How Brands Can Benefit From Psychographic Segmentation in 2022

Strategically using audience segmentation allows you to create stronger, more targeted brand campaigns, attract more qualified leads, and identify unique new opportunities within existing markets.

While you may be familiar with — or even already using — basic forms of segmentation to better understand your target audience, psychographic segmentation goes deeper to deliver even more links between consumers’ personalities and beliefs and how they interact with brands.

This deeper understanding enables you to deliver personalized brand experiences by tailoring your marketing efforts — not just to who your audience is or where they are, but also what they think, believe, and value. Personalized brand experiences can strengthen brand affinity, improve customer loyalty, and increase ROI on your marketing campaigns.

Want to learn more? This article explains what psychographic segmentation is, how it differs from other types of audience segmentation, and how you can use it to benefit your brand.

What is Audience Segmentation?

First, let’s take a look at market segmentation as a basic concept. Segmentation is the process of dividing a target audience into smaller sub-groups of consumers according to shared characteristics. These characteristics are often based on demographic, behavioral, or geographic information.

• Demographic segmentation includes such factors and statistics as age, gender, and income.

• Geographic segmentation divides people based on their location or other geographic borders.

• Behavioral segmentation focuses on things such as purchasing or spending habits.

Segmentation can help a business create more personalized and relevant brand experiences.

Most consumers also have some awareness of segmentation in its basic form. We’ve all seen advertising campaigns and products that are using demographic segmentation — just think of Gillette and its personal razors designed specifically to target men or women.

Geographic segmentation is also fairly straightforward. For instance, a many micro-mobility brands limit their advertisements to urban consumers, as their e-scooters and bikes are best utilized in cities with better infrastructure.

Or, for example, behavioral segmentation could mean dividing consumers into those who have purchased a new washing machine in the past 3 years, people who drink coffee, or those who ride the subway.

However, a fourth way of dividing consumers and audiences into smaller groups is through psychographic segmentation.

What is Psychographic Segmentation?

Psychographics is the study of psychological attributes, such as personality, attitudes, beliefs, opinions, and lifestyles. Psychographic segmentation is when those audience sub-groups we spoke about are defined by these psychological characteristics.

So, instead of categorizing people based on gender or income, psychographic segmentation groups people based on the way they feel and think, as well as the attitudes and values they have about the world around them.

Psychographic segmentation can be based on both conscious or subconscious beliefs, motivations, and priorities, and can be used to predict how consumers will respond to certain messages and how they’ll behave towards certain brands.

Examples of Psychographic Segmentation

• Values: A person who values the environment above their perceived social status

• Attitudes: A person who thinks that smoking is disgusting

• Interests: A person who enjoys playing and watching tennis

• Motivations: A person who likes their buying decisions to reflect a certain social status

• Beliefs: A person who believes that drinking alcohol is unhealthy

• Desires: A person who longs to retire early

Since it concerns the way people think and feel, psychographic segmentation is more subjective than segmentation characteristics such as purchase decisions and demographics.

Yet, we don’t need to choose one or the other. Different methods of audience segmentation can intersect to combine a more holistic understanding of customers.

How Does Psychographic Segmentation Fit With Other Methods Of Segmentation?

The goal of audience segmentation is not to divide your target audience into mutually exclusive groups that have nothing to do with each other. Rather, it's to form a realistic and meaningful overview of who your audience is and how your brand might solve their problems or fulfill their wants and needs.

So, there’s no reason why you shouldn’t combine multiple approaches and try to understand the psychographic segments within different age or income groups, for example.

Geographic, behavioral, and demographic segmentation are the easiest ways to divide an audience, as the characteristics are measurable and typically easier to research. However, these factors are somewhat limited in their ability to predict future behavior.

This is where psychographic segmentation comes into play as a valuable component of audience segmentation. While it’s traditionally much more difficult to measure people’s attitudes and beliefs, they can provide key insights into how someone is likely to respond to a specific situation.

For example, if you know that somebody values the environment above having the latest technology — regardless of their age, gender, or location — you could draw a number of conclusions about their buying behavior, preferences, and how they might respond to various advertising messages.

8 Benefits of Psychographic Segmentation

Collecting and analyzing data on the personalities, attitudes, and beliefs of consumers allows brands to draw insights into their needs, wants, and motivations, which is key to providing a brand experience that consumers perceive to be valuable, relevant, and exciting.

Some advantages of incorporating psychographic segmentation into your marketing strategy:

1. Understanding the “why” behind consumer behavior. Not just what consumers do, but why they do it, through analyzing their personalities, beliefs, and motivations.

2. Improved potential for customization. Psychographic segmentation provides insights that allow for better and more relevant customization, not only of products and services, but of communication and targeted brand campaigns.

3. More efficient use of resources. When consumer preferences and desires can be more accurately understood and predicted, many resources can be saved thanks to more accurate development of new products. The same applies to advertising and brand campaign efforts. If you discover through segmentation that a certain proportion of your audience likes watching sports, while another prefers watching stand-up comedy, you can tailor specific marketing activities to cater to those preferences.

4. Better understanding of competitor audiences. Using similar variables to evaluate your competitors’ target markets allow you to better strategize branding activities

5. More accurate segmentation overall. By incorporating psychographic segmentation into your overall market segmentation activities, you can identify much more accurate and meaningful opportunities and trends, driving new marketing tactics or product offerings.

6. Improved customer loyalty. Giving a consumer the feeling that your brand truly understands them and addresses their needs improves brand loyalty.

7. More compelling communications. By targeting your communications and content to appeal to people’s personality traits and interests, you can make your campaigns much more interesting to the right audience.

8. Increased brand affinity. When customers feel like your brand knows them, they’ll want to spend much more time with your brand and its products.

How You Can Use Psychographic Segmentation in Your Branding

By collecting and analyzing psychographic data, you can develop a deeper understanding of the personalities, interests, and values of your audiences.

With this more multi-dimensional view of who your customers or clients are, you’ll be able to see them as unique people with individual needs and desires and things that make them tick, and categorize them in more meaningful ways.

This is the magic behind psychographic segmentation and the key to providing optimized brand experiences that truly resonate.

5 Methods For Collecting Psychographic Data

Psychographic data can be gathered from focus groups, interviews, and brand tracking software. Below are some examples of how your brand could collect psychographic data.

1. Interview your customers: Ask your existing, past, and ideal customers about their attitudes and beliefs. By going right to the source, you can begin to understand.

2. Interview your sales managers: An organization’s sales team often holds a wealth of detailed knowledge about the beliefs and attitudes of their customers. Conduct interviews with your sales team to find shared attributes and qualities in your customers.

3. Utilize your CRM system: A sophisticated CRM such as Hubspot or Salesforce can maintain detailed data about the businesses or people that make up your customer base. Utilize your CRM tool to find trends and consistencies between.. (more relevant to demographics/behavioral segmentation).

4. Utilize web analytics and social media: Your website, landing pages, and social media channels have the potential to provide valuable data about your customers. By using various tracking tools to measure behavior and perception, you gain insights into the psychographics of your audiences.

5. Use brand tracking software: A good brand tracking tool can hep you understand what your target audience feels about your brand and how they are reacting to your campaigns. Brand tracking software like Latana can drill down into the niche audiences important for your brand, providing accurate insights that you can base data-driven decisions on.

Analyzing Psychographic Data

When putting psychographic segmentation into use, you must ensure that the data is not misinterpreted, and is used accurately and ethically — in a way that's GDPR-compliant.

With this in mind, draw meaningful insights from the psychographic data you’ve gathered. Consider the following questions.

• Identify trends: What trends or segments stand out from the data? Are there any commonly held beliefs about your brand that you hadn’t identified before?

• Identify opportunities: What can the data reveal about your audience that you hadn’t considered before? What segments are currently not being served? How can your brand begin to serve those segments? Can you see new ways to connect with audiences that have been difficult to reach?

• Supplement other segmentation data: How does the psychographic data correlate to existing behavioral, demographic, or geographic data? Do you now see opportunities to subdivide existing demographic groups? Are there new patterns of behavior that you can link to smaller groups?

The rich, psychological information you gather can help you to develop more holistic buyer personas and informed marketing campaigns. By appealing to psychographic factors that you now know exist, you show a deeper understanding of your audiences and their needs and wants.

Brands Using Psychographic Segmentation

It’s safe to assume that most big brands are using some form of psychographic segmentation to reach the right audience with targeted campaigns, products, and experiences. Let’s take a look at a few examples.

1. Spotify

With over 155 million paying subscribers worldwide, Spotify is the market leader in music streaming services. How did they manage to get ahead of competitors and grow so quickly? They used market segmentation to reach the right audiences.

Simply by signing up, searching for and listening to music, free and paid Spotify users willingly give valuable data, not just about the way they consume music, but how they categorize it into themed playlists, and what moods they’re in when they listen to different artists or genres.

Spotify can then focus on smaller groups of relatively similar customers and attract them to the brand, advertising partners, or to specific artists or labels with content and offers that are relevant and relatable.

Spotify is also planning to use detailed consumer psychographic insights to provide different ads to people who may be listening to the exact same music or podcast.

2. IKEA

Another brand that skillfully appeals to different consumers through psychographic segmentation is the Swedish furniture brand we all know and love, IKEA.

By understanding that people often use interior styling to express their personalities and values, IKEA creates various lines of products that appeal to different people accordingly.

In a new collaboration project with an entire city, IKEA is using data insights around customers' different reasons and motivations for recycling textiles to increase convenience of recycling disposal options.

Final Thoughts

For years now, psychographic data has been crucial in supporting the movement towards increased personalization and targeted marketing. Modern consumers not only want but expect brands and their campaigns to relate to their personal needs and demands.

Using psychographic segmentation along with their usual segmentation methods, brands can expect to see:

• a boost in ROI

• an increase in brand affinity

• strengthened customer loyalty.

Just make sure your data is being used with consent and in compliance with GDPR and other regulations!

Updated by: Cory Schröder on 24.08.22