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 and socioeconomic status (SES) are critical demographic variables used in market segmentation and consumer behavior analysis. They offer insights into purchasing power, lifestyle choices, and cultural preferences, helping businesses target and position their products effectively.

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).

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.

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.

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

Components of Social Class and SES

Social class is typically determined using a combination of demographic factors, which may vary by region or cultural context:

  1. Income:
    • Definition: Household or individual earnings.
    • Significance:
      • Higher income often correlates with greater discretionary spending power.
      • Can influence preferences for premium, luxury, or value-oriented products.
  2. Occupation:
    • Definition: Type of job or profession.
    • Significance:
      • White-collar vs. blue-collar roles often indicate social class distinctions.
      • Occupation also reflects values, lifestyle, and priorities, such as stability, status, or innovation.
  3. Education:
    • Definition: Level of formal education attained.
    • Significance:
      • Higher education levels often align with higher income potential and social mobility.
      • Education influences tastes, preferences, and openness to new products or ideas.
  4. Wealth:
    • Definition: Accumulated financial assets, such as savings, investments, and property.
    • Significance:
      • Wealth reflects long-term financial stability and impacts purchasing decisions for high-ticket items.
  5. Geographic Residency:
    • Definition: Quality and location of one’s residence.
    • Significance:
      • Neighborhoods often signify social class, with areas classified as affluent, middle-income, or low-income.
      • Geographic residency also correlates with access to resources like education, healthcare, and retail options.

Social Class Terminologies

Common social class structures include:

  • Upper Class: Wealthy individuals with significant influence, often associated with old money, philanthropy, and exclusivity.
  • Upper-Middle Class: Professionals and executives with high income and education levels.
  • Middle Class: Individuals with moderate income, including skilled workers and lower-tier professionals.
  • Lower-Middle Class: Often overlaps with middle class but includes less affluent individuals or those in transitional roles.
  • Lower Class: People with limited income and job stability, often reliant on government assistance.

In some systems, social class is represented by letters:

  • AB: Upper and upper-middle classes.
  • C1/C2: Middle and lower-middle classes.
  • D/E: Working class and those with limited income.

Social Class in Cultural Contexts

  1. Structured Societies:
    • Examples: India’s caste system, the UK’s traditional class structure.
    • Social mobility is often restricted, with individuals adhering to class-specific behaviors, jobs, and lifestyles.
  2. Fluid Societies:
    • Examples: United States, Canada, Australia.
    • Social mobility is more attainable through education, entrepreneurship, or career advancement.

Applications of Social Class in Marketing

  1. Product Positioning:
    • Luxury brands target upper classes by emphasizing exclusivity and quality.
    • Value brands cater to lower classes by offering affordability and reliability.
  2. Message Tailoring:
    • Upper-class consumers often respond to aspirational advertising.
    • Middle-class consumers may prefer messages emphasizing practicality and value.
  3. Media Consumption:
    • Upper classes are more likely to consume niche publications and online content.
    • Lower classes may prefer mass-market media such as television or radio.
  4. Retail Strategies:
    • Premium retailers like Saks Fifth Avenue target affluent customers in high-income areas.
    • Discount retailers like Walmart focus on lower-class segments with cost-conscious offerings.

Example: Social Class in Action

Luxury Auto Industry

  • Upper Class: Rolls-Royce markets its cars as bespoke creations, emphasizing craftsmanship and exclusivity.
  • Upper-Middle Class: Audi and BMW target professionals seeking prestige and cutting-edge technology.
  • Middle Class: Toyota and Honda highlight reliability and affordability, resonating with practical buyers.

Fashion Retail

  • AB: Chanel and Louis Vuitton attract high-income earners with premium designs and limited-edition collections.
  • C1/C2: Zara and H&M appeal to middle-class consumers by blending affordability with aspirational style.
  • D/E: Walmart and Target serve value-conscious shoppers with everyday low prices and utility-focused products.

Insights and Limitations

  1. Insights:
    • Social class reveals broad patterns in spending, aspirations, and lifestyle.
    • It provides a starting point for segmentation but should be complemented by other variables like psychographics.
  2. Limitations:
    • Social class distinctions are often nuanced and overlap.
    • Increasing globalization and digital access have blurred traditional class lines.

By understanding the nuances of social class and socioeconomic status, businesses can create more effective marketing strategies, ensuring their offerings resonate with the needs and aspirations of diverse consumer segments.


Values and Lifestyles

VALS (Values and Lifestyles) is a psychographic segmentation tool developed by Strategic Business Insights (SBI). It categorizes consumers into groups based on psychological traits, demographic characteristics, and consumer behavior. This method is widely used in marketing to tailor products, messaging, and strategies to specific consumer segments.

The Eight VALS Segments

  1. Innovators:
    • Traits: Confident, high-resource individuals driven by a desire for independence and new ideas.
    • Behavior: Early adopters of technology and trends, they value sophisticated products and services that symbolize success.
  2. Thinkers:
    • Traits: Analytical, well-informed, and conservative.
    • Behavior: They prefer practical and durable products that deliver value. Decision-making is deliberate, based on research.
  3. Believers:
    • Traits: Traditional, community-oriented, and family-focused.
    • Behavior: Loyal to established brands, they favor American-made products and appreciate simplicity.
  4. Achievers:
    • Traits: Goal-oriented, hardworking, and focused on career success.
    • Behavior: They are attracted to premium products that demonstrate success and provide efficiency.
  5. Strivers:
    • Traits: Ambitious but constrained by limited resources.
    • Behavior: They favor stylish products that help them emulate successful lifestyles, often influenced by peers and trends.
  6. Experiencers:
    • Traits: Energetic, youthful, and novelty-seeking.
    • Behavior: They frequently spend on fashion, entertainment, and experiences to reflect their social and adventurous spirit.
  7. Makers:
    • Traits: Practical, self-sufficient, and focused on family and craftsmanship.
    • Behavior: They prefer functional, durable products and are less influenced by luxury or image-oriented goods.
  8. Survivors:
    • Traits: Resource-constrained, risk-averse, and focused on meeting basic needs.
    • Behavior: Loyal to value-driven products and dependable brands; not swayed by trends.

Strategic Applications of VALS

  1. Product Development:
    • Marketers can design products tailored to the needs and aspirations of each VALS segment, such as durable appliances for Makers or luxury vehicles for Achievers.
  2. Targeted Communication:
    • Communication strategies can be adapted to resonate with the values of each group, like promoting eco-friendly initiatives to Thinkers.
  3. Market Analysis:
    • VALS provides insights into the socio-economic factors influencing buying decisions, helping businesses identify untapped markets.
  4. Media Planning:
    • Media channels can be selected based on the preferred consumption habits of each segment (e.g., digital ads for Experiencers, print for Thinkers).

Why VALS is Crucial in Marketing

VALS goes beyond traditional demographic segmentation by integrating psychological insights. This combination enables businesses to:

  • Connect emotionally with consumers.
  • Build long-term brand loyalty.
  • Optimize resource allocation by prioritizing high-value segments.

This framework remains a cornerstone for understanding consumer diversity in complex, fragmented markets. For more detailed insights, visit resources like Strategic Business Insights or market research case studies.

AIO analysis is a foundational approach in psychographic segmentation, providing a flexible framework for understanding consumer behavior. Unlike preset systems like VALS, AIO allows businesses to tailor their segmentation based on their specific market, product offerings, and customer insights.


Attitudes, beliefs, opinions, interests and/or activities

  1. Activities:
    • Definition: Observable actions or behaviors that occupy consumers’ time.
    • Examples:
      • Hobbies: Gardening, hiking, or painting.
      • Entertainment: Streaming shows, attending concerts, or gaming.
      • Shopping Habits: Online vs. in-store preferences.
      • Travel: Frequent vacations or day trips.
    • Marketing Implications:
      • A retailer might focus on frequent travelers with portable, compact products.
      • Brands targeting fitness enthusiasts could highlight wearables, activewear, or gym memberships.
  2. Interests:
    • Definition: Areas or subjects that consumers find appealing or engaging.
    • Examples:
      • Interests in technology, sustainability, luxury goods, or DIY crafts.
      • Preferences for culinary experiences or outdoor adventures.
    • Marketing Implications:
      • A tech company could create content appealing to gadget enthusiasts.
      • An eco-friendly brand could emphasize sustainable production methods and green certifications.
  3. Opinions:
    • Definition: Consumers’ views and attitudes toward issues, products, or lifestyles.
    • Examples:
      • Opinions on health and wellness, environmental responsibility, or financial security.
      • Political or social views influencing brand perceptions (e.g., ethical sourcing, inclusivity).
    • Marketing Implications:
      • Companies can align with socially conscious opinions to build brand affinity.
      • Opinion-driven campaigns often resonate more deeply with niche audiences.
  4. Attitudes:
    • Definition: A consumer’s general disposition toward a product, service, or brand.
    • Examples:
      • Positive attitudes toward innovation (early adopters).
      • Skepticism about luxury goods being worth the price.
    • Marketing Implications:
      • Businesses can design campaigns to reinforce favorable attitudes or address skepticism directly.
  5. Beliefs:
    • Definition: Deeply held convictions that shape consumer behavior.
    • Examples:
      • Belief that organic food is healthier.
      • Conviction that luxury brands represent quality.
    • Marketing Implications:
      • Brands can leverage beliefs in storytelling, such as emphasizing natural ingredients or craftsmanship.

Why Use AIO Analysis?

  1. Customization:
    • Unlike VALS, AIO enables firms to focus on attributes directly relevant to their products and target markets, such as tailoring segmentation around dietary preferences for a food brand.
  2. Behavioral Insights:
    • AIO reveals not just what consumers do but also why they do it, providing deeper insights into purchase motivators and barriers.
  3. Market Differentiation:
    • AIO helps businesses uncover unique psychographic profiles, differentiating their strategies from competitors who might focus on standard demographic or geographic factors.

Applications of AIO in Marketing

  1. Product Development:
    • Companies can design products aligned with consumers’ activities and interests, such as a fitness app integrating gamification for activity-oriented users.
  2. Communication Strategies:
    • Marketers can craft messaging that appeals to specific opinions or beliefs, such as promoting fair trade coffee to ethically driven consumers.
  3. Targeted Campaigns:
    • AIO helps identify niche segments for personalized campaigns, like targeting avid readers with book clubs or subscription boxes.
  4. Customer Journey Mapping:
    • Understanding AIO profiles enhances prediction of consumer behavior at each touchpoint, enabling better resource allocation across channels.

Example: AIO in Action for a Sustainable Fashion Brand

  • Activities: Research reveals that the target audience enjoys outdoor adventures and urban exploration.
  • Interests: Interest in reducing waste and supporting small businesses.
  • Opinions: Positive view of brands that disclose environmental impact.
  • Attitudes: Favorable disposition toward minimalistic, timeless designs.
  • Beliefs: Belief that spending more on durable clothing is better for the planet.

Outcome:
The brand could create a campaign highlighting its sustainable production methods, featuring durable designs tested in rugged outdoor conditions. Promotions could include collaborations with eco-friendly influencers and partnerships with adventure travel companies.

AIO vs. VALS: Flexibility in Segmentation

Attribute AIO VALS
Focus Product-specific insights. Broad lifestyle and psychological traits.
Customization Fully tailored to brand’s own data. Preset segments determined by research firms.
Market Fit Ideal for niche, dynamic, or emerging markets. Effective for general market overviews.
Ease of Use Requires deeper analysis and primary research. Ready-to-use for quick segmentation.

AIO analysis offers marketers a granular view of their target audience, enabling precise strategies that align closely with consumer behavior, needs, and preferences. This flexibility makes it an invaluable tool in crafting impactful, customer-centric marketing campaigns.

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.

There are multiple personality classification systems in psychology, each with its approach to understanding and categorizing traits. Among these, the Big Five Personality Traits model has gained widespread acceptance and is particularly useful in marketing applications.

This framework consists of five broad dimensions of personality:

Openness refers to a consumer’s inclination toward new ideas and experiences. Individuals scoring high on openness are often curious, creative, and imaginative. They are likely to seek out products that promise novelty, innovation, or adventure. For example, a high-openness consumer might be drawn to cutting-edge technology or experimental cuisines. These individuals are prime targets for campaigns that emphasize exploration, uniqueness, and discovery.

Conscientiousness relates to how organized, reliable, and disciplined a person is. Highly conscientious consumers tend to value structure, dependability, and quality in products and services. They are more likely to choose brands known for precision and consistency, such as tools, financial services, or health-focused products. Marketing to this group often emphasizes features like efficiency, longevity, or adherence to high standards.

Extraversion measures sociability, energy, and a preference for engaging with others. Extroverts thrive on social interaction and are naturally drawn to activities, brands, or experiences that facilitate connection and excitement. Marketing to extraverts often highlights social or community-driven benefits, such as events, group experiences, or vibrant and energetic lifestyles. For example, extraverts may prefer fitness classes like Zumba over solitary activities like yoga.

Agreeableness reflects the degree to which individuals are kind, cooperative, and empathetic. Agreeable consumers often prioritize relationships and are more inclined toward products or brands that promote harmony, sustainability, or social responsibility. Campaigns focused on charitable initiatives, ethical sourcing, or family-oriented messaging tend to resonate strongly with this group, as they align with their values of kindness and trust.

Neuroticism describes the extent to which a person experiences negative emotions, such as anxiety, anger, or vulnerability. High neuroticism scores may indicate a predisposition toward stress or insecurity, influencing consumer choices toward products that offer reassurance or comfort. For instance, neurotic consumers might prefer insurance policies emphasizing comprehensive protection or personal care items marketed with calming or soothing benefits.

Each of these traits provides a lens for designing tailored marketing strategies. For instance, an airline could appeal to highly neurotic individuals by emphasizing safety records and reliability, while targeting high-openness consumers with advertisements showcasing exotic destinations and adventure-filled itineraries.

While personality traits are powerful in segmentation, it is important to recognize their limitations. Not all consumers fit neatly into one category, and traits often interact with other demographic and psychographic factors. For example, an extroverted but highly conscientious person might respond differently to a campaign than an extroverted individual with low conscientiousness. Similarly, cultural contexts can influence how certain traits are expressed and perceived, requiring a nuanced application of personality-based segmentation in global markets.

The Big Five Personality Traits offer a rich framework for understanding and segmenting consumers, providing insights that go beyond surface-level behaviors to uncover the psychological drivers behind purchasing decisions. By aligning marketing strategies with these traits, businesses can create deeper, more resonant connections with their target audiences.

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?

Psychographic segmentation is one of the most powerful tools in marketing, offering deep insights into the thoughts, feelings, motivations, and values that drive consumer behavior. Unlike demographic or geographic segmentation, which focus on who or where consumers are, psychographic segmentation seeks to answer the critical question of why people make decisions—why they choose one brand over another, why they prioritize certain features, or why they respond to specific messaging.

This segmentation approach is particularly valuable when marketers aim to build emotional connections with their audience, tailor messaging to align with personal values, or differentiate their brand in a crowded market.

Ideal Situations for Psychographic Segmentation

Psychographic segmentation is most effective in certain contexts:

  • High-Involvement Purchase Decisions: Products that require significant consideration, such as luxury cars, financial services, or travel packages, often rely on psychographics to understand the motivations behind consumer choices. For example, a financial services firm might segment consumers based on their attitudes toward risk, targeting risk-averse individuals with investment plans emphasizing safety and stability.
  • Lifestyle-Oriented Markets: Categories such as fitness, health, fashion, and food benefit greatly from psychographic insights. For instance, activewear brands might target fitness enthusiasts with messaging around performance and style, while organic food brands appeal to health-conscious consumers with a focus on sustainability and nutrition.
  • Emotional or Value-Driven Purchases: Products or services with strong emotional or value-based appeal, such as charities, premium skincare, or experiential travel, are ideal candidates for psychographic segmentation. These categories often require marketers to resonate with the consumer’s deeper values or self-perception.
  • Brands Seeking Differentiation: In highly competitive markets, psychographics can help brands stand out by aligning their messaging with consumer attitudes, beliefs, and lifestyles. For example, a niche coffee brand might position itself as the choice for environmentally conscious consumers, setting it apart from mass-market competitors.

Benefits of Psychographic Segmentation

Psychographic segmentation offers several distinct advantages:

  • Uncovering Motivations: By delving into consumer psychology, brands can craft messages and offerings that resonate deeply with their audience’s desires and needs.
  • Building Emotional Connections: Understanding values, attitudes, and lifestyles allows brands to forge strong emotional bonds with consumers, increasing loyalty.
  • Enhanced Personalization: Psychographics enable tailored marketing campaigns, from product recommendations to communication strategies.
  • Supporting Other Segmentation Bases: When combined with demographic, behavioral, or geographic data, psychographics add a rich layer of detail, creating multi-dimensional segment profiles.

For instance, a fitness company might combine geographic data (urban areas), demographic data (millennials), and psychographics (focus on wellness and community) to develop a comprehensive marketing strategy.

Limitations of Psychographic Segmentation

Despite its strengths, psychographic segmentation has challenges:

  • Cost and Time Requirements: Developing psychographic segments typically requires extensive research, including surveys, focus groups, and data analysis. For small businesses or brands with limited budgets, the investment may be prohibitive.
  • Linking Traits to Behavior: While psychographics provide an in-depth understanding of consumers as people, translating this into actionable consumer behavior insights can be difficult. For example, knowing that a segment values environmental sustainability doesn’t guarantee they’ll purchase eco-friendly products.
  • Complexity in Implementation: Psychographic data is often qualitative and nuanced, making it harder to apply consistently across campaigns or product lines.

Blending Psychographics with Other Segmentation Bases

While psychographics can stand alone, it often works best when integrated with other segmentation bases:

  • Demographics: Combine psychographics with income, age, or education to target specific groups, such as environmentally conscious millennials with disposable income.
  • Behavioral Data: Use psychographics to interpret why consumers behave as they do. For instance, a frequent buyer of high-end skincare products might prioritize self-care and luxury.
  • Geographics: Tailor campaigns based on psychographic insights and geographic location. For example, promoting adventure travel packages to outdoor enthusiasts in regions near national parks.

The Added Value of Psychographic Segmentation

Despite its challenges, psychographic segmentation enriches a brand’s understanding of its target audience, enabling the development of more relatable, engaging, and effective campaigns. For example:

  • A premium car brand might create personas such as “Driven Innovators” who value cutting-edge technology and status, helping to shape both product features and advertising.
  • A fitness app might segment its audience into “Social Exercisers” and “Solo Achievers,” using psychographics to design community features for the former and personalized challenges for the latter.

By going beyond surface-level data, psychographic segmentation allows marketers to tap into the underlying motivations that inspire action, creating strategies that resonate more deeply and drive stronger results.


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