Psychographic segmentation is sometimes also referred to as behavioural segmentation.

Psychographic segmentation is a method of dividing markets on the bases of the psychology and
lifestyle habits of customers. It is the marketers and the sellers of products and commodities who
use this technique in order to decide their marketing strategy. Marketing a product requires a deep
understanding of the customers psychology, along with their needs, in order for the product to be
accepted. Marketers carry out a number of activities in order to better understand the psyche and
the habits of the customers, so that they can accurately predict the response to the product they are
selling, and thus make accurate sales projections. This is the primary use of psychographic
segmentation. Read more on market segmentation strategy.This type of segmentation divides the
market into groups according to customers lifestyles.
It considers a number of potential influences on buying behaviour, including the attitudes,
expectations and activities of consumers. If these are known, then products and marketing
campaigns can be customised so that they appeal more specifically to customer motivations.
The main types of psychographic segmentation are:
Lifestyle different people have different lifestyle patterns and our behaviour may change as we
pass through different stages of life. For example, a family with young children is likely to have a
different lifestyle to a much older couple whose children have left home, and there are, therefore,
likely to be significant differences in consumption patterns between the two groups. One of the
most well-known lifestyle models, the sagacity lifestyle model, identifies four main stages in a
typical lifestyle:
Dependent (e.g., children still living at home with parents);
Pre-family (with their own households but no children);
Family (parents with at least one dependent child); and
Late (parents with children who have left home, or older childless couples).
Each group is then further subdivided according to income and occupation.
Opinions, interests and hobbies this covers a huge area and includes consumers political
opinions, views on the environment, sporting and recreational activities and arts and cultural
issues. The opinions that consumers hold and the activities they engage in will have a huge impact
on the products they buy and marketers need to be aware of any changes. Good recent examples
include the growth of demand for organic foods or products that are (or are perceived to be)
environmentally friendly
Degree of loyalty customers who buy one brand either all or most of the time are valuable to
firms. By segmenting markets in this way, firms can adapt their marketing in order to retain loyal
customers, rather than having to focus constantly on recruiting new customers. It is often said that
it is ten times more profitable selling to existing customers than trying to find new ones. So the
moral is work hard at keeping your customers.
Occasions this segments on the basis of when a product is purchased or consumed. For example,
some consumers may only purchase flowers, wine or boxes of chocolates for celebrating birthdays
or Christmas, whereas other consumers may buy these products on a weekly basis. Marketers often
try to change customer perception of the best time to consumer a product by promoting alternative
uses for a product. For example, recently Kelloggs has attempted to change the image of cereals to
that of an any time snack, rather than simply a breakfast meal.
Benefits sought this requires marketers to identify and understand the main benefits consumers
look for in a product. Toothpaste, for example, is not only bought to maintain healthy teeth and
gums, but also because of its taste and in order to help combat bad breath!
Usage some markets can be segmented into light, medium and heavy user groups. Psychographic
Segmentation Variables
The variables that come into play when we speak of psychographic segmentation are primarily
psychological in nature. The following variables could be said to be a part of the process of
psychographic segmentation.
Interests
Activities
Opinions
Behavioral patterns
Habits
Lifestyle
Perception of selling company
Hobbies
Using these factors as a base, a marketer can determine how a particular group of customers will
respond to the launch of a new product. Psychographic segmentation should not be confused with
demographic segmentation. Demographic segmentation primarily takes into consideration the age
and the gender of the targeted customer group.

Psychographic Segmentation Example
Consider a company that manufactures high end luxury cars. This is a product that cannot be
afforded by people from every income group. Only individuals falling in high income groups are
realistic customers of this specific product. That is the primary basis of segmentation for the car
manufacturer, that forms the basis of their marketing plan.

Within the high income bracket, the car manufacturer must now decide how he should go about the
segmentation process. He will analyze the habits and lifestyles of his existing customers, and even
those of the customers of his direct rivals. Soon he will see that some customers use these luxury
cars as status symbols, some use them as utility vehicles, and some use them for long distance
drives. Understanding the usage of a particular vehicle will provide the basis for the marketing of a
product. Users who prefer long drives will be shown the highlighted fuel efficiency of the vehicle,
people who use the car sparingly just for prestige purposes will be told about the excellent looks and
prestige of the car model and the brand, and people who use them for other purposes will be
informed about the interior space, the handling, the braking system etc. Read more on strategic
planning.

The art of marketing is such that the marketer needs to highlight that part of the commodity that
appeals most to a particular customer, and tell him the features of the product and how it will
benefit him, as a part of the advertising process.

Psychographic Segmentation Advantages
Apart from the obvious advantage of increased sales, there are a few other intricate advantages of
psychographic segmentation as well.
Increased brand value of the company in the eyes of the customer.
Greater usefulness of the product for the customer.
Better inputs for the design of new products that the customer will like.
Lesser amount of money spent on marketing, as it is now more specific.
Easier to target a specific type of customer base.
Simpler to derive effective and efficient marketing strategy.
Greater degree of customer satisfaction and customer loyalty, resulting in higher amount of
customer retention.
The advantages of psychographic segmentation are well known to any marketer who wishes to sell
his product. The scale of production and the size of the company are irrelevant when this concept
comes into play. Even the smallest scale marketer knows the benefits of psychographic
segmentation, and he will apply it to this marketing strategy, either knowingly or unknowingly.
In psychographic segmentation, buyers are grouped according to variables such as Social Class, Lifestyle, or
Personality. Marketers infer or research differences in the approaches of buyers to their products based some
elements of these factors.
Certain product areas have been found that are strongly influenced by social class and background. These
include cars, home furnishings, leisure activities, and reading/media habits. There is convincing data to show
that social class is a good predictor of market behaviour in these product categories.
There are several problems for the practical marketer attempting to using these class distinctions:
1 They are fluid over time.

Particularly in post-industrial societies, the increase in incomes in many of these categories has blurred the
differences between the classes. In addition, people are defining themselves less in these terms than they did in
the past.
2 They are less discriminating than they were.
In the US, the majority of the population describes themselves as middle-class, and while sociologists may find
it useful to produce sub-segments of this large group of people, in practice this does not help marketing decision
making. So, the car brands purchased by upper, middle and lower class people are certainly different. However,
with so many people in the middle class, this is not a useful discriminating factor.
3 The world has moved on.
In post-industrial markets, everyone demands and can often afford most of the products that are available. There
are still some exclusive brands around, but the trend this century has been towards mass prestige - stylish brands
that are within the reach of most of the working population, even at a slight stretch. Also, as markets globalise,
marketing directors need segments that will work globally. This Anglo-Saxon view of society has no relevance
in China or India.
So Social factors may play some role in psychographic segmentation, they can be of limited practical use in
consumer marketing.
See We're all middle class now - London Times
Lifestyle Factors
Peoples interest in various products can be determined by their lifestyles, and indeed people can often express
their lifestyles through the goods that they consume. There are several companies who conduct large scale
surveys of consumers and then predict the lifestyle classification of people by the postcode in which they live.
Here are some examples.
The Insight Value Group has produced a classification of people based on a survey of their outlook and their
social values. The classification draws heavily on Maslow's hierarchy of needs. The groups are:
Self actualisers Focused on people and relationships, individualistic and creative,
enthusiastically exploring change, 'in a framework of non-prescriptive
consideration for others'.
Innovators Self-confident risk-takers, seeking new and different things, setting
their own targets to achieve.
Esteem seekers Acquisitive and materialistic, aspiring to what they see are symbols of
success, including things and experiences.
Strivers Attach importance to image and status, as a means of enabling
acceptance by their peer group, at the same time holding onto
traditional values.
Contented conformers Want to be 'normal', so follow the herd, accepting of their
circumstances, they are contented and comfortable in the security of
their own making.
Traditionalists Risk averse, guided by traditional behaviours and values, quiet and
reserved, hanging back and blending in with the crowd.
Disconnected Detached and resentful, embittered and apathetic, tending to live in
the 'ever-present now'.
The National Readership Survey (NRS) in the UK has had a similar classification of consumers in the past. I has
now moved to a more granular system which provides data each of the following lifestyle attributes of readers.
Marital status Single, married, divorced, separated
Children in household 0-23 months
2-4 years
5-10 years
11-15 years
16-20 years
21+ years
Education Terminal education age, Highest Qualifications achieved
Tenure on home Owned outright
Mortgage/loan
Rented from Council
Rented from someone else
Rent free/tied house
Motoring Numbers of cars, owned, company, leased
Travel Number of holidays, destinations, business travel
Future Plans Getting married
Having a baby
Retiring
Moving job
Moving home
Buying a new car
Spending 500 or more on home improvements
Personality
The concept of personality based segmentation is that marketers endow their brands with a
personality that matches the personality of the consumer. There is some data from the advertising
industry that suggests that this has worked successfully in categories such as cosmetics, cigarettes,
insurance and alcoholic drinks. However there is also research form the car industry in the US to
suggest efforts to use personality segmentation have been a failure.
Brands do have personalities and they do attract different types of people, but that is not
segmentation, targeting and positioning in the way that it is generally understood and operated.
There are several proprietary tools available on the market that will segment markets by personality
type, but there is a general lack of practical case studies to support the approach.
The following are examples of psychographic factors used in market segmentation:
1. Social class : Is the single most used variable for research purposes, and divides the
population into groups based on the occupation of the 'Chief Income Earner' (CIE), as
such it can be seen as a socio-economic scale. In the UK, The National Readership
Survey, provides the following standardised groupings.
The socio-economic scale

Social grade

Description of occupation

Example



A

higher managerial, administrative or
professional

Company
director



B

intermediate managerial, administrative or
professional

Middle
manager



C1

supervisory, clerical, junior administrative
or professional

Bank clerk



C2

skilled manual workers

Plumber



D

semi- and unskilled manual workers

Labourer



E

state pensioners with no other income,
widows, casual and lowest grade earners

Unemployed


3. Lifestyle : Involves classifying people according to their values, beliefs, opinions, and
interests. There is no one standardised lifestyle segmentation model, instead market
research firms, and advertising agencies are constantly devising new categories,
which will best help target possible consumers of their clients products.
One example of a life style classification model, is that developed by the advertising
agency, Young & Rubican, called Cross Cultural Consumer Characterization (4Cs for
short). This classification model is presented in the table below
The 4Cs

Resigned
Rigid, strict, authoritarian and chauvinist values, oriented to
the past and to Resigned roles. Brand choice stresses safety,
familiarity and economy. (Older)


Struggler
Alienated, Struggler, disorganised - with few resources apart
from physical/mechanical skills (e.g. car repair). Heavy
consumers of alcohol, junk food and lotteries, also trainers.
Brand choice involves impact and sensation.


Mainstreamer
Domestic, conformist, conventional, sentimental, passive,
habitual. Part of the mass, favouring big and well-known
value for money 'family' brands. Almost invariably the largest
4Cs group.


Aspirer
Materialistic, acquisitive, affiliative, oriented to extrinsics ...
image, appearance, charisma, persona and fashion. Attractive
packaging more important than quality of contents. (Younger,
clerical/sales type occupation)


Succeeder
Strong goal orientation, confidence, work ethic, organisation
... support status quo, stability. Brand choice based on reward,
prestige - the very best . Also attracted to 'caring' and
protective brands ... stress relief. (Top management)


Explorer
Energy - autonomy, experience, challenge, new frontiers.
Brand choice highlights difference, sensation, adventure,
indulgence and instant effect - the first to try new brands.
(Younger - student)


Reformer
Freedom from restriction, personal growth, social awareness,
value for time, independent judgement, tolerance of
complexity, anti-materialistic but intolerant of bad taste.
Curious and enquiring, support growth of new product
categories. Select brands for intrinsic quality, favouring
natural simplicity, small is beautiful.(Higher Education)