Psychographic segmentation: how to increase communication ROI by examining values, beliefs and motivations.

For many years, demographics have governed how communication target their campaigns. The problem is that even though individuals in a specific demographic category share some common characteristic, such as age, sex or income, the psychographics of these groups--their values, motivations and beliefs--are not homogeneous. There are multiple motivations for a behavior, and people in a specific demographic category have a wide range of attitudes. Although demographics can turn up objective facts, such as that your target customer owns a car, they can't tell you why the person bought the car. Psychographics can. They measure the motivations behind a behavior, including why individuals in a specific generation or income bracket will accept or reject a message, act on it or ignore it. Using psychographics can help communicators improve the quality and accountability of their campaigns by zeroing in on the most receptive audience for their message.

COMMON OBSTACLES

When first beginning to understand and apply psychographics, communicators often run into three impediments.

* The first is using demographics to infer an audience's motivations or behaviors. For example, the suggestion that all mothers believe it is important for their children to play a musical instrument. Such inferences are based on intuited leaps of faith, and the relationships they postulate do not necessarily have a basis in reality.

* A second obstacle is the multiplicity of attitudes and motivations within an audience. There may be multiple motivations for a behavior, and individuals in a demographic category have a wide range of attitudes toward a subject. Statements such as "The primary motivators for Latin

Americans are home and family" or "Resistance to authority is a hallmark of Generation Y" are oversimplifications.

* The third obstruction to understanding audience motivation lies in creating messages targeted to an average. An "average consumer" does not exist, and messages targeted to this mythical audience remain too general to convince or motivate anyone. In addition, an "average" perspective submerges and ignores the real motivational differences that occur naturally within every audience.

For example, when attitude toward a subject or awareness of it is measured before and after a communication, the results are usually reported as averages of the total population. Before an information campaign, a communicator may note that an average of 42 percent of an audience agrees that an employee benefit is important, whereas an average of 58 percent agrees afterward. The problem with reporting averages is that a segment within that average may feel far more strongly about the subject than others--and that one segment may be more critical to the company's success than any other.

SUCCESS THROUGH SEGMENTATION

These roadblocks can be removed by applying psychographic segmentation. When attitudes, motivations, personality characteristics and belief systems are analyzed mathematically or statistically to determine groups with substantially different attitudes, the result is a psychographic segmentation. When psychographics are segmented, the need to either oversimplify or use averages evaporates, and communicators can select the most effective message for each segment. For one segment a message may confirm an established viewpoint, and for another, a targeted message will change a mindset. Segments that consider an issue or subject to be far more important than does the mythical average could be made up of opinion leaders who influence others' viewpoints. When these weighty segments are measured in a statistically accurate way, a communicator can compare before and after measures--by segment--to determine the true impact of a program.

Return on investment can be further enhanced by examining a psychographic segment's demographics. For example, a segment may be receptive to a particular product, but lack the financial resources to actually purchase it. Or, although receptive, those in a particular segment may avoid mass media to such an extent that few messages, no matter how relevant, will reach them. The behaviors of a particular psychographic segment can confirm for the communicator whether a segment that evinces a particular attitude actually follows through with a tangible behavior. Looking at all the facets of a psychographic segment establishes whether or not it is a worthwhile target, allowing efforts to be focused on the most profitable segments, as well as those with the highest potential.

BREAKING DOWN BABY BOOMERS 

For many organizations, baby boomers and mature consumers are an important audience. People 40 and older compose 42 percent of the U.S. population, and will grow to almost half (47 percent) by 2010. This immense demographic group is responsible for 66 percent of all expenditures tracked by the Consumer Expenditure Survey (CXS); enjoys 64 percent of all pretax income and controls 65 percent of all discretionary spending; and, according to the U.S. Bureau of Labor Statistics, comprises 47 percent of all employees.

Since 1989, Strategic Directions Group in St. Paul, Minn., has conducted seven studies, including surveying 20,000 people 40 and older, to develop a comprehensive perspective on this important U.S. market. Each study gathered demographics, behaviors, and media and Internet usage, which when combined resulted in the development of nine psychographic segmentations for this market: Lifestyle, Financial, Travel, Food, Car Purchase, Car Maintenance, Health, Health Information and Health Compliance.

Knowing what motivates baby boomers--by segment--can be useful in many applications. One is persuading individual boomers to continue working after retirement, thereby benefiting the company with their high-level skills. For example, the Lifestyle segment identified by Strategic Directions Group is divided into categories, including Financial Positives and Upbeat Enjoyers. Examined by their demographics, both are affluent, educated segments. But whereas Financial Positives have planned for a leisurely retirement with no interest in returning to work, Upbeat Enjoyers are definitely interested in continuing to work after retirement.

The behaviors of each segment parallel their attitudes. At a statistically significant level, fewer Financial Positives who have retired with no intention of returning to work are now working full or part time than are the other Lifestyle segments. One in three (34 percent) once-retired Financial

Positives now works for pay at some level, but almost half (47 percent) of those in the other segments do so.

A communication professional attempting to convince skilled employees to return to the company on a part-time or temporary basis after retirement will have far greater success in motivating an audience of Upbeat Enjoyers to do so than one made up of Financial Positives. Because Financial Positives are attitudinally opposed to working after retirement, a "return to work" message will fall on deaf ears. In contrast, Upbeat Enjoyers are receptive to the proposition.

COMMUNICATOR'S ROLE ENHANCED

At a time when communication overload is common among all audiences, communicators must send relevant messages to those who are most receptive. Using psychographic segmentation to design and implement a communication strategy results in more effective and efficient campaigns, and changes the communicator into a strategist rather than a tactician, moving his or her work from that of an inexact art to an exact science.

As companies demand more from their communication programs, psychographic segmentation strategies are proving more useful than generalized averages or broad demographics in every phase of communication, from planning through implementation and evaluation.

RELATED ARTICLE: HOW TO TARGET YOUR MOST PROFITABLE MARKET

Many marketers run into trouble when they try to be "all things to all people" and attempt to market their product to everyone. Instead, try to discover the demographics and psychographics of your niche--your specific (or greatest) market. Then market to that audience more than any other, and as often as possible.

Demographics are the basic qualities and characteristics of your market. They include age, gender, culture, employment, industry, income level, marital status, location and so on. On the other hand, psychographics are made up of the emotional and behavioral qualities of your market. They include the emotions, reasoning, history, psychology and thought processes behind people's decision to buy your product.

INTELLIGENCE GATHERING

In other words, demographics include the segment of the population that needs your product, whereas psychographics define those within your demographics who want your product. If you don't know this, you can easily conduct a survey as part of a marketing research campaign among your current clients, potential clients and clients of other similar products or companies. Don't underestimate your greatest source for marketing research--clients!

For example, here's a list of questions you should ask:

* Why did your clients buy your product? If they didn't buy it, why not?

* Why, specifically, did they buy from you or your competitor?

* Why did they not buy from you or the competition?

* Why did they buy from you at that specific time?

* Why did they buy right away (on impulse) or take their time?

* If they shopped around, why did they? Where did they go?

* What do they like the most and the least about the product?

* Would they refer you to others? Why or why not?

* What specific benefits do they see in your product?

* What specific benefits do they see in your competitor's product?

These are immensely important questions that can help you, guide you or even cause you to change your approach altogether. Don't discount the power of doing marketing research, especially within your own back yard. You want to know not only who buys from you but, more important, why they do. In other words, think psychographics and not just demographics.

TARGET YOUR MARKET

To illustrate the difference between demographics and psychographics: Hair transplant doctors cater mainly to men who have experienced hair loss and are able to afford an expensive operation. Men--bald men, specifically--are potential patients because they may need more hair. Psychographics, on the other hand, go a little further. In this example, potential patients are men who not only need but also want more hair--because not all of them do. (It's a matter of priorities, just like the type of clothing one chooses to wear.)

Therefore, to target this market as precisely as possible and thus generate better leads, doctors must take the psychographic element into account, such as their patients' lifestyles, their interests, the types of industries in which they work (certain industries are image-related), as well as their previous buying habits (such as men who have already invested in other hair-replacement solutions)--the more information the better.

If you arm yourself with as much of this type of information as possible beforehand, your chances of achieving greater success with your product will increase. Just as you can't be everything to everyone, you shouldn't be targeting everyone for everything.

Michel Fortin, based in Ottawa, Canada, is a direct response copywriter and consultant dedicated to turning businesses into powerful magnets. Visit his web site for more information, www.successdoctor.com.

Carol M. Morgan and Doran J. Levy, Ph.D., are principals in Strategic Directions Group Inc. in St. Paul, Minn., and authors of "Marketing to the Mindset of Boomers and Their Elders" (www.attitudebase.com). They can be contacted at [phone].