Psychographic Segmentation - A vital component of market segmentation studies

Defining psychographic segmentation as part of the extensive marketing segmentation landscape is like a day-trip through the countryside, with scenery changing every couple of hours. The experience is one of merging vistas, each one different in its own right. The most obvious market segmentation exercises are undoubtedly geographic and demographic segmentation analysis arenas. They are descriptive and revealing in so many respects. However, where people live and what they look like, leaves gaps. It doesn’t tell you why they behave the way they do.

If you could psychoanalyze every customer – discover the inner thought and emotional drivers of their actions – it would be the most profound psychological segmentation anyone could ever do. It’s possible – take a B2B situation with one customer, for example:

Imagine a company putting out tenders for a vast factory construction estimated at around $30 million. It’s a single company embarking on a lone project. Nonetheless, its magnitude marks it as a viable market segment, warranting detailed psychoanalysis of all the involved decision-makers.

However, when hundreds, thousands, and millions of customers are under the psychographic segmentation spotlight, the challenge is far more complicated. In such cases, we have to assume that there’s a commonality of purpose governing buying behavior. If that’s true (and it usually is), we have the challenging task of discovering the forces that create the commonality.

What is Psychographic Segmentation, and how does it differ from Behavioral Segmentation?

Psychographic segmentation is the market research study of the “why.” More specifically, why people, demographically defined, living in the geographically targeted marketplaces, act the way they do. Behavioral segmentation is a close cousin, where we group people whose actions are the same into segments. The latter sections off by the observed activities; psychographic segmentation divides respondents into groups with the same underlying motivations.

A case study that illustrates the primary differences

Two “in-their-fifties,” caucasian family men (Demographic Segmentation), living in the Dallas upper-middle-class suburbs (Geographic Segmentation), order more or less the same mountain bike on Amazon (Behavioral Segmentation). At all three levels of breakdown, they look practically identical.

A psychographic segmentation exercise broke the illusion.

It uncovered that one man bought the bike for his son as a birthday gift.
The other bought it for his own use as an exercise option.
Further investigation found that there are numerous Dallas male residents with the same characteristics connecting to both of these psychographic profiles – exercising and giving friends and family extravagant gifts from the same product category.
Thus, there’s an emergence of two psychographic segmentation opportunities for the distributors of mountain bikes. The promotional messages, of course, must be different in each case.
It got more intriguing when studies found that a significant number of middle-aged men in Dallas and other Texas cities function in both psychographic segments simultaneously – exercising and gifting.

What impacts this group’s behavior?

Ask yourself, who or what influences the target group’s behavior? Here are some ideas:

Educators
Social affiliations – clubs, friends, and associations
Upward mobility – designations you aspire to
Notions and principles taught to you by parents since early childhood
Opinions of your peers
Hobbies, sports, religious and cultural orientations.
One’s boss in a B2B situation or the tech fundis in another department that know the ins and outs of a product’s intricate workings

With so many ingredients in the mix, psychographic market segmentation is not as linear as geographic or demographic segmentation. It requires the employment of sophisticated psychographic segmentation survey technologies and tools to probe people’s minds.

We recommend harnessing the assistance of companies like Sogolytics, a company in the thick of psychographic segmentation and all that it entails. Your psychographic segmentation goals will eventually boil down to investigating and interpreting the following:

How your products and services register mentally and emotionally with your targeted customers
Where your offered benefits fit into your customer’s lifestyles
The most significant pain points your marketing package addresses
Determining whether or not you can reduce or erase pain better than your competitors
Knowing who’s getting in the way of a buy action – decision influencer, perhaps, or someone on your team?

Psychographic segmentation lies at the root of customer experience (CX), customer journey mapping, and every touchpoint that it involves.

Psychographic segmentation is arguably the most penetrating competitive tool available to marketers today.

Customer churn erodes a company’s ROI as prolifically as termites eat into wood structures. Studies show that it takes converting five prospects (or more) to the customer ranks to make up for one loyal customer’s lost business. You better believe that something went emotionally or mentally off the rails to send a stalwart customer into the competitor’s camp. Perhaps it’s happening a lot, and if so, you should know about it.

Conversely, customer retention is the name of the game. Holding onto and building established customer business. What are you doing right that keeps them in place? Healthy profitability aligns with excellent customer relationships.

Examples of Psychographic Segmentation

The following feedback examples from survey data at different times have revealed that Psychographic segmentation uncovers:

Emotional Stress – A customer service call to an AT&T agent supposedly resolved a $25.30 account discrepancy. It popped up again – this time with a late payment charge added in. Three more calls, with an escalation, never concluded the matter. The customer, with AT&T for 14 years, switched to T-Mobile. A feedback survey probing the reason, elicited the following – “…frustrated until I was almost crying. When I got to around eight hours on the phone in total, one agent pushing me to the next – that was the last straw.”
Peer Pressure – A sales enablement specialist bought his first Mac after using a Dell for years. He attributed it to “…my workmates’ accolades about how well it was working for them.”
Boredom – After switching to another restaurant, a regular customer said, “It was like eating at home. No change in menu, I wanted a variety for a change.”
Fashion influence – A couple explained why they spent more for less space when buying their retirement home. “We were always traditional, but we love the minimalist concepts we’ve seen around the neighborhood. Clean cut, modern materials, more expensive, but it’s worth it to declutter and throw off the old baggage.”
Fear – “With COVID-19, we are staying at home more, venturing out less. We don’t shop in malls or eat out. Everything is a curb-side pickup or Amazon Delivery. The Internet is now my umbilical cord.”
Distrust – “I ordered my Peloton, and things were great for a while. You can’t ride it without cleats. Unhooking them every time creates heavy stress on the shoe. The cleats stripped after only two months, and I found out that the guarantee on the shoes is only one month. They cost close to $125 at a time. There are ways to preserve them better, like leaving them connected to the pedals, but I didn’t realize that until too late. Peloton never gave out any advice on this. What’s the next bike breakdown that’s going to cost me big? One month’s guarantee on the shoes is a rip-off knowing the issue as I describe it.”

Psychographic segmentation focus groups identified that a massive influence on our actions connects to Personality Type:

Neuroticism – There are huge groups of people that reflect emotional imbalance, and mood swings. Knowing who they are is crucial for certain medication manufacturers with FDA approval. The benefits of the product, in this instance, must connect to the mental pain with less side effects.
Extroverts – There are thousands of people in this category. Individuals that go out of their way to be noticed and display unusual but socially accepted behavior. They are often the opinion leaders, life of the party, and they attend many of them. Their clothes are a little outlandish, as are their autos, jewelry, hairstyles, and personal accessories. Entire markets drive on the energy of extroverts.
Introverts – Don’t try extrovert marketing on the introverts of this world. They value privacy and anonymity. Security, and seclusion are priorities at home and the office. They buy many products to preserve the peace-and-quiet they work hard to secure.
Personality types are almost endless and overlapping, including groups of people who are “Agreeable, disagreeable, creative, open-books, closed-books, ambitious, unambitious” – the list goes on.

If your product or service steers towards a personality type, you’re on the psychographic segmentation bandwagon for sure. Investigate it, don’t underestimate its power, and do everything you can to get your brand into its circle of influence.

Lifestyle, opinions, and social pressure – Psychographic factors

The examples above indicate that we are not genuinely free agents. Our neighbors, workmates, aspiration groups, political leaning, health concerns, self-images, and more converge to push our activities in specific directions. These psychographic influences and pressures range from moderate to extreme. However, knowing what they are can be severely differentiating. How do we get to see them in plain view?

Analyze activities and draw inferences. This is the focus of behavioral segmentation. It doesn’t get into the “whys” but instead establishes a notion that spotlighting populations by reactions to promotions and special offers may make “knowing why” not all that important. For example, Macy’s targeted Boca Raton upper-income residents of both genders, thirty-five, and over, with friends & family 40%-off sales every three months based on the observed sharp reaction to this activity (i.e., big sale responsiveness) every time.
The problem is when the activity changes without warning. That’s when psychographic segmentation kicks in with all cylinders firing. First, try surveys structured along the lines of the Likert Scale model, or possibly customized quizzes. Sogolytics knows what works best in which situation. These can take you quite far into the motivational framework of customer groups.
Standardized methodologies go only so far. The next step is working with small group interviews (focus groups), or better still, individual interactions with trained consultants. However, it comes at a price requiring specialist skills to ensure that the feedback represents the group and to interview in a penetrating manner. Ask yourself this – does this interview talk for customers with similar demographics and behavioral patterns?

Talk to Sogolytics about psychographic segmentation

If ever market segmentation called for specialized input, it’s in the psychographic segmentation category. The Sogolytics team will assess each situation and structure the right questions and projects to get into the minds and souls of your customers along every touchpoint on the customers’ journey. Likert scale questions, survey templates, and rverything you require in the psychographic segmentation field rests in the Sogolytics resource pool.