What is Psychographic Segmentation?

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Marketers know the role customer segmentation plays in engaging prospects and driving conversions. Among the four types of segmentation, psychographic segmentation allows you to understand your customers as they are. 

Psychographic segmentation plays a driving role in our everyday life. We analyze people to see if we are compatible or not before we become friends with them or get married. 

In business, marketers use psychographic segmentation to find customers compatible with their products & to learn how to market the product so the customers can discover them. 

This blog will explore the role psychographic segmentation plays in business decisions.

What is Market Segmentation?

Market segmentation refers to the categorization of buyers with homogeneous characteristics into segments. Segmentation allows marketers to target the right customers, in the right way, at the right time.  

There are four main types of market segmentation, and they are:

  • Geographic Segmentation
  • Demographic Segmentation
  • Behavioral Segmentation
  • Psychographic Segmentation

Within this article, we will be focusing particularly on psychographic segmentation.

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What is Psychographic Segmentation?

Psychographic segmentation is a market segmentation technique that categorizes respondents based on their psychological traits. Specifically, the psychological traits that influence the consumption habits of buyers. 

Customers are segmented based on internal characteristics such as lifestyle, attitude, interests, personality, values, social class, etc. These characteristics are analyzed to understand how different customer segments respond to various marketing campaigns.

Psychographic Segmentation2

How Psychographic Segmentation differs from Demographic Segmentation?

Psychographic segmentation groups people based on personality, lifestyle, values, or beliefs. In contrast, demographic segmentation uses characteristics such as age, gender, education, income, etc., to group people. 

While marketers use both segmentation types to develop marketing strategies, psychographic segmentation explores what motivates the customers’ purchase intent. It helps understand how your product adds value to their life. 

A peek into a customer’s thinking helps product development, improves brand position, and creates personalized marketing messages. 

When you start grouping customers using psychographic segmentation, there are many variables to consider when you start grouping customers. Jump to the following section to learn about these variables. 

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Psychographic Segmentation Variables with Examples

There are five main variables of psychographic segmentation:

  • Personality
    • Segmentation based on personality involves categorizing buyers with similar personality traits into segments. A few prominent personalities are; introverted, extroverted, emotional, and opinionated. This is a great way to segment buyers as customer personality and purchasing habits are strongly related. 
    • For example, if a food delivery company identifies that its customer base has a huge segment of introverted personalities, they may want to use advertisements that depict people eating delicious food alone in the comfort of their homes. 
  • Activities and Interests
    • This form of segmentation groups buyers based on their interests and the activities they engage in. This can include hobbies, media consumption habits, and what occupies people’s time.
    • For example, if a company that sells beer discovers that a significant portion of their users enjoy watching sports, they may depict this relation through an advertising campaign that shows their beer as the perfect accompaniment for them while they watch sports matches. 
  • Social Status
    • Customers are often segmented by their social class. High end products, such as those made by Chanel and Christian Dior, will be targeted at the upper-class consumer. On the other hand, there are brands that target the masses by creating products for the average middle class buyer. This includes brands such as H&M and Marks and Spencers. 
    • For example, Forever 21 targets their marketing efforts at middle-class buyers who are looking to buy trendy clothes at a good price. They do not advertise as high-end or luxury, rather, they focus on marketing their ability to provide clothes that are in fashion and are also affordable. 
  • Lifestyle
    • This variable of psychographic segmentation groups respondents based on their lifestyle. A person’s lifestyle can refer to the ways in which they like to spend their money, their time, and/or their energy. 
    • For example, if a company that sells sturdy water bottles discovers that many of its users are school going children who can be careless with their belongings, the marketing team can create an advertising campaign that focuses on how sturdy and robust their bottles are. 
  • Attitudes
    • A person’s attitude can be shaped by the way they were brought up, the values that were instilled in them, and their culture. In this type of segmentation, buyers are grouped based on their thoughts, their attitudes, and their motivators. 
    • For example, if a clothing company discovers that their target market consists of those who are a part of (or are allies to) the LGBTQ community, they may create clothing items that reflect their support of the community: such as the pride flag/rainbow on a t-shirt.
Variables of Psychographic Segmentation2

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Collecting Psychographic Segmentation Data using Surveys

Psychographic segmentation looks beyond objective and superficial data like demographic segmentation. Collecting data for psychographic segmentation can be challenging because you have to dig deeper beyond the obvious information. 

Surveys are the efficient and simplest method to help you understand your customers and prospects. Surveys allow you to ask a variety of questions engagingly to ensure that participants don’t drop out of the survey and that you learn about their personalities. 

You can ask open-ended questions to gain a deeper understanding of your audience. Use the Likert scale to understand the level of satisfaction/dissatisfaction. Or use a semantic differential scale or drag & drop questions to make the surveys interactive while learning about their priorities. 

With that, you are ready to collect psychographic segmentation data from your audience and make better business decisions. 

[Related Read: How to Segment the Market for a New Product in 5 Steps]

Advantages of Psychographic Segmentation

  1. Helps understand consumer behavior by analysing different psychographic variables. 
  2. Enables marketers to segment based on attitudes and opinions, and can act like an extension of behavioral segmentation.
  3. More effective than other segmentation types; psychographic segmentation is more effective than geographic or demographic segmentation as it provides details on buyers’ internal characteristics such as interests, lifestyles, and opinions.

Wrapping up;

Psychographic segmentation adds an x-factor to the buyers’ persona, helping you reach the right audience with tailored messages and offers. The data helps you understand your customers and helps you learn how to engage with them. 

In this digital world where customers feel more disconnected from their loved brands, marketers need to add an extra effort to know the customers. Psychographic segmentation helps you ensure that you offer value to your customers and positively impact their life. 

[Related Read: Why is Market Segmentation Important?]

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FAQs on Psychographic Segmentaion

Answer: These are a few goals psychographic segmentation can be used to achieve:

  • Improve ROI (return on investment).
  • Improve customer experience.
  • Attune products and services to the right customer at the right time.

Simply put, demographic segmentation categorizes customers based on who they are, while psychographic segmentation categorizes customers based on why they buy. Demographic information includes data on buyers’ age, income, gender, education etc. Psychographic information includes data on buyers’ lifestyle, interests, and motivators. 

Customer persona can be defined as a semi-fictional character that reflects the key traits of a significant segment of an organization’s audience. This persona is created based on the data collected on the organization’s customers.

Segmenting buyers using psychographic characteristics is important as it provides organizations with a much narrower view of their customer, and helps them increase the effectiveness of their targeting efforts. It brings organizations closer to the right customers: those who are likely to buy their products and/or services.

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