Psychographics in Market Segmentation and Consumer Behavior

Introduction to Psychographics

Psychographics is a method by which one can analyze and understand a social group, obtaining information about the psychological responses of particular groups or individuals to given situations. Psychographics is understood as a medium for understanding the diverse beliefs, opinions, and interests of customers. It is also defined as profiling the perceptions, attitudes, feelings, and preferences of customers, and understanding the mental processes of customers in purchase decisions.¹

Psychographics is a very effective communication tool for marketers, on the basis of which appropriate marketing strategies can be formulated and implemented. It is believed that psychographics is perhaps a better method of understanding consumer behavior when compared with other behavioral tools such as psychodynamics, neuro-linguistics, and design psychology. According to Harold Finkleman, "Psychographics enables us to understand who we are in communication with, and how they would react to particular situations—whether in a positive or negative manner—and would thereby enable us to have an understanding of their decisions made on the basis of their lifestyles and values upheld."² It can also be used to anticipate the psychological response of specific individuals or audiences to almost anything.

Market Segmentation and the Limits of Demographics

Market segmentation is one of the key marketing activities, involving the classification of a population with the objective of identifying target groups upon whom marketing efforts can be focused. "Segmentation is essential for designing marketing and communication strategies to enable marketers to reach out to customers."³ A common method is the use of demographics, by which the market is segmented based on gender, age, education, occupation, income, marital status, and ethnic background. Demographics provides important information on the characteristics of the target market—for instance, whether the population is dominated by younger or older consumers, what the average level of education is, and how much average disposable income is available to potential customers. Thus, demographics provides basic information on market participants but stops short of providing information on the psychological profiles of customers. For example, with demographic data alone, it is not possible to know the sentimental factors involved in a middle-class salaried worker's decision to purchase an apartment.

Another method of segmentation is geographic, which classifies the market based on boundaries and regions.⁴ This approach also does not present a complete view of customer profiles. Psychographics is now recognized as an important and necessary tool in market segmentation because it attempts to unravel buyer characteristics more fully.

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