Psychographics

                                        by

Amber Pence

Introduction

            Several types of market segmentation exist, with demographic and geographic segmentation being the most commonly used.  As marketing knowledge has advanced and competition has increased, however, the need for a more precise segmentation tool has grown.  Psychographics, often referred to as lifestyle, is just the tool.

            Psychographics has been around for more than 30 years, but is still one of the least understood concepts in marketing research (Heath, 1995).  It seems that every scholar has his or her own definition of exactly what constitutes psychographics.  Some define it simply as values or lifestyles while others have more elaborate definitions.  The most clear and complete definition I found was in the book Consumer Profiles: An Introduction to Psychographics, by Barrie Gunter and Adrian Furnham.  Their definition claims that psychographics “seeks to describe the human characteristics of consumers that may have bearing on their response to products, packaging, advertising and public relations efforts.  Such variables may span a spectrum from self-concept and lifestyle to attitudes, interests and opinions, as well as perceptions of product attributes” (Gunter & Furnham, 1992). 

Psychographics are used to determine lifestyle characteristics and traits that can be correlated into targeted marketing programs (Bainbridge, 1999).  Psychographics and lifestyle are often used interchangeably, but psychographics is actually the way that lifestyle is made operationally useful to marketing managers.  Psychographics appraises a consumer’s activities, interests, opinions, and values and correlates them with a consumer’s demographics.  Psychographics allow for a more complete picture of an individual, making it easier to understand how to market products to them.   

Explanation of the topic

            Basis of Psychographics – Psychographics initially emphasized consumer’s activities, interests, and opinions, also known simply as AIO.  AIO inventories were helpful, but were soon found to be excessively narrow.  Today, psychographics has broadened to include attitudes, values, activities and interests, demographics, media patterns, and usage rates (Hawkins, 1998).  Because of this new, more extensive, definition, psychographics is able to more precisely define who a company or product’s consumers are.

            There has been some dispute between marketing experts and scholars as to what constitutes psychographics.  Is it synonymous with lifestyle or is it a separate entity?  Researchers have concluded that there is a distinction between the concepts.  Some marketers believe that psychographics refers to a consumer’s personality traits, while lifestyles consist primarily of an individual’s activities, interests, and opinions (Gunter et. al, 1992).  In application of psychographics, however, it is helpful to use both personality traits and lifestyles to collect meaningful market information.  Examples of what constitutes AIO categories is found in the following table:

AIO Categories of Lifestyle Studies

(Gunter & Furnham, 1992)

            Psychographic Research – One can not begin to explain psychographics without first defining the manner in which psychographic research is conducted.  Psychographic research is quantitative research that attempts to place consumers based on psychological, as opposed to strictly demographic dimensions (Heath, 1995).  The most popular research tool describing lifestyle and psychographics is SRI International’s Value and Lifestyles Program (VALS).

            VALS was introduced in 1978, but was replaced in 1989 by a new system, VALS 2 (Hawkins, 1998).  The original VALS was more activity and interest based, while VALS 2 is more psychologically based.  VALS 2 also places less emphasis on values and more emphasis on psychological, economic, and educational resources (Weinstein, 1994).  VALS 2 is used to classify subjects according to their self-orientation and resources.  Based on these two concepts, eight general psychographic segments have been identified.  The following table gives a quick overview of some of the key descriptors for the groups.

(Weinstein, 1994; Hawkins, 1998)

            VALS and VALS 2 information has been used successfully to develop new products, create product positioning strategies, target new markets, design ad campaigns, measure media audiences, and predict consumer and business trends (Weinstein, 1994).  It is one of the most valuable and useful tools related to psychographic research.

            There are, however, several weaknesses identified with the VALS 2 system.  VALS 2 measures individuals, but most consumption decisions are made by households.  The categories are also not completely exhaustive.  One person may fit in more than one.  Finally, the values and demographics measured by the system may be inappropriate for certain products or situations.  These weaknesses, nevertheless, do not outweigh the positive effects of using VALS 2. 

            Pros & Cons of Using Psychographics – Psychographic research has several positive and negative aspects associated with it.  Psychographic information can be extremely valuable to a marketer when used correctly.  Psychographics allows marketers to better define and explain a market.  It provides a more complete profile of the target market. 

Psychographics helps marketers understand consumer behavior (Weinstein, 1994).  Consumers behave unpredictably.  “They demonstrate loyalties to brands (or not), blindly follow trends (or not), and buy according to their convictions and aspirations (or not).  Individuals are innovators in some product categories, but not in others.  What they say they do and what they really do are seldom the same” (Heath, 1996).  Psychographics is one way to clarify the behaviors consumers exhibit.

Psychographics, like all other segmentation tools, also helps minimize risks (Weinstein, 1994).  On the other hand, psychographics also has several limitations associated with it.  Psychographic research is complex and often confusing.  It can also be very costly.  Completing psychographic research usually costs upwards of $50,000 (Weinstein, 1994).  Critics also claim that the categories psychographic research places consumers in overlaps so much that it does not differentiate among consumers.  Psychographic research can also be lengthy and narrow, or unable to be projected onto an entire population (Gunter, 1992).  Even with these limitations, however, psychographics have been used successfully innumerable times. 

Examples

            Porsche - Porsche Cars North America is an example of a company that uses psychographics to divide up its consumers.  Porsche sells cars costing between $40 and $82 thousand to a demographically homogenous group, consisting of 40-something male college graduates earning over $200,000 per year.  Even with this information, Porsche’s sales were slipping.  They hired a team of anthropologists to figure out the psychographic composition of their consumers.  What they found surprised them.  They had been marketing to the wrong people in the wrong ways.

            After gathering psychographic information on their consumers and implementing marketing plans tailored to these specific segments, they ended a seven-year slump and sales rose 48% (Taylor, 1995). The automotive industry, in general, attempted to divide its consumers into four psychographic segments: participants, functionalists, ego show-offs, and do-it-yourselfers (Mitchell, 1994). Porsche consumers were divided into five segments according to their psychographic characteristics (Taylor, 1995).  These groups included:

·        Top Guns: Driven, ambitious.  Power and control matter.  Want to be noticed.

·        Elitists: Old money.  A car is just a car, no matter how expensive.

·        Proud: Ownership an end in itself earned by hard work, no need to be noticed.

·        Bon Vivants: Worldly jet setters and thrill seekers. Car heightens the excitement in their already passionate lives

·        Fantasists: Their car is an escape, uninterested in impressing others, may feel a little guilty about owning a Porsche (Taylor, 1995).

 “The refinement of raw automotive power – The new 911 Turbo.”

“Sports do not build character. They reveal it. Competition challenges us to reach deep inside and push ourselves past previous limits towards new, higher achievements. We discover something about strength, perseverance of the human spirit and the importance of choosing the right equipment. Which is why you choose Porsche.”

This second Porsche advertisement positions the Porsche and the Porsche owner as being stylish, sporty, and hip.  This advertisement would most appeal to the driven and ambitious, or the “Top Guns.”  They want to be noticed, as the bright yellow car would indicate, but also have other interests.  This advertisement might also appeal to the “bon vivants” psychographic segment or “participants” because of the excitement and love for life the ad depicts.

            Absolut – The alcoholic drinks market has been divided into three psychographic segments: image seekers, task seekers, and commodity drinkers (Sampson, 1992).  The image seeker would be someone that buys a bottle of Absolut Vodka instead of the Osco brand because of the image it portrays.  The task seeker is best described as the person that buys an alcoholic beverage to quench their thirst or, like many college students, to get drunk.  The commodity drinker is not necessarily an alcoholic.  Drinking is a way of life for them.  They drink nearly every day either with meals or after work.            

The campaign promised to help farmers reduce herbicide costs and increase profits to provide more for their families and, ultimately, to help them pass down the family farm to their children.  The advertisement recognized that farmers use more than just pure reason and logic when deciding which herbicide to use.  It helped Basis gain a competitive advantage in an otherwise very cluttered marketplace (Bernick, 1996).  While other pesticide manufacturers base their advertising on how well their chemicals kill pests, the Basis campaign took agricultural advertising to a new, emotional level.

        “We got there by taking leaps.” “It’s what DuPont has always done, taking leaps that             change everything.”

The DuPont advertisement above is not the same one I described in the previous paragraph, but it also appeals to a certain psychographic segment.  The advertisement appeals to DuPont consumers who value freedom and innovation.

As each of these illustrations demonstrate, psychographics is a valuable tool in a wide range of marketing situations.  Psychographics can help reach consumers of everything from cars and alcohol to agricultural products.

Relevant Web Sites

Porsche                        www.porsche.com

Absolut                         www.absolutvodka.com

Miller Brewing Co.     http://www.millerbrewing.com

DuPont                          http://www.dupont.com/ag/us/

VALS2 Survey            http://future.sri.com/vals/valsindex.shtml

USA Today                    http://www.usadata.com/

Notes on Personality and Psychographics, Ric Johnson, University of Alberta http://courses.bus.ualberta.ca/consumer-behavior/Lectures/PrsnltyPsygr/index.htm

Test for understanding

1.      An advertisement for a Porsche shows someone using the car mainly as a means of safe transportation, without much emphasis on the speed of the car or the admiration of others.  This advertisement would most appeal to which group?

a.       Top Guns

b.      Elitists

c.       Bon  vivants

2.      Psychographics includes:

a.       lifestyle

b.      attitudes

c.       interests

d.      opinions

e.       all of the above

3.      Psychographic research is limited because:

a.       Psychographic categories are often not exhaustive.

b.      Psychographic research is expensive.

c.       It does not help marketers understand consumer behavior.

d.      Only a and b

e.       Only  a and c

4.      The most precise segmentation tool used by marketers is:

a.       geographics

b.      psychographics

c.       demographics

5.      VALS 2 divides consumers into how many segments?

a.       4

b.      10

c.       30

d.      8 

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Answers:1=b, 2=e, 3=d, 4=b, 5= d

 
References

Bainbridge, H.  (1999).  Beyond demographics.  Wireless Review, 16(11), 61-2.

Bernick, K.  (1996).  Describing the customer psychographics: hype or hard-hitting strategy?  Agri Marketing, 34, 18-20.

Gunter, B. & Furnham, A.  (1992).  Consumer Profiles: An Introduction to Psychographics.  Routledge:  New York.

Heath, R.P.  (1995).  Psychographics: Q’est-ce que c’est?  American Demographics: Marketing Tools Supplement, 74-9.

Hawkins, D.I., Best, R.J., & Coney, K.A.  (1998).  Consumer Behavior:  Building Marketing Strategy, 7^th edition.  Irwin/McGraw-Hill:  Burr Ridge, IL.

Heath, R.P.  (1996).  The frontiers of psychographics.  American Demographics, 18, 38-43.

Mitchell, V.W.  (1994).  How to identify psychographic segments: Part 1.  Marketing Intelligence & Planning, 12 (7), 4-10.

Sampson, P.  (1992).  People are people the world over:  the case for psychological market segmentation.  Marketing and Research Today, 20, 134-48.

Taylor, A.  (1995).  Porsche slices up its buyers.  Fortune, 131, 24.

Weinstein, W.  (1994).  Market Segmentation: Using Demographics, Psychographics, and Other Niche Marketing Techniques to Predict and Model Customer Behavior.  Probus Publishing Company:  Chicago.