When Nike lost the 2012 London Summer Olympics bid to Adidas, it turned to target the sporting psychology of athletes and fitness enthusiasts to compete as the unofficial face of the tournament.
The company undertook psychographic segmentation of its customers. It studied their attitudes, beliefs, and values to launch the ‘Find Your Greatness’ marketing campaign.
Nike drove lakhs of people, comprising its customers, who showed a positive attitude towards sports into action. In no time, the Nike+ app membership jumped by 55%. The campaign, which used psychographic segmentation in marketing, pushed its revenue by $506 million.
The ‘Find Your Greatness’ campaign of Nike fetched an additional $506m in revenue
As in Nike’s case, segmenting customers based on psychological traits can prove a game-changer for companies. Technology comes in handy here by helping you measure psychological metrics, visualize segments, and tune them into your marketing strategy. Attributes such as the interests and beliefs of customers widen the aperture of your view of the customer. This, in turn, helps personalize the customer experience.
Let’s understand why psychographic segmentation is important in customer engagement marketing, how you can perform it, and how customer engagement platforms can help.
What is Psychographic Segmentation?
Psychographic segmentation helps you categorize customers based on their psychological and cognitive attributes. These include beliefs, attitudes, values, personality traits, interests, and social status.
These can uplift your marketing campaigns as 95% of customers make purchasing decisions using their subconscious mind. By grouping customers along these traits, you can personalize campaigns.
A psychographic study also helps brands position their identity based on their core customer base. For example, motorcycle maker Harley-Davidson uses the tagline ‘Live Free, Ride Hard’ to appeal to its loyal clientele, which values freedom, adventure, and rebellion.
A Harley Davidson campaign highlighting the value of freedom
Customers need to believe you value their beliefs. Today, brands stand by causes such as environmental sustainability, women’s rights, and equal opportunities.
Psychographic segmentation is different from other methods like demographic, geographic, behavioral, firmographic, RFM segmentation, needs-based, and benefit segmentation.
Here are the differences between psychographic and demographic segmentations:
| Features | Demographic segmentation | Psychographic segmentation |
| What is it based on? | Observable characteristics | Psychological and cognitive traits |
| Incorporated data | Age, gender, income, education level, or family size | Values, beliefs, interests, opinions, social status |
| Segment examples | Millennials, urban dwellers, women | Tech-savvy, health-conscious, luxury-oriented |
| Data collection method | Customer engagement platform, surveys, purchase history | Customer engagement platform, surveys, focus groups, social media listening |
| Challenges | Ignores nuance and why customers buy | Difficult to quantify |
What are the Benefits of Psychographic Segmentation?
Understanding customer psychology can prove invaluable for marketers, as it lets them tap into the hidden desires and fears of customers. The benefits of psychographic segmentation are many:
1. Better Targeting
Psychographic segmentation lets you tailor marketing campaigns that target customers’ subconscious minds and evoke the desired emotional response from them. These messages are more likely to resonate, leading to better engagement and conversions.
For instance, Sterling achieved a 13.4% higher revenue by relying on Netcore’s AI-driven segmentation. By studying their customer’s behavior and psyche, they were able to create unique customer journeys for their campaigns by sending targeted messages across multiple communication channels.
By sending the right message to the right audience at the right time, Sterling Holidays reduced customer churn and improved conversion rates for their holiday packages.
2. Deeper Customer Understanding
Psychographic segmentation gives you a deeper layer of a customer’s persona by identifying motivating factors that trigger them to take action.
With this deeper understanding, you can design campaigns that resonate deeply with your customer’s values and emotions. For example, if you have identified a segment of the audience that are environmentally conscious, you can create marketing campaigns that are centered around such causes. This creates a positive brand image in the minds of customers, leading to better engagement, trust and meaningful relationships.
Coca-Cola’s green marketing targets environmentally-conscious customers
3. Brand Differentiation
According to an article in Harvard Business Review, psychographics has proved effective in brand reinforcement and positioning. Appealing to the emotional aspects of customers opens opportunities to conduct campaigns in niches that are uncommon and overlooked yet hold an important place in the hearts of customers. Crafting messages that appeal to these aspects get higher attention, have better appeal, and last longer in the minds of customers.
4. Increased Customer Loyalty and Lifetime Value
Psychographic segmentation helps connect your brand on a deeper level with customers, making them feel more understood and valued. This in-turn aids in recall and creates a positive brand image, making them return to make repeat purchases, improving customer lifetime value.
How to Create Psychographic Segments?
In the book The Marketing Edge, the authors say that a segment specialist would enjoy the first-mover advantage until competitors start replicating their approach. This holds for psychographic segmentation too. Here are the steps to implement it:
Step 1: Define Goals
Lay out what you want to achieve with psychographic segmentations and how that fits your organizational goals. Consider these questions while defining your purpose:
- Are you planning to launch targeted marketing campaigns?
- Are you looking to identify new market segments for product expansion?
- Are you planning to improve your market share?
- Do you wish to build customer retention and loyalty?
- Do you aspire to brand differentiation?
Step 2: Conduct Research
Zero in on traits you plan to capture and standardize responses that would indicate them. There are various variables you can consider while capturing and segmenting psychographic data:
1. Interests: Includes areas customers most care about and spend their time pursuing.
Example: Particular kinds of sports or movie genres.
2. Attitudes: Customers acquire beliefs, values, and outlooks through their upbringings, communities, and experiences.
Example: Being environmentally conscious and cautious about your carbon footprint.
3. Social status: This is based on both the social and economic position of customers. In some societies, social markers of ethnicity and caste are still prominent, while in others, economic markers of class influence buying decisions. A combination of both can exist too.
Example: Owning a Mercedes-Benz car indicates a higher social status.
4. Lifestyle: Purchasing power of customers doesn’t always determine the way they live. Forces of globalization also influence lifestyles.
Example: Preferring a health-conscious diet.
5. Personality: Customers may be introverted/extroverted, creative, flexible, honest, humble, ambitious, or conscientious. These attributes might influence buying decisions.
Example: Ambitious customers may value goods and services that help them achieve a higher social or economic status, such as owing a Harley Davidson motorcycle.
Step 3: Analyze Findings
Use statistical techniques to identify patterns and correlations in data. Perform cluster analysis by grouping customers with similar psychographic traits.
For instance, a person interested in fashion could value sustainable clothing and animal rights.
Step 4: Create Personas, Integrate with Other Segmentations
Create personas based on psychographic segmentation. These should seem like real people with defining psychological and cognitive traits.
Example: Sarah values wellness and balance between work and life. She practices yoga regularly and likes to spend time with her family. Together, they travel every six months.
Next, correlate psychographic data with other segmentations based on demographics, behaviors, geography, and so on.
Step 5: Create targeted campaigns, inform product development
Tailor messages that resonate with each psychographic segment. Use an omnichannel strategy to engage customers across email, social media, and mobile phone messaging channels.
Align product and service offerings with each segment’s desires to maximize conversions. This opens up a window to partner with product and design teams.
For instance, Amazon launched the Amazon Saheli offering to promote women entrepreneurs in India. This aims at widening offerings on its platform and capturing the attention of customers who value women’s empowerment.
The Amazon Saheli program to empower women entrepreneurs
Step 6: Evaluate and Improve
Evaluate the performance of your marketing efforts against previous strategies and stated goals. Go over metrics like the cost of customer acquisition, most effective channels, retention rates, engagement rates, lifetime value, conversion rate, and time-to-conversion.
Examples of Psychographic Segmentation
Value & Attitude Segmentation
For example, an apparel brand identifies a significant chunk of its customers that is deeply concerned about environmental impact and are eco-conscious. So it launches a marketing campaign targeting them by showing how they have been associated with business practices that are eco-friendly and sustainable. The brand reiterates its use of organic material and fair labor practices.
Food Tech service
A food delivery app identifies a customer segment that shows aggressive buying around weekend European football league matches. The company offers special offers for these customers around the match hours. On the same basis, the app company can derive a similar behavior on other major events or days with long weekends and plan campaigns suited to that occasion.
Personality Trait Segmentation
This kind of segmentation identifies users basis their inherent characteristics such as extroversion, interoversion or conscientiousness. An example in this case would be a travel company targeting extroverts with exotic locations or experiences that are unique. Or an interior decorating brand can focus on consumers who prefer comfort by showcasing cozy rooms with great ambience and lighting.
Lifestyle Segmentation
Lifestyle segmentation focuses on the way customers live their lives, their daily activities and opinions. For example, there is a segment of audience focused on health and wellness activities like yoga, exercising and meditation. Understanding these aspects of customers, brands can tailor messages that focus on wellness and healthier ways of living to resonate with their customers.
Examples of Brands Using Psychographic Segmentation
1. Airbnb
Airbnb caters to travelers looking for authentic and unique experiences, offering a platform that showcases distinctive accommodations and local adventures. This approach attracts adventurous and open-minded individuals who crave more than just a place to stay.
The company understands its customers’ desire for personalized and memorable travel experiences, which enables it to effectively connect with a market segment passionate about exploration and cultural immersion. By focusing on these elements, Airbnb resonates deeply with those seeking to fully immerse themselves in new environments.
Through its strategy, Airbnb not only offers a service but also fosters a sense of community among its users. The platform’s emphasis on unique, local experiences encourages travelers to engage deeply with their destinations, enhancing their overall travel experience and satisfaction.
2. Old Spice “The Man You Could Smell Like” Campaign
Old Spice masterfully infused humor, confidence, and masculinity into their campaigns, targeting men who embrace self-assurance and adventure. This approach was designed to resonate deeply with a demographic known for valuing wit and a sense of daring.
In 2010, Old Spice embarked on a strategic mission to rejuvenate its brand image, aiming to attract a younger, more modern audience. This pivot introduced the iconic “The Man Your Man Could Smell Like” campaign, which broke conventional norms.
The campaign uniquely targeted female consumers, a shift from the traditional male-focused advertising in the toiletry sector. This innovative approach was a gamble that paid off handsomely, as it engaged an often-overlooked influencer in men’s product purchases—women.
This strategy led to an impressive 60% increase in sales shortly after the campaign’s launch, which had doubled by July 2010. Old Spice’s success story underscores the powerful impact of understanding and leveraging consumer psychographics in marketing.
3. Patagonia Eco-friendly Outdoor Gear
Patagonia caters to outdoor enthusiasts and environmentally conscious consumers, highlighting their dedication to environmental sustainability alongside their high-quality outdoor gear. Their marketing initiatives prominently showcase these eco-friendly practices, resonating deeply with those who prioritize nature and sustainable living.
This strategic focus not only differentiates Patagonia in the marketplace but also strengthens its bond with a loyal customer base. By consistently emphasizing durability and responsible production, Patagonia appeals directly to individuals who value long-lasting products and ethical consumption.
Through this approach, Patagonia cultivates a sense of community and trust among its customers, reinforcing its brand as a leader in environmental advocacy within the apparel industry. This has proven effective in building lasting customer relationships based on shared values and commitment to the planet.
Best Practices for Psychographic Segmentation in Marketing
When you segment customers based on psychographic markers, it’s essential to follow certain practices for optimal results and derive a return on investment. Here are those practices:
1. Be transparent and value privacy: Inform your customers about how segmentation will help enhance their experience. Be clear about data collection and processing procedures.
2. Use technology: Use a unified software tool instead of relying on multiple disjointed tools to integrate and process data and launch targeted campaigns.
3. Refine segments: Create workflows to automate real-time updates of segments based on customer interactions. Review these updated segments to create related content pieces and launch marketing campaigns.
How Can Customer Engagement Platforms Help?
Technology lets data flow across collections and analyses across streams. It lets you automate several repetitive tasks so you can redirect your attention to strategy. They help marketers in multiple ways for psychographic segmentation:
Data Analysis
Customer engagement platforms can help you track customer behavior across channels, platforms, and stages of the conversion funnel. You can define metrics that align with your strategy and automate data collection.
You can also track website interactions, including visits, time spent, and purchases, that could reveal customer preferences and interests.
Such tools let you gauge sentiment across channels and visualize trends. They also help you group customer traits into segments to create personas.
Visualization of segments helps you view group characteristics, size, relevance, and conversion rates. It makes reporting easier for launching and tracking marketing campaigns for these groups.
Targeted Campaigns
Using customer engagement tools, you can segment your audience basis their psychological traits and decide ‘what’ to say to ‘which segment’ through ‘which channel’ and ‘at what time’ to maximize conversions.
The integration of data gathering, analysis, and campaign management on one platform reduces the chances of error that come with manual work, facilitates omnichannel communication, speeds up message delivery, and offers real-time analytics.
You can also A/B Test with different messages, timings, and offers to gauge which campaign resonates with your customers the most. With co-marketer AI, you can create multiple segments at scale and deploy unique campaigns according to each segment. This enhances engagement, boosts conversion, and drives customer loyalty in the long run.
Final Words
Psychographic segmentation offers brands a powerful tool for crafting marketing campaigns that truly resonate with their audience. By understanding consumers’ lifestyles, values, and interests, companies can move beyond basic demographics to deliver messages that align closely with what their customers care about.
This approach enhances engagement and builds stronger, more meaningful connections with the target audience. In essence, psychographic insights allow brands to cut through the noise and offer tailored experiences that drive loyalty and growth.
Technology can help you power psychographic segmentation. On unified platforms like Netcore, you can collect and analyze data to launch campaigns. The software lets you track every user interaction in real time and makes you respond to evolving customer needs.
On Netcore, you can create AI-led personalized user journeys and improve conversions. You can set rules for product recommendations and messaging for different segments. The platform lets you perform A/B tests before launching a wide campaign. With a single view of your customers, you can delight them and boost your revenues.
