The whole market can be segmented in a number of different ways. This article is about psychographic market segmentation.
The most common profilers used in customer segmentation include the following four: behavioral market segmentation, geographic market segmentation, demographic market segmentation and psychographic market segmentation.
Psychographic market segmentation
Psychographic market segmentation divides the market considering people’s lifestyles, values and worldviews. It assumes that people have different personalities and emotions and attitudes will influence how to perceive certain products, hence whether they are willing to spend their money or not. Psychographic factors include lifestyle, hobbies and interests, values and attitudes, social status, culture and personality.
Lifestyle
In the broad terms, lifestyle means a way of life of a person and a way of thinking about life. As money is needed to maintain a certain lifestyle, marketers are very interested in how different living styles of a person impact on demand. Lifestyle mainly includes daily activities and personal choices of an individual throughout the day. Remember that different age groups have different lifestyles. Also, people from different background will have different lifestyles too.
Example 1: There has been a huge increase in health awareness around the world in recent years. This caused an increase in demand for healthy lifestyles promoting wellness; healthy good and services such as healthy smoothies and snacks, gym memberships, outdoor equipment and so on.
Hobbies and interests
The business’s marketing department must understand and recognize that different hobbies and interests of customers can provide the firm with plenty of marketing opportunities for the development of new products. In general, human hobbies and interests evolve around active outdoor lifestyle, the Bohemian lifestyle, the corporate lifestyle, the creative lifestyle, the activist lifestyle, the academic lifestyle and the technical lifestyle.
Example 2: Many people who prefer active lifestyle participate in many sports. This has boosted demand in the sports industry to an unprecedented size. These days the market for sport includes not only clothing and equipment but also services such as ESports, short for electronic sports, or sports betting on all sporting events. The world’s largest sports betting company include International Game Technology, GVC Holdings and Bet365.
Values and attitudes
Human values refer to a person’s principles that judge standards of behavior. People’s beliefs usually determine one’s judgement of what is important and what is not important in life and what is not important. Nowadays, there has been an increasing trend towards ethical business practices. In extreme cases, customers openly refuse to purchase products from unethical businesses that cause harm to people, animals and the natural environment.
Example 3: Businesses that value Corporate Social Responsibility (CSR) tend to be very ethically responsible putting the well-being of its stakeholders as the top priority. The Body Shop is very popular among customers who do not believe that testing cosmetics on animals is the right thing to do.
Social status
People are very conscious of their social class because the feeling of their economic status acts as the feel-good factor. Income derived from employment and the level of wealth usually determines an individual’s social class. Consequently, this has a great impact on spending patterns as people of different social status spend money differently. It is because a consumer’s social class influences class-related activities and preferences. The main categories of social classes used in the US or the UK include:
- Upper Middle Class: CEOs, directors of big companies, doctors, lawyers, politicians, etc.
- Middle Class: Middle managers, teachers, etc.
- Lower Middle Class: Team supervisors, clerks, administrative assistants, junior managers, etc.
- Skilled Manual Workers: Technicians, IT-specialists, plumbers, etc.
- Working Class: Semi-skilled and unskilled manual workers such as factory workers.
- Casual: Part-time workers such as TAXI drivers, convenience store staff, etc.
- Unemployed.
Example 4: Customers who belong to upper middle class would be expected to spend more money on certain assets that define their social status such as designer clothes, luxury jewelry, antique home furnishings, sports cars, exclusive sports, etc.
Culture
People living in different cultures have different shopping habits and product preferences. This can provide marketers with immense opportunities to sell the same product in a completely different way depending on the cultural belonginess of customers.
Example 5: Chinese customers prefer to do grocery shopping more frequently in smaller quantities. This is because kitchens in Chinese apartments tend to be rather small and without the fridge. While Americans tend to buy large quantities of food once a week at supermarkets such as Walmart or Costco stock piling their large refrigerators.
Personality
Personality characteristics are difficult to measure or define, but they do influence consumption decisions. One would expect an active outgoing person to have different purchasing patterns from a stable timid person. The same could be said for impulsive people as opposed to very cautious people. Many firms, particularly in their advertising, attempt to appeal to consumers who share certain personality characteristics.
Example 6: Products such as activity holidays aimed at outgoing people who wish to pursue relatively dangerous sports such as sky diving, bungee jumping or white-water rafting. On the contrary, people with introverted personalities will prefer to stay at home and engage in indoor activities such as reading books or watching movies.
Psychographic market segmentation variables help to determine whether certain groups of people can become potential customers for the firm’s products. Based on hobbies, interests and social status, the business will make sure whether this is the right type of customer it is trying to sell its products to.
