Most researchers understand what segments are, and how they are used – but do you consciously think about the different types of segments? It is important to understand the types of data you are incorporating into a segment, and how to collect it – to fully leverage the power of segments.
Three powerful types of market segmentation that we recommend:
Demographic Segmentation: Observations that identify and characterize respondents or users based on age, income, etc.
Behavioral Segmentation: Observations that divide your audience based on observed actions or decisions (i.e. behaviors) such as shopping habits or repeated purchase loyalty.
Psychographic Segmentation: Segmentation based on attitudes, beliefs, or emotions, which are typically self-reported.
While the focus of most surveys is to track respondent behaviors and preferences, it is important to understand who that person is. Demographic questions should always be included with a survey – and they are vital in helping the researcher develop demographic segmentation.
Demographic questions are any questions that aim to help the research better understand the identity and characteristics of each respondent. Demographic surveys are administrated to seek basic information such as Age, Income, or Family Size, and allows the survey designer to understand where each person fits in the general population – and of course, how they fit into your client’s market.
The most commonly used demographics in segmentation are Age, Sex, Marital Status, Family Size, Occupation, Education Level, Income, and Ethnicity. What do all of these qualities have in common? They are all concrete characteristics (not opinions) that help you narrow down which market segment the people in your target audience best fits. This means that you can split a larger group into subgroups using cross tabs or similar methods.
Learn how a beverage manufacturer used segmentation to isolate a very specific characteristic among respondents.
How to Collect Demographic Information
The advantage to incorporating demographic data into segments is that it is easy to collect – primarily because you are asking for facts of record, not opinions or feelings. There also exist a number of both primary and secondary methods to collect this data, which is advantageous to the researcher. Asking your customers directly, especially as part of an existing survey, is free and accurate; but can be time-consuming. You can also obtain demographic data by looking at social media and other online profiles.
There are countless second-party and third-party data providers, including marketing service providers and credit bureaus. Public records can often be gotten for free, such as those kept by the USPS (United States Postal Service) and the US Census Bureau.
Survey respondents can also be segmented based on their behaviors. Collecting and analyzing this data is a crucial component of Applied Behavior Analysis (ABA). Behavioral segmentation refers to a process in research which divides customers into segments that are defined by their behavior patterns, often when they are interacting with a particular business, product, or website. Behaviors are typically defined by:
- Their use of your product or service,
- Their actions when someone interacts with your product, website, app, or brand,
- Their purchasing behavior and tendencies, such as buying special occasions, or other triggers.
Dividing your audience based on their demonstrated behaviors allows you to create messaging that caters to those behaviors. You can also use it to identify future product enhancements or up-sell opportunities.
Some example behaviors that you might observe and record:
- Shopping Habits (Especially online): You might consider your users’ online shopping habits across all related sites or storefronts – not just your own. This may correlate with the likelihood that they will make an online purchase on your site.
- Usage Rate: Observe or ask your consumers how often they use your products, and under what circumstances. Your product messaging could change depending on if your behavioral segment is a heavy user, medium user, or a non-user that could be converted.
- Actions taken on a Website: You can collect user experience behavioral by tracking actions on your software or online website, and understanding how the user interacts with specific elements. For example, looking at how long someone stays on the site, whether they read your pages or blogs all the way to the end, which content they are most interested in (often organized by keywords present in the copy), etc.
- Loyalty: After using your product or service for some time, customers will develop brand loyalty (or at a minimum, recognize the switching costs of moving to a competitor). Asking questions around this, or observing their repeated usage over time, you can categorize customer based on how loyal they are to your brand.
Psychographic is similar to behavioral segmentation, except that it deals directly with characteristics that are mental, attitudinal, or emotional. In fact, it is sometimes referred to as attitudinal research or attitudinal segmentation. The primary difference between behavioral and psychographic segments, is that behavioral variables are actions that can be observed; and psychographics are typically self-reported. Some examples of psychographic characteristics are interests, beliefs, attitudes, lifestyles, and personality traits.
Although psychographic attributes are more difficult to observe and record, they can absolutely provide you valuable insight into your audience’s motives, preferences, and demands. Although demographics and psychographics demonstrate the what, when collected correctly, psychographics provide you the why.
For example, let’s say you are representing an automotive company, and the market segment you are addressing are newlyweds between 25-40 with a household income above $60k (those are demographic variables). Some members of this segment convert, but a large percentage are not. By adding psychographic information into your surveys or focus groups, you may find that participants in your demographic segment are environmentally conscious and value community. Based on this information, you could help your client create ads that show people going out to restaurants in the car, or discussing your low emissions. If this is successful, it might make sense to modify your segments to incorporate the psychographic variables, to further focus on these individuals. You can collect psychographic data about your audience, consider adding questions to surveys, personal interviews, or focus groups that drive at attitudes or personality traits. The trick is to ask these questions in ways that expand beyond the direct usage of your product or service. In our above example, we asked questions about their views on political issues (such as the environment) or their need to seek a sense of community. These were not directly related to auto ownership, but asking tangentially-relevant questions got us insights that you can directly use to improve your product or messaging.