It is considered to be a psychographic variable because it indicates key elements of people’s “lifestyles”. For example, a person who has a high income, a professional occupation, is well-educated, and lives in a good neighborhood – is likely to have a distinct lifestyle as compared to a person who on the opposite scale of these demographic variables.

Value and lifestyles segments (VALS)

In many countries, there are formal market research firms that have segmented the country’s population based upon long-term studies of opinions and lifestyles. In the USA, Strategic Business Insights has constructed eight VALS segments. It is common to see the segments listed and discussed in marketing textbooks as well.

Their eight identified segments are:

  • Innovators
  • Thinkers
  • Believers
  • Achievers
  • Strivers
  • Experiencers
  • Makers
  • Survivors

Please follow the link above for more information about the VALS segments. But as you can see, they use one descriptive word to try and summarize the core characteristics of that particular psychographic segment.

As one example only, the firm describes “Experiencers” as :

  • Those people who often go against the mainstream
  • People who are up on the latest fashions and
  • See themselves as very sociable

On the website, there is more information about the segments – but you can see that they are describing the person and their mindset – which is important aspect to help understanding what psychographic segmentation is trying to do and how it classifies consumers.

Attitudes, beliefs, opinions, interests and/or activities

As mentioned above, AIO is a common psychographic analysis approach, where activities, interests, and opinions are explored and people are segmented accordingly.

As you can probably identify, this is a variation of the prior VALS framework discussed above. But the VALS is a preset approach from a research firm and does not allow for tailoring according to the company’s own data and products/markets.

In other words, we have the ability to consider segments from a more product-specific bases, rather than the broader general lifestyle elements of VALS.

Personality traits

Another psychographic variable option is using key personality traits of consumers. Obviously, personality has been studied for a considerable length of time it is not unique to the field of marketing, but has been borrowed for segmentation purposes.

Personality may be used to understand motivation, perception and social interactions, which are key influences in consumers’ buying decisions.

A quick search on the internet will reveal that there are multiple possible classification systems for personality traits – as there are many approaches. However, the following personality trait classification system has current support:

  • Openness = Being open to new ideas and being curious/creative
  • Conscientiousness = Ability to get things done, follow rules, being structured
  • Extraversion = Being outgoing and social and enjoying the company of others
  • Agreeableness = Degree of kindness, trust and cooperation l
  • Neuroticism = Extent of negative emotions, such as anger, anxiety, and envy – (measuring like the opposite of being calm and centered).

People would be scored on a scale of each of these five key traits, and then classified accordingly. Please read this external article for more detail on this approach to personality traits.

When to use psychographic segmentation?

There is no doubt that psychographic segmentation is a very strong tool in understanding how people think and feel and what drives their actions. It helps answer the WHY people make decisions.

Therefore, for products/markets that have higher-involvement  purchase decisions, where the key is to unlock motivation and to influence behavior through communications and other marketing mix offerings – psychographic segmentation would be very effective and helpful.

One downside of psychographic segmentation is that is often expensive and timely to construct – given that significant data is required to to build these type of segments.

Another downside is that you have a good understanding of the person as “a person”, but to what extent does this connect to their actions as a consumer?

Regardless, remember that you can include a variety of different segmentation bases when defining your segments, and psychographic segmentation will always have the benefit of adding a richness and more detailed information to the understanding of your segments and its consumers.

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Class differences: Social status isn’t just about the cars we drive, the money we make or the schools we attend — it’s also about how we feel, think and act