Segmentation models: Psychographic, Behavioral and Generational
Like other forms of market segmentation, psychographic segmentation divides consumers into sub-groups based on shared characteristics. As the adjective ‘psychographic’ suggests, those characteristics relate to psychological influences, including subconscious or conscious beliefs, motivations, and priorities. Very broadly, psychographic segmentation applies behavioral and social sciences to marketing research. In other words, psychographic segmentation focuses on what makes individual consumers tick—their attitudes, values, personalities, lifestyles, and communication preferences.
Some consider lifestyle segmentation to be interchangeable with psychographic segmentation, marketing experts argue that lifestyle relates specifically to overt behaviors while psychographics relate to consumers’ cognitive style, which is based on their patterns of thinking, feeling and perceiving.
Psychographic segmentation complements demographic and socioeconomic segmentation to explain and predict consumer behavior. Insights from psychographic segmentation enable marketers to understand consumers’ decision-making processes better and more efficiently target audiences with highly-relevant messaging to influence their responses to marketing, brands, products or services.
Behavioral segmentation divides consumers into groups according to their observed behaviors. Many marketers believe that behavioral variables are superior to demographics and geographic for building market segments and some analysts have suggested that behavioral segmentation is killing off demographics. Typical behavioral variables and their descriptors include :
- Purchase/Usage Occasion: e.g. regular occasion, special occasion, festive occasion, gift-giving
- Benefit-Sought: e.g. economy, quality, service level, convenience, access; (See this case)
- User Status: e.g. First-time user, Regular user, Non-user
- Usage Rate/ Purchase Frequency: e.g. Light user, heavy user, moderate user
- Loyalty Status: e.g. Loyal, switcher, non-loyal, lapsed
- Buyer Readiness: e.g. Unaware, aware, intention to buy
- Attitude to Product or Service: e.g. Enthusiast, Indifferent, Hostile; Price Conscious, Quality Conscious
- Adopter Status: e.g. Early adopter, late adopter, laggard
Note that these descriptors are merely commonly used examples. Marketers customize the variable and descriptors for both local conditions and for specific applications. For example, in the health industry, planners often segment broad markets according to ‘health consciousness’ and identify low, moderate and highly health conscious segments. This is an applied example of behavioral segmentation, using attitude to product or service as a key descriptor or variable which has been customized for the specific application.
A generation is defined as a cohort of people born within a similar span of time (15 years at the upper end) who share a comparable age and life stage and who were shaped by a particular span of time (events, trends and developments). Generational segmentation refers to the process of dividing and analyzing a population into cohorts based on their birth date. Generational segmentation assumes that people’s values and attitudes are shaped by the key events that occurred during their lives and that these attitudes translate into product and brand preferences.
Demographers, studying population change, disagree about precise dates for each generation. Dating is normally achieved by identifying population peaks or troughs, which can occur at different times in each country. For example, in Australia the post-war population boom peaked in 1960, while the peak occurred somewhat later in the USA and Europe, with most estimates converging on 1964. Accordingly, Australian Boomers are normally defined as those born between 1945–1960; while American and European Boomers are normally defined as those born between 1945–64. Thus, the generational segments and their dates discussed here must be taken as approximations only.
The primary generational segments identified by marketers are:
- Builders: born 1920 to 1945
- Baby boomers: born about 1945–1965
- Generation X: born about 1966–1976
- Generation Y: also known as Millennials; born about 1977–1994
- Generation Z: also known as Centennials; born 1995–2015