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Fuel Cycle Blog: Psychographic Segmentation in Marketing

Psychographic Segmentation in Marketing

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Long gone are the days of one-size-fits-all, mass marketing techniques. Today’s marketing is all about personalization. Customers want more personalized shopping experiences, marketing messages, and an individualized overall customer journey. It’s natural that an agile marketing strategy would use psychographic segmentation in as many aspects as possible as it’s used everywhere in life. From the friends we make to the neighborhoods we choose to live in, psychographic segmentation is deeply ingrained in our day to day lives and should be equally utilized in your marketing strategy.

If you need a little extra convincing, here are some of the top recent stats about the importance of personalization in marketing:

  • 91% of consumers are more likely to shop with brands that provide relevant recommendations and offers.
  • 72% of consumers in 2019 only engage with marketing messages that are customized to their specific interests.
  • 80% of those of self-classified frequent shoppers say they only shop with brands who personalize their experience.

If you’re looking to cater to more than three-fourths of consumers, then you must engage in marketing strategies and best practices that result in personalized messages and experiences.

But, how?

While there are several ways to engage your target audience with personalized messages, psychographic segmentation sits up front as one of the best methods for accurate personalization.

This post will cover the bases of what psychographic segmentation is, why and how marketers use it, and top factors involved in dividing a consumer base.

What is Psychographic Segmentation?

Psychographic segmentation is a popular segmentation technique in market research and marketing. With this technique, researchers form groups based on psychological traits that influence purchasing habits. Psychological traits could include things like social status, personality, interests, opinions, attitudes, and more.

Once researchers identify the psychological traits, they separate consumers into different segments, or groups. With the help of this psychographic segmentation data, organizations can understand its customers psychology to provide on-point marketing messages for the various groups.

Why Should Marketers Use Psychographic Segmentation?

While personalization is key in providing relevant marketing messages, it’s also not possible for marketers to create an individual message for each and every customer.

Sometimes your regular methods of segmentation (demographic segmentation, behavioral segmentation, geographic segmentation) may indicate your various customer personas have drastically different needs. This doesn’t mean you need to start from square one or undergo an expensive individualized marketing personalization project. Instead, you can delve deeper to find commonalities your customers have with the help of psychographic segmentation.

Psychographic segmentation will help you identify similarities among groups that are otherwise intensely different. Once you find the commonalities, you can create a realistic amount of segments, and market the product to various groups effectively.

Once you’ve conducted the research and created various segments, developing marketing personas and respective messages will be feasible, affordable, and personalized.

How Do Organizations Execute Psychographic Segmentation?

Upon first glance, it may seem like psychographic segmentation is difficult and expensive. The truth is the approach you take to psychographic segmentation will depend on your population size, your market research resources, and your budget.

Here are the top two ways to execute psychographic segmentation.

1. Primary Market Research

If your budget is on the smaller side, conducting an attitudinal survey is an excellent place to start. With the help of an attitudinal survey, you can run factor analysis to find different patterns and make groupings based on clear patterns.

In the event you need more information after capturing initial data, conduct a qualitative study to dig deeper.

2. Marketing Artificial Intelligence (AI)

AI Marketing platforms are a more expensive initial investment than a simpler attitudinal study, but will also provide more accurate, and even predictive, results.

With the help of AI marketing, you have access to data from nearly all digital options, from multiple channels, and across all devices. Marketing AI platforms will help aggregate and crunch critical numbers to show you various patterns and help you create accurate segments.

Using a AI marketing platform may also provide more reliable results, considering it is analyzing actual data, based on real actions, as opposed to analyzing consumer self-reported data in a survey and/or a qualitative follow-up.

Regardless of your budget, the most important factors in executing psychographic segmentation include grouping by distinct differences and making sure the data is actionable.

What are factors that help divide a population based on psychographic segmentation?

Now that you know some different ways to capture data for psychographic segmentation in marketing, let’s look more deeply into what variables researchers and machine learning platforms are interested in when it comes to drawing different segments.

1. Lifestyle

Evaluating lifestyle as a variable can mean a couple of different things. First, it can ask “what is the lifestyle of a consumer from a particular area?” For example, the lifestyle of someone in an urban area may be different from someone in a rural area. These lifestyle factors can affect the type of purchases consumers make.

Another factor when evaluating lifestyle as a variable can be where different groups are in the life cycle (or life stages). For example, the way you market clothing to a group of high schoolers will be different from the way you market to college students. These marketing approaches will also be different from marketing to office workers and stay at home parents, respectively.

Once an organization has identified different lifestyle groups, they can market their products accordingly.

For example, an email marketer could use dynamic content to switch out clothing lines based on life cycle segments. Subscribers in the “work life cycle” segment may receive an email with images and offers that pertain to professional attire, while subscribers in the “college life cycle” segment will receive images and offers with hip, comfortable attire options.

Automotive companies also use lifestyle segments in their marketing promotions. More below the line (BTL) promotions happen in rural areas, while above the line (ATL) promotions happen in urban areas.

2. Social Class

Unless you are specifically selling luxury products to people with gobs of money, chances are your consumers will fall into different social classes.

Understanding the social classes of your consumers will help you understand their buying power, income levels, and spending habits so you can create more relevant marketing promotions.

Social class as a marketing segment can help you market the right products to the right people. It can also help you with the images you use, the words your copywriters write, and even how often and when you send marketing messages.

Sticking with the automotive example, creating segments based on social class is highly beneficial. For example, an automotive company would do well to avoid sending luxury car line promotions to a lower-middle-class family and send them to their upper-class high spenders instead.

3. Personality

The best way to explain this variable is to run through a quick exercise. Stop for a minute and think about what comes to mind when you think of the following brands.

When you hear “Harley Davidson,” you probably automatically think of a rough, tough biker that enjoys long rides and perfect outdoor weather. You probably don’t think of a 90-year old grandma that enjoys knitting.

When you hear “Nike,” you probably think of people that love to exercise and do everything to maintain a healthy lifestyle. You’re not thinking of a beer-drinking couch potato.

What about Apple? Are you thinking of a Silicon Valley tech executive that is obsessed with innovation? You are, right? You’re not thinking of a penny pincher that doesn’t care about technology.

Learning the personality of your customer includes understanding what they like, who they are, and what makes them tick. Once your organization understands this, crafting the perfect marketing message for different segments will be a breeze.

4. Values and Attitudes

The values and attitudes of customers vary depending on their upbringing, experiences, and views on things like religion, gender, politics, and less touchy subjects.

Learning the values and attitudes of your customers is a surefire way to connect with them in the right way. If you are engaging in cause marketing, then learning the attitudes and values of your customers is imperative. After all, you don’t want to walk blindly and support a cause that either your customers don’t care about at all, or promotes the opposite values as your customer base.

These are the main factors that will help you divide a population-based on psychographic segmentation. If you need to delve deeper, you can also consider looking into interests, opinions, activities, occasions, and more.

Wrap Up

Engaging in research that helps you with psychographic segmentation is a surefire way to learn about your customers and connect with them in more meaningful ways when it comes to marketing.

If you are interested in learning more about your customers, but aren’t sure where to start, contact Fuel Cycle. Fuel Cycle offers resources to learn more about market research and conduct research more effectively.

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