Psychographic Segmentation: Definition, Variables & Examples (2024)

Using customer segments is a good way to find your target crowd, which can help you get them more involved and get more sales. You can use different types of segmentation, such as demographic, behavioral, geographic, and psychographic segmentation, to make sure that the right marketing messages get to the right people.

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Customers’ ideas, thoughts, and beliefs greatly impact the decisions they make in the market. Psychographic segmentation is important if you want to understand how these things affect how people act and use this information to help your business.

Psychographic segmentation is thought to be the most effective way to divide a market because it lets you know what people are thinking. If you want to collect psychographic segmentation data from dividing your target market, you should read this blog all the way to the end.

What is psychographic segmentation?

Psychographic segmentation is defined as a market segmentation technique where groups are formed according to psychological traits that influence consumption habits drawn from people’s lifestyles and preferences. It is mainly conducted on the basis of “how” people think and “what” they aspire their life to be.

Any organization which intends to understand its consumers’ thought process can divide its target market according to this segmentation method. Psychographic market segmentation is one of the most effective segmentation methods other than demographic segmentation, geographic segmentation, and behavioral segmentation.

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Such traits include social status, daily activities, food habits, and opinions on certain subjects.

For example, a sleep survey is conducted to monitor people’s sleep habits. The sleep survey template consists of various questions about a respondent’s sleeping habits, which help draw conclusions about what habits impact sleep and the factors that cause sleeplessness.

A product/service-based organization has to keep its customers in mind as these products are created for the customers’ consumption. Customer demands, and expectations play a pivotal role in designing and developing a product.

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These demands and expectations evolve with time, and customer understanding also evolves with an increase in family income, age, or other demographic examples. An organization will be able to perform better if it understands its customers’ psychology and it will be able to provide market-driven products.

Why use psychographic segmentation?

Psychographic segmentation helps with a marketing campaign because it helps you show how valuable your product is to different customers. The product has a lot of uses, so it attracts a wide range of people and grows the customer base.

Top companies like Apple use psychographic segmentation to build brand identities that match how users see their products and services. Apple’s psychographic research will give it information about its target customers’ needs and help it develop marketing strategies that focus on different psychographic segments.

Psychographic segmentation could be an important part of the marketing strategy of an organization for a number of reasons:

1. Deeper understanding of customer needs

   Psychographic segmentation can assist businesses in better comprehending the values, attitudes, and beliefs of their target market. As a result, they are able to produce goods and services that more closely match the requirements and preferences of their customers.

2. More targeted marketing

   Businesses can develop more focused and individualized marketing strategies by segmenting their audiences based on psychographic traits. Higher conversion rates and better returns on their marketing investments may result from this.

3. Improved customer loyalty

   Increased customer loyalty can result from businesses demonstrating that they have a deeper understanding of their customers. Customers are more inclined to remain loyal to a company whose values and ideas match their own.

4. Competitive advantage

   Organizations that use psychographic segmentation can position themselves favorably by developing products and services better suited to their target market’s wants and needs. In a congested market, this can make them stand out and draw in more customers.

5. Better resource allocation

   Businesses can allocate their resources more effectively and economically by concentrating their marketing efforts on particular psychographic categories. By doing this, they can increase their marketing ROI and raise their bottom line.

How big-data effect psychographic segmentation

The power of big data influences most of the decisions made for psychographic segmentation.

• When a customer approves an application to access personal information or a cookie on a website, they start leaving their digital chain that is usually tracked to observe purchasing habits. They are used to analyze attitudes, personalities, lifestyles, etc.
• Organizations can access psychographic information precisely by tracking a user’s activity on social media, online platforms, online product purchases, or use of mobile applications.
• Social media websites, search engines, and mobile applications access a significant amount of detailed information about a user.
• Big data allows the collection of details about the applications and devices used by a customer and provides real-time access to personal information such as access control data or personal characteristics along with phone numbers, private messages, social media presence, and other data saved on a user’s phone.
• Users’ online behavioral patterns, time spent on each site, reviews posted about restaurants or hotels, visited locations, and any payments done online are tracked using big data.
• Digital platforms access this information to create detailed psychographic targeting plans and influence online behavior. It is safe to say that with big data, they know who their visitor is, what this visitor does online, and also why they do what they do.
• Organizations can implement big-data methods such as linear or logistic regression analysis to understand and map psychographic traits to customize their website layout, color theme, and products according to the tracked psychographic qualities.

Psychographic segmentation variables

Conducting psychographic market segmentation is a critical task for business development and, thus, needs special attention. Every individual has varied demands and opinions. Brands must focus not only on dividing the market based on psychographics but also on connecting with their target market on the basis of psychographics.

There are five psychographic segmentation variables on the basis of which hom*ogeneous segments can be prepared for proper research – Personality, Lifestyle, Social Status, AIO (Activities, Interests, Opinions), and Attitudes.

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• Personality

  Market researchers can conduct a segmentation based on personality to form a group of people with similar personality traits. New products/services can be launched to cater to various personalities, and new features also can be developed for the analyzed personalities. A few defined personalities are creative, emotional, friendly, opinionated, introverted, extroverted, etc. help organizations filter their customers in a systematic manner.

  Customer personality and purchasing habits are strongly related. For businesses to develop products that add value to customers based on their habitual needs – is key to creating a successful product/service

  An organization can use this psychographic segmentation variable to develop products according to most customers’ personalities, which can help boost sales. In the past, many liquor, laptop, car, and perfume brands implemented their customers’ personalities for better marketing activities.

  A market researcher should ask this question: “In general, what personality would your prospective consumers have?” to understand which product/services would work better with their target market and develop marketing strategies accordingly.

• Lifestyle

  Various resources have to be invested if multiple products are to be created for multiple markets. But, product resources can be saved if segmentation is done on the basis of lifestyle, and product development can be made more credible.

  For example, if a shoe manufacturer intends to design shoes for various sections of the market, such as athletes, office-goers, students, etc. Dividing groups according to customers whose lifestyle revolves around cycling or running, those individuals who prefer formal shoes, and similar other segmentation. This way, the manufacturer can produce shoes that cater to every lifestyle, i.e. likes or dislikes, which will help build a brand that develops shoes for every market segment on the basis of lifestyle.

• Social status

  In most cases, the social status of people primarily decides the products they use and their preferences (in general). Each social class has its choice of clothes, shoes, food, cars, electronics, etc.

  For example, elitists would generally prefer solitaires, luxury cars, holiday homes, etc. A luxury car brand would target only the elitists, not the middle class. This segmentation type can be helpful for brands with a niche product/service, which will not be helpful to all social classes.

• Activities, interests, and opinions

  This psychographic segmentation is based on what activities the customers are inclined towards, which topics they are enthusiastically interested in, or what their opinions are about specific matters. These parameters are called AIO (Activities, Interests, and Opinions).

  Some viewers love watching stand-up comedies, and some prefer Narcos or Wild Wild Country – be it thriller or comedy, the common activity here is watching online shows. Depending on the preferred activity, a researcher can determine preferred products and services and build marketing strategies to cater to varied activities, interests, and opinions.

• Attitudes

  An individual’s attitude is molded by the way he/she was raised and their cultural background. Each prospective customer will have a different attitude which can be a variable for psychographic segmentation.

  Groups are created by dividing customers on the basis of thoughts and attitudes. Attitude is an intangible parameter that provides insights into the basic nature of a customer.Each customer exhibits different attitudes – a person belonging to a high-income group will prefer dining at premium restaurants and driving a Mercedes Benz. A middle-class individual will be bothered more about saving a few extra bucks and not on luxury.A marketer has to keep these points in mind while deciding the target market for an upcoming product feature or a new product.

Psychographic segmentation examples

Here are a few psychographic segmentation examples:

• A common psychographic segmentation example is a luxury mobile-manufacturing brand that specializes in customization.
• These mobiles are not available for people from every class. A certain standard of living and family income is essential to purchasing an expensive mobile customized for each customer.
• By using psychographic market segmentation, the marketing team of this mobile-manufacturing brand can divide the target market according to their social status first and then on the basis of lifestyles, attitudes, or personalities.
• They can also evaluate the same variables for their competitor’s target market as well for a better selection of a market for their branding activities.

This example can be extended to other markets as well. The organic food industry is one of the fastest-growing industries that focuses on a specific target audience. Here is again where psychographic segmentation can play a major role.

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Psychographic segmentation advantages and disadvantages

Psychographic segmentation has a lot of advantages, but it also has a few significant disadvantages that businesses need to be aware of. By knowing the pros and cons of psychographic segmentation, businesses can decide if it is the right approach.

Here are the advantages of psychographic segmentation:

• Understand consumer behavior by analyzing their personalities, lifestyles, or social status.
• This segmentation type is important when the customization of products and services is involved.
• It provides details about factors such as lifestyles, interests, opinions, etc., so it is much more effective than geographic or demographic segmentation.
• It is an extension of behavioral segmentation and offers options to divide the population based on attitudes or opinions as well.

Here are the disadvantages of psychographic segmentation:

• Psychographic data is hard to get and expensive to analyze, so it has a limited reach.
• Concerns about privacy and getting people’s permission when gathering and using psychographic data.
• Psychographic segmentation results may not always apply to the target group, so they are not very general.

Conclusion

Psychographic segmentation can help businesses learn more about their customers and come up with better marketing plans. Companies can improve customer loyalty, gain a competitive edge, and get the most out of their marketing efforts by making their products, services, and marketing strategies fit the needs and preferences of their target audience.

Psychographic segmentation is a powerful marketing strategy that can help businesses learn more about their customers and make more effective marketing campaigns. With the rise of “big data” and advanced analytics tools like QuestionPro, businesses now have more access to psychographic data than ever before.

Psychographic segmentation has a lot of advantages, but it also has some major drawbacks that businesses should be aware of. By weighing the pros and cons of psychographic segmentation and using tools like QuestionPro to collect and analyze data in a responsible and ethical way, businesses can create more targeted and personalized marketing campaigns that increase customer loyalty and boost their bottom line.