What is Psychographic Segmentation? Definition, Factors, Example, and Pros/Cons

What is Psychographic Segmentation?

Psychographic segmentation is a market segmentation strategy that groups customers based on the factors like personality, attitude, lifestyle, social class, and interests.

Psychological segmentation aims to know why and how consumers do the way they do. It seeks to understand the customers on an individual level and use personalized messages to reach the target customers.

Customers’ psychological factors like thinking, status, or thoughts greatly impact the way they respond to marketing messages and products they use. Psychographic segmenting understands it and seeks to design products keeping in mind even the smallest point of the customers.

Why Psychographic Segmentation is Important?

You can not make the right decision about your customers if you do not know exactly what they need and why.

Psychographic segmentation seeks to find the answers to questions like – what customers value in life, what their main pain point is, why they do the way they do, and how to connect with customers so they feel valued.

In order to give your target audience the most value and establish a more personal connection with them, you can modify your offers, marketing messages, and advertising channels based on those considerations.

Read Also: What is Core Product?

Gaining a deeper understanding of potential clients enables you to offer them highly personalized messages and products, boosting the likelihood of greater sales and profits.

Varaibles/Factors of Psychographic Segmentation

Psychographic segmentation is one of the four types of market segmentation – other includes behavioral, demographic, and geographic. The following are the main variables of psychological market segmentation.

Personality

Personality refers to the uniqueness people have in their actions and decisions. It includes the unique image people have in society which they express behaviorally.

Examples of people’s personalities include introvert, extrovert, analytical, authoritarian, aggressive, sociable, etc. And, each of these personality characteristics represents a potential market segment.

Related: Demographic Market Segmentation

Social Class

Social class includes grouping people based on their economic conditions. Social class, usually, includes three types middle, lower, and upper class.

The upper-class people have high income and high purchasing power, middle-class people have average, and lower-class people have very low income and purchasing power. Based on this fact, you can target customers who can afford and have the capability to pay.

Attitude

Attitude refers to the customer’s specific opinions by which they decide what is wrong and what is right which they have gained from their life experiences.

Attitude is more personal and can not be easily measured, however, customers show different attitudes. Let’s say a person with a high income usually goes for luxurious products whereas a low income will rather buy necessary products.

Life Style

People with different lifestyles choose products that best match their lifestyles. It is a choice that people have made for themselves to live life.

For example, keeping long hair, smoking, drinking, traveling, green living, and so on are some activities that represent the lifestyles of people. To each person’s lifestyle, you can target your products.

Activities, Interests, and Opinions (AIO)

This is based on the customers’ preferences for certain activities, the subjects that spark their interest the most, and their viewpoints on various issues.

These segments can cover things like preferred sports teams, television show genres, outdoor activities, and after-work hobbies and are frequently far less involved than the lifestyle psychographic segments.

Read Also: Levels of Market Segmentation

Advantages and Disadvantages of Psychographic Segmentation

The following are some of the pros and cons psychological segmentation may offer to your business.

Advantages:

• Personalization – Psychographic segmentation will enable your company to provide personalized products.
• Good Relationships – Brands will have a good relationship with clients as it seek to understand actual customers’ pain and reach out to them the way they feel valued.
• Higher Customer Satisfaction – With more personalized messages and products customers get what actually satisfies their needs.
• Makes Loyal Customers – When you serve customers on a personal level that makes them feel that your company is the best and they become more loyal to your brand.

Disadvantages:

• Difficult To Understand – Customers’ psychological factors are more personal in nature. Most of the time they can’t be seen. It is difficult to understand the feelings and emotions of customers.
• Relies On Assumptions -Psychographic segmentation mostly relies on assumptions. Let’s say, if a person spends too much money on unnecessary things, this segmentation will assume the person is rich and has high spending power. But, it will not be true always.

Examples of Psychographic Market Segmentation

There are multiple companies that are adopting psychographic segmentation. Let’s take the example of BMW – it provides quality automobiles that offer people status in their society. It is not for low and middle-class people. It targets people who have high incomes. With BMW people do just not drive and enjoy the benefits of the car but also get power and status to influence people.

Similarly, let’s take an example of personality – recently, a wine and alcoholic beverage firm learned that the majority of its clients are extroverted and want to consume their products with others. After segmenting out this group, the brand changed its messaging from being a delicious accompaniment for a meal to a great product for parties and gatherings. What the firms here have done is focused on the specific personality characteristics of people i.e. outgoing or sociable.

Read Next: Types of Market Segmentation