Does segmentation seem like an overwhelming concept? The first step is understanding why segmentation matters. Think about the last time you tried a new restaurant with friends. Was everyone in complete agreement about the quality of food or the friendliness and promptness of the staff? Even among friends, opinions vary. It’s just a matter of differences in preferences and attitudes.
Psychologists say that people have different motivations, while economists say people have different perceptions. No matter which perspective you take, together they highlight the importance of segmentation in marketing.
What type of data do you have that you can use for segmentation?
Age, gender, stage in household life cycle, number of children, education, and income
Demographic characteristics are pretty clear and easy to recognize, but they can be simplistic stereotypes. For example, some older people have a difficult time with technology, such as ATMs and the Internet, while others are very savvy and embrace even the newest technologies.
Countries, cultures, and urban vs. rural
When geographic and demographic information is combined, segmentation can be even smarter and more effective. Keep in mind that there can be cultural differences even within the same geographical area.
Attitudes; knowledge and awareness; wants and needs; affiliations (political party or university alma mater); traits (charitable giver); expertise and involvement (hobbies or volunteerism); preferred brand attributes (premium quality vs. low price); or risk orientation (financial investments or adventurous traveler)
A popular tool marketers use for segmenting using psychographic data is called VALS (Values, Attitudes, and Lifestyles). The idea behind VALS is that the attitudes people hold along with their value systems determine their orientations toward certain product categories and brands. The eight types of consumers are innovators, thinkers, believers, achievers, strivers, experiencers, makers, and survivors.
Users; nonusers or competitors’ users of products or brands; co-purchase patterns (which we see today when we shop online and similar or complementary items appear during our experience)
Most behavioral data can be collected by scanners or other digital tools today. Behaviors are important because watching what the consumer does tells us something about who they really are. Attitudes are not directly observable, but behaviors can be used to understand attitudes and psychological style.
Data on all of these characteristics and traits may not be available to you. But, keep in mind that a smart segmentation plan uses data to determine what differentiating information to use.
The Badger Group helps small to medium-sized businesses and nonprofits more effectively use the data they have. Learn more about our Data & Insights solutions.