Is the process of using psychological sociological and anthropological factors to determine how a market is segmented?

the process of dividing a larger market into smaller pieces based on one or more meaningfully shared characteristics

• age
• gender
• family life cycle
• income & social class
• ethnicity
• place of residence

Segment By Psychographics 

the use of psychological, sociological, & anthropological factors to construct market segments 

a technique that divides consumers into segments on the basis of how they act toward, feel about, or use a good or service 

a strategy in which marketers evaluate the attractiveness of each potential segment & decide in which of these groups they will invest resources to try to turn them into customers 

the market segments on which an organization focuses its marketing plan & toward which it directs its marketing efforts 

a description of the "typical" customer in a typical segment 

undifferentiated targeting strategy 

appealing to a broad spectrum of people 

differentiated targeting strategy 

developing one or more products for each of several distinct customer groups & marketing sure these offerings are kept separate in the marketplace 

concentrated targeting strategy 

focusing a firms efforts on offering one or more products to a single segment 

marketers must decide on a targeting strategy, should the company go after one total market, one or several market segments, or even target customers individually? 

an approach that tailors specific product & the messages about them to individual customers 

an approach that modifies a basic good or service to meet the needs of an individual 

develop a marketing strategy to influence how a particular market segment perceives a good or service in comparison to the competition 

lifetime value of a customer 

the potential profit a single customers purchase of a firms products generates over the customers lifetime 

the financial value of a customer relationship throughout the lifetime of the relationship 

the percentage of an individual customers purchase of a product that is a single brand 

Consumer psychographics as we know it today was formulated almost 50 years ago in what originally started out as consumer behavior research. Over the years, B2C psychographics has been refined into a powerful sales intelligence tool that many large corporations use. Companies like Best Buy, IKEA, Porsche and BellSouth use psychographics to structure their market strategies and boost conversions.

This enabled marketing and sales teams to carve out inch-perfect strategies that specifically target requiting audiences based on the psychological factors they consider dear. The resultant success of B2C psychographics further led to another proposition — B2B psychographics. As traditional wayward methods of sales targeting eroded with the rise of data driven sales intelligence, it was only wise to turn the tables around and use tools such as psychographics on businesses themselves — employees, managers, key personnel, members of management.

Fast forward to today, psychographics allow marketing and sales teams to target prospects with the highest probability of reciprocating demand. Integrating psychographic data into your market strategies can help you improve deal conversion rates and reach the right target audience. Psychographics enable your business to assemble inclusive campaigns, strategies and content that dramatically boost conversions. But first:

Psychographic segmentation or psychographics is a market segmentation tool that derives actionable market segments by assigning specific psychological characteristics to consumers. Psychographics can be segmented based on consumers’ behaviors, interactions, opinions, and interests. Psychographic segmentation enables businesses to predict their next customer with a great deal of accuracy. This is done through the inspection of appropriate psychographic variables.

In 1989, Emanuel Demby, who coined the term psychographics, revised his original definition of the market segmentation tool, as conceived in 1974, to read:

“(The) use of psychological, sociological, and anthropological factors, self-concept, and lifestyle to determine how the market is segmented by the propensity of groups within the market – and their reasons – to make a particular decision about a product, person, or ideology”

Why is Psychographic Segmentation Important?

With technological revolutions, societal upheavals and extensive business developments, the definition and manner in which psychographic segmentation is carried out has greatly altered. Despite these changes, the motives for using psychographics remain unchanged, that is for businesses to structure high-yielding marketing and sales efforts using the personal characteristics and other situational factors that define their target consumer.

From branding to designing social media campaigns, psychographics can be a powerful tool to enhance an audience’s association with the brand or product/service. Companies can exponentially increase conversion rates through the proper implementation of psychographics across their sales and marketing efforts.

Psychographic Segmentation Variables

There are primarily 6 key psychographic segmentation variables. They include:

1. Values and attitudes
2. Personality traits
3. Lifestyle
4. Social status
5. Interests and activities
6. Opinions

To better understand these psychographic characteristics, let’s take a look at examples of how businesses use them to boost conversions.

6 Psychographic Segmentation Examples

When setting out to use psychographic data to segment your target audience, the most important step is to choose the right attributes—as in, the attributes and variables that will help you predict your next customer with heightened precision.

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The most common psychological factors taken into consideration when performing psychographic segmentation may include the the following:

1. Values and Attitudes

The values and attitudes of a consumer may constitute the ideals, mannerisms, and self expression that arise as a result of the lifestyle or accomplishments of the consumer. Your target consumer is more likely to purchase your product or service when your sales strategies embody their values and attitudes.

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The Colin Kaepernick campaign from Nike is a good example of how values and attitudes can serve as powerful motivators. Despite the controversy surrounding Kaepernick, Nike, keeping the future in mind, decided that the movement would best represent the values and attitudes of American millennials. And rightly so, the company witnessed commercial success shortly after, with its income jumping 31% the following bank holiday weekend despite the backlash and controversy the ad attracted.

2. Personality Traits

The personality traits of a consumer can be a crucial parameter when ideating and designing a campaign. Consumers tend to associate themselves closely to deep-seated personal inclinations such as patience, sense of humour, identifications etc. These facets may be defined using models such as The Big Five Personality Traits — openness to experience, conscientiousness, extraversion, agreeability, and neuroticism. Addressing a consumer based on their personality can go a long way. This further allows your product or service to resonate with the intended audience.

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Seamless, an online food ordering service, in the above campaign, caters to consumer’s personality traits like laziness and isolation. There is also a consistent theme of New York across the campaign. This plays on the audience’s identification with the personality traits that accompany their identity of themselves as ‘New Yorkers’.

3. Lifestyle

The lifestyle of a consumer can be defined as the subjective notion of how one chooses to lead their life. People tend to associate themselves with different categorical personas that may arise from a mixture of worldly identifications. These include professions, hobbies, role-models, etc. For instance, a consumer may identify themselves as adventurers, sport fans, parents, corporates, or socialites.

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The above is a mother’s day campaign from Englin’s Fine Footwear that has its play on the lifestyle associated with the role of a mother. This is a powerful and persistent identifier that can influence consumer decisions. Each set of shoes are further classified into products that insinuate lifestyle choices with which a mother can associate.

4. Social Status

The social status of a consumer can be identified based on a plethora of factors. However, economic segmentation into the upper, middle, and lower class is the more commonly used route. This is especially the case when it comes to psychographics and marketing.

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Aston Martin seeks to capture the attention of upper class consumers through a humorous take on stereotypical upper class associations.

5. Interests and Activities

Consumers can be segmented based on shared interests and activities. Individuals tend to develop strong associations with their interests or the activities in which they partake. This can be quite the head-turner.

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OnePlus, a smartphone manufacturer, caters to consumers that are supercar and racing enthusiasts with their licensed McLaren product campaign. McLaren, a supercar manufacturer and a household name across the world of F1 racing is used to capture the phone’s fast performance and charging capabilities.

6. Opinions

An opinion is a belief or perspective held by a consumer on a particular subject based on personal experiences. These are not necessarily based on facts. The opinions held by an individual play a key role in shaping the way they see themselves. In turn, this determines how they associate with a product or service. Segmenting consumers based on shared opinions can act as a powerful tool to design instinctually associative campaigns for your product.

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In the 1930s and 40s, tobacco companies increasingly recruited doctors and physicians to vouch for the safety of their products. This was amid the growing concern that smoking cigarettes causes lung cancer. Doctors were considered a credible authority by consumers and their opinions could pacify consumer concerns.

What Are B2B Psychographics?

In B2B psychographics, the focus is shifted to the contrasting nature of the industrial buyer. Brought about by their corporate integration, an industrial buyer’s nature is further driven by personal needs, enterprise expectations, business objectives and other cultural aspects within their organisation. These factors allow for businesses to calibrate their value propositions and communication to best suit the wants of each specific industrial buyer, intensifying their propensity to convert.

An academic definition of B2B psychographics reads: 

“(The) segmentation of organisational buyers into homogenous clusters of mindsets and behaviours that are distinguished by motives, risk perceptions and social interaction styles in order to identify prospects as well as predict the predispositions of the firm’s decision makers for the sake of adapting products, marketing messages and relational selling behaviours”

– (Barry; Weinstein, 2010)

As organizations are best represented by the sum total of its constituent workforce, organizational psychographics can predict the innovativeness of an organization by taking into consideration the psychographic elements of the multi-person nature of industrial buying. Empirical studies have proven that organisational psychographics play a key role in understanding purchase intentions among industrial buyer. Shared values in the communication efforts of a business are great indicators of this.

Disparaging the more traditional purchase motives of rationally assessing a product based on factors such as quality, price and service prior to making a purchase, the Bonoma and Shapiro Model states that non-rational/social and personal components of industrial buying were equally important. The personal motives can include individual recognition and career advancement. Social motives involve the organization’s acceptance of the product purchased and the utility they have derived from it.

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By gaining an understanding of the motives behind industrial buying, marketers are better equipped to create a more personalized and rewarding selling strategy.

Technology and Modern Psychographics

Behavioral cues are the basis on which customers are segmented. With technological proliferation, a big chunk of the world’s population has gained widespread access to multiple devices, platforms and tools, all interconnected by the World Wide Web. This enables billions of interactions, data points and other useful user information to be recorded on a daily basis. 

As mobile computing continues to pervade many aspects of our daily life, from social activities to the more personal ones, some may even argue that our smartphones know us better than the people closest to us. In addition, the growing capabilities of big data and machine learning have enabled each user interaction to be assimilated. This data is used to discern behavioral patterns and psychological traits that can be attributed to each user.

Why?

Psychographic Segmentation Advantages

A powerful tool not just for marketing and sales teams to tailor product campaigns, but rather organizational functioning. Psychographics are changing the way businesses operate. Using psychographic data to guide various operations within an organisation has helped team productivity skyrocket through the efficient reallocation of resources. Be it B2C or B2B, the versatility psychographics offers allows your business to incorporate it across multiple departments and teams.

How to Collect Psychographic Data

Psychographic segmentation can be conducted using a variety of methods that include profiling likely participants, web and field-based customer service applications, scraping data from various user platforms and social media, pricing/value and price sensitivity studies, surveying and interviewing customers, creating online communities of customers, focus groups, supply-chain management and global marketing practices such as sales negotiations.

The disadvantage of psychographic segmentation is that it is a highly time consuming process. It leaves you with qualitative data which is hard to comprehend considering that every consumer may be extremely unique. Psychographic segmentation not conducted in an appropriate manner can possibly lead to inaccurate results. As a result, businesses tend to delegate this task to third-party agencies in what can be extremely capital intensive. 

In this day and age, to refine results further, psychographics is paired with other sales intelligence and market segmentation tools. These include technographics and firmographics in order to predict your business’s next customer with pinpoint accuracy.

The most cost, time and resource saving method to gather sales intelligence today is by using all-encompassing sales intelligence tools. Tools like Slintel analyse variables pertinent to your business and it’s product/service with the utmost rigour. This gives you high-precision, high-intent leads that you can bank on.

Are the use of psychological sociological and anthropological factors to determine how the market is segmented by the propensity of groups within the market?

When marketer's use psychological sociological and anthropological factors to analyze a market they are using?

What is market segmentation and why is it important?

When Linda saw the ad for the new and improved Swiffer mop she rushed out and bought one she can be considered to have the trait of?