Psychographic Segmentation: Used or Abused? – Brief Article

Marvin Schoenwald

Long ago, when laptops and the Internet were only a dream, a few people in marketing and research began to see that traditional segmentations (demographic, behavioral, regional, etc.) were not providing the depth of understanding needed to paint a well-defined portrait of primary target audiences. They saw that changes in the social and economic structure of the country were blurring class lines and that increasing saturation of product categories was leading to fewer physical differences between brands and, therefore, more need to tap into the emotional elements of decision-making.

Thus, the art and science of segmentation based on attitudes, needs, self-image and lifestyle began to take root. While some saw this as akin to finding the holy grail of marketing, the reality is one of a wide range of degrees of success–or lack thereof–in creation of segments and implementation of strategies based upon them.

In the rush to adopt this new tool, what was often forgotten was that segmentation was not a panacea, but simply one more tool to be added to the repertoire of techniques available to marketers seeking more understanding of the marketplace and how to best address those consumers offering the best opportunities.

Not surprisingly, while well-done segmentations have often enhanced market planning, there have been occasions of dissatisfaction, sometimes due to over-expectation and sometimes to poor research implementation or interpretation. And some rush to condemn the technique whenever research or market results do not confirm anticipated behaviors.

In reality there are many reasons for not finding a clear relationship between a specific segment and brand performance. First, the list of needs and/or attitudes selected as a means of defining segments may be incomplete, or not provide the most relevant method of defining meaningful clusters of consumers. Also, key needs that are so strong across several segments may overpower the impact of a single distinctive benefit. In-market performance may also be affected by changing market dynamics (competition, technological change, etc.) or changes in the economic or social climate. And unexpected results could simply reflect consumers “taking away” a different perception of a brand or message than that intended by the marketer.

Another problem often seen is trying to rely on macro-segmentation to define targets for a specific product or service. While macro-segmentations can be of great value in spotting major patterns that could effect the political, economic and social environment, they may be useless in defining a target for a particular brand.

One example: the same person who would fall into a macro-segment of conservatism or traditionalism on social or economic issues, may well be a leading edge/creative consumer for some new electronic gizmo and a passive consumer when it comes to a financial service. Thus, it is not surprising that when researchers tag on a battery of macro-segmentation items to a product-related study they find little useful relationship for use in decisions and planning.

The Micro Factor

To address this issue, many marketers turn to category-oriented micro-segmentations. While these can sometimes turn out as “nice-to-know,” but not actionable or linked with anticipated market behavior, segmentation can be valuable if these basic “rules” are followed:

* Don’t bet the family jewels only on segmentation. Use it as a tool to help expand your understanding of targets and their needs to be addressed in honing product, positioning and communications.

* Always look for a reliable link between a segment and some form of existing behavior, lifestyle or self-image that tends to “validate” the utility of the segment definition to a specific product category.

* Be sure lists of needs and attitudes are comprehensive enough to reflect all potentially important emotional and rational elements that may impact usage.

* Always remember that a person is classified into the segment of “best fit.” Thus, there are always many in a segment who might, in fact, overlap with those in another segment or “switch” to another cluster based on personal or market conditions.

* Seek not only differences between segments, but links that can offer opportunity for a broader target.

* Segments are not carved in stone. They can shift with changes in society, the economy technological or competitive change. Thus, it is necessary to update a segmentation whenever substantive changes in the marketplace occur.

When creating an algorithm for a short list of items to classify respondents into a segment, even the best algorithms generally can only “correctly” reclassify about two-thirds to three-fourths of respondents. Thus, there is always a fair degree of uncertainty in using them as the primary analytic tool. This is especially true if sample sizes are small and the potential range of error is large.

Don’t automatically assume that because a certain segment does not act the way you expected the segmentation scheme is at fault; it may be that what you thought would attract a certain segment really does not meet its needs.

Keep the number of segments low enough to permit addressing those of adequate size to constitute a potentially meaningful target. Too many tiny segments are both non-actionable and confusing.

Finally, in today’s marketplace, there is the question of whether a global segmentation can be created for a category. In my experience, it may be possible to find segments that show similar needs profiles in many countries, but there are often substantial differences in portraits due to socio-economic conditions, local social and cultural mores, product availability, etc.

For example, an early adapter in a developing country may share the desire to own the latest and greatest, but not yet be able to afford it. Thus separate portraits must be developed by country that point out areas of similarity and difference to be addressed in multinational market planning.

Clearly, the value of a segmentation depends on both what you put in and what you take out. By building it carefully and using it within a repertoire of targeting tools, it can help to fine tune what you say to consumers, how you say it and how you deliver on promises made. Used in a vacuum, it can be a frustration to marketers and a limiting influence on the planning process.

Marvin Schoenwald is president of The Schoenwald Group, a New York firm that specializes in research for use in strategic planning for new and existing brands.

COPYRIGHT 2001 BPI Communications, Inc.

COPYRIGHT 2001 Gale Group

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