Segmentation

Everyone in marketing talks about segmentation, I just wanted to join the club. However, I think of segmentation very differently than most people. You create segments in the market by identifying demographics (age, sex, race) and geographic norms (population density) and how they relate to one another. This gives you a good idea about how and how not to market to your customer. Trying to advertise a $900 video game system in a low-income area of town would not be very successful.

There is a third dimension of segmentation that is increasingly coming into play in today’s market: psychographics. Knowing who and where people are is a great predictor of their buying behavior. Knowing why they fit those criteria is just as important. Because I have already talked at length about what psychographics are, I can move on to explaining why they are so important.

The marketplace has so much clutter that it is difficult to define a truly unique product. A new ski jacket is just that, a new product in an already saturated category. Varying its price points enables you to target a few different segments, but not in any meaningful way to protect from competition. Changing design characteristics to better match why certain people buy ski jackets will help set you apart from the rest of the marketing static.

Consider for a moment …

I own a ski jacket, but I have never been skiing. I bought the jacket because it was both warm and fashionable. However, it has several features that I don’t understand and know I will never use. There are others like me in the market that, for the sake of argument, we can identify as the “want-to-bes.”

The want-to-bes want to fit in with the skiing trend, but also want a functional coat. Rather than wasting expensive technical innovations on this segment, we design a new product that satisfies these two criteria. The new coat looks the same on the outside, is just as warm on the inside, but can be made of lighter material (no need to stand up to the rigors of skiing) at a lower cost to the company. Positioning the product as ski apparel for the non-skier – the advertising potential is endless – allows us to target only the want-to-bes while still selling our high-performance gear to existing segments.

Psychographics allow further segmentation of the market. Anyone with financial experience can see the potential gains of creating lower-cost (or higher-profit) product lines. Psychographic information is a powerful tool in the hand of a capable marketer.

Have you ever used psychographics to segment your market?