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Significance Of Segmentation And Importance Of Psychographic Segmentation


Task: What is the significance of demographic and psychographic segmentation related to marketing strategies? Lay stress on the importance and execution of psychographic segmentation.


Need of the customers is an important factor that an organization has to consider while making its marketing strategy. The organization has to interpret and satisfy the need of the customers in order to excel and to leave the competitors behind. The concept of individual segmentation helps in segregating different customer’s basis their particular needs and wants in order to make specific and tailor made products. Segmentation is based on different characteristics of the customers divided into four segments, geographic, psychographic, behavioral and demographic (Sartika & Abdillah, 2020). In the following write-up, demographic and psychographic segmentation have been discussed in order to showcase its importance. The paper further discusses how psychographic segmentation is more preferred than other segmentation options and how its application can be executed.

Psychographic segmentation

What is demographic segmentation?
When a market is divided into various segments basis age, gender, religion, education and occupation, it is known as demographic segmentation. The division helps an organization to allocate its budget more efficiently for advertising and marketing its products and services (Gogoi, 2020). It helps them to target their customers instead of walking around the entire market.

What is psychographic segmentation?
Psychographic segmentation is breaking down the customers into different group’s basis their beliefs, value and the reason behind their existence (Gajanova, 2018). In this type of segmentation, the aspects which influence the purchasing behavior of a consumer is taken into account like his lifestyle, his status in the society, his opinions and his activities.

Discussing the importance of demographic and psychographic segmentation in marketing:
The division helps the organizations in reduction of costs related to marketing for some consumers who are disinterested in their products or services and in turn helps in increasing their overall revenue.

The demographic segmentation helps to do the following things:

Building long relationship with the customer’s: When an organization connects with some particular individual customers it helps in building loyalty among the customer’s. It helps the customer’s to relate with the products and services being made by an organization basis their specific needs (Gogoi, 2020).

Improving products and services: When an organization receives a regular feedback from its loyal customers it helps it to improve its products and services or develop some similar products or services. The organization can put themselves in place of its customers and understand their needs.

Clear marketing strategies: Marketing strategies becomes more clear and specific through demographic segmentation. It provides a clear vision and helps in future advertising planning’s. Through the application of demographic segmentation, time, budget and resources are saved from being wasted.

The psychographic segmentation helps to do the following things:

Perceive customer value: Psychographic segmentation helps in understanding and analyzing the value that a customer has with regards to a product or a service. It helps an organization to adjust its products or services as per the value placed by its customers.

Helps in understanding the concerns: Through psychographic segmentation an organization can understand the concerns or the issues faced by its customers while using its products and services. It helps in further improvement and to build a strong relationship (Gogoi, 2020).

Understanding the choice: Every customer has a reason behind buying a particular product or using a particular service. Through psychographic segmentation an organization can find out such reasons behind buying behaviors which will help them to improve their products and services. It will help the organization to attract a new set of customers. 

Variables to demographic and psychographic segmentation
egmentation has its own variable which is used to divide the people into different groups. Particular characteristics of people help in segregating them in order to find out their similarity for e.g. if an organization is segmenting a market basis class of the people residing there then class is considered as a segmenting variable.

Psychographic segmentation

Source: (Sartika & Abdillah, 2020)

Both demographic and psychographic segmentation has a set of variables basis which the market is segmented (Sartika & Abdillah, 2020).

The variables of demographic segmentation have been enumerated below:

Age: To need something is a changing variable for every person irrespective of age. But there are certain people who remain loyal to a particular product or service irrespective of their age. It is the responsibility of an organization whose product or service is being consumed by the person to follow his needs and wants in order to serve him better. A company marketing a soap brand will market its soap differently for children and adults. It may use different shapes and colors to make soaps for children but the same soap will not be preferred by an adult so the company has to either make a regular soap or may provide some additional offers in order to attract the adults (Sartika & Abdillah, 2020).

Gender: It is one of the common variables for an organization to segment consumers while preparing to market its product and services. Products or services related to beauty are more preferred by females than men’s. Similarly any organization dealing in clothing, cosmetics, magazine printing, etc. will prepare its marketing tactics basis this variable. An organization dealing in electronics will target males through its marketing initiatives rather than females as the former are more interested in new technological gadgets (Biswajit, 2017). So keeping in mind the gender of its customers and there different purchasing decisions, an organization can prepare its marketing campaigns.

Income: It is another factor basis which certain organizations dealing in expensive and luxurious goods and services target the consumers with higher income. There are companies whose products and services can be availed only by higher income groups like the company producing Lamborghini or Royals Royce, etc. Such companies know that making a marketing strategy for middle class people will be a waste of resources and money so they directly target the higher income groups (Hati, Gayatri & Indraswari, 2017). Likewise company like TATA manufacturing a NANO has targeted the middle income group.

Religion: Segmentation also depends upon religious beliefs and consumers of a certain community are divided into different target groups. Companies involved into making packed foods ensure that their products are sufficiently labeled in order to signify veg and non-veg. The red mark on any product signifies having some content which vegetarians cannot have and the green mark on any product signifies that it can be eaten by vegetarians. Some communities especially Mohammedans do not usually have a product with red mark on it until it is clearly known whether the product consists of egg or it has some halal content. Companies are ware about all the religious beliefs so they do provide complete information about the product on its packaging in order to target a specific set of consumers. There are certain companies and stores who mention about its products being halal like chicken being sold at Wal-Mart is stamped as halal in order to target the Muslim community (Gajanova, 2018). There are certain banking institutions as well who targets a specific set of people with certain religious beliefs like Mohammedans do not believe or practice in giving or taking interests on any money transactions. Certain banks are aware about this practice so they have a different policy to target Mohammedans wherein they do not charge or provide any interest (Hati, Gayatri & Indraswari, 2017).

Occupation and education: Occupation and education is also considered as one of the variables in demographic segmentation. There are certain products and services which are being targeted at a specific set of people like making organic clothes or organic food for people which is preferred by doctors or educated people as they are well aware about its benefits. Companies into making fast food targets those people who have no time or less to invest in preparing and having the food for e.g. the students may like to eat fast food in order to save time. Education also plays an important role in order to determine the quality and effectiveness of products and services. A highly educated consumer will look into the ingredients of any product before using it whereas a consumer who is less educated may only want a product as it is a necessity for him, he will not check its ingredients. So companies while making their marketing strategies do keep in mind the education and occupation of its consumers.

The variables of psychographic segmentation have been enumerated below:

Lifestyle: Every people living on this earth have a definite set of behavior and living patterns irrespective of the age in which they are. If in a family there are some adults and children then they will have a different lifestyle as compared to a family which has only adults or older people. The family with children will tend to use products and services which make their life easier due to their busy life schedules like using a dishwasher or vacuum cleaner instead of personal cleaning. But a family with adults or older person will not utilize such products rather they will personally ensure that that everything is neat and tidy. The difference is only due to lifestyle and behavior patterns (Gajanova, 2018). The new generation people are more into trying new innovative things in order to ease their daily burden whereas the older generation sticks to their traditional way of living. The difference helps the organizations to make marketing strategies for different sets of consumer’s basis their different lifestyle.

Opinion, hobby and interest: Every individual has an opinion, hobby and interest which may or may not be liked by another. But there is a possibility that a set of individuals may have a similar opinion, hobby or interest for e.g. there may be more than one person interested in using organic products or khadi products (Gajanova, 2018). Marketers need to collect the data of such persons so that they can specifically target this set of people. Most of the organizations dealing in essential products have a set of organic products section in order to attract people who understand the importance of using such products. Wal-Mart has a separate department which provides organic products.

Loyalty: There are customers who do not want to change their habit of using certain products or services. They are the loyal customers of a company and they have become a regular customer. Organizations can use their segmentation and marketing strategies in order to hold back such customers rather than focusing to create a new set of customers. Regular messaging helps in retaining back the loyal customers. Degree of loyalty can also become one of the parameters of psychographic segmentation in order to market the products and services (Hati, Gayatri & Indraswari, 2017). A dedicated focus will help the organization in improving its products or services in order to retain back the loyalty of its longtime customers and fulfill their needs and wants. It will further result in saving time and resources in order to find out new customers.

Occasions: The psychographic segmentation variable, occasion helps in segmenting consumer’s basis their buying and purchasing of certain products. A consumer may not like eating or buying chocolates but during festivals, giving a box of chocolate may be considered as the best option for the same consumer. But there are certain consumers who like eating chocolates irrespective of any occasion (Biswajit, 2017). Marketers can attract all its customers by applying new techniques in order to get hold of both types of consumers and this can be done by giving offers and discounts, irrespective of any occasion. By applying new offers and schemes the marketers can change the perception of consumers towards their products and services. If an organization is into making certain products which are occasionally available then it is the best option to use psychographic segmentation.

Seeking benefits: In this psychographic segmentation variable, the marketer needs to understand and investigate the benefits which are being looked at by a consumer in a product or a service. If a consumer wants to buy an air condition then there is a possibility that he may also want the air conditioner to purify the air which comes with a stabilizer and would save money. Haier is one such company which has introduced an air conditioner having air purifying feature (Biswajit, 2017). The company has analyzed the changing needs and the benefits that a consumer is looking for so innovation is the best technique which can be applied to cater such needs.

Usage: This psychographic segmentation variable helps in bifurcating or dividing consumer’s basis the usage of any product or services. These are categorized as light, medium and heavy depending upon the usage. A market having products related to technologies like mobile phones, laptops, etc. may come under heavy user groups whereas a market having plastic related products may come under medium user groups.

Why preferring psychographic segmentation?
When a marketer is unable to judge the wants and needs of its customers after a thorough research in the form of responses and feedback, it is a time for him to switch to psychographic segmentation. It is one of the best methods to market the products and services to a set of consumers who may have different characteristics. There are experts who are of the opinion that the application of psychographic segmentation may yield higher profits in future (Pitt, Bal & Plangger, 2020). Its application can increase the buying frequency, can add value for a lifetime, can generate greater loyalty and many more such benefits can be yielded. Once the application of psychographic segmentation is complete, it will help the organization in developing a marketing plan with the help of other members of the team.

How to execute the application of psychographic segmentation?
Execution of psychographic segmentation depends upon different ways basis which its objectives can be fulfilled. Basically the segmentation depends upon the size of the market in which the product or the service is to be introduced the amount of money being invested that is the budget and the time that is to be involved. There are some well-known approaches being discussed below which can be applied:

Researching primary market: Surveys can be conducted in order to analyze the attitude of the consumers. A statistician can be hired in order to analyze the data gathered by considering factor analysis to understand patterns and groups. To apply this method the marketers need to have an insight to judge where exactly, lays the difference so that such areas can be investigated (Pitt, Bal & Plangger, 2020). The research can be accompanied with qualitative study in order go deep inside in certain areas. There is a possibility that the research may influence the outcome by reflecting the true picture of the market. So the marketer needs to be prepared to reanalyze their marketing strategies.

Market research through Google survey: In order to conduct this survey the marketer needs to have an understanding about the elements which is creating a difference. The imaginary difference can be tested through some less expensive digital methods or a statistician can be hired for a thorough analysis. But it cannot be stated that the survey results will be accurate, there is a possibility of errors (Biswajit, 2017). The method is more appropriate for low budget firms rather than guessing about the needs and wants of the consumers.

Artificial Intelligence marketing: In case a marketer needs to conduct certain tests rapidly, this method can be used. It helps in learning and improving. It is conducted through predictive analysis which helps in in-depth learning. The method has a bright future and it can be seen to give a tough fight to other digital and content related marketing tactics in near future. To match its analysis will be difficult in future. The method will help in optimizing huge data which will be produced through different online platforms and instruments which can become a part of the segmentation process in order to analyze the buying behaviors (Pitt, Bal & Plangger, 2020).

At the end, it is the marketer who has to ascertain the type of method he needs to use. He has to ensure that if in case he is taking help from a third party then the party should be able to deliver a perfect segmentation model which can do the following:

  • To be able to act as per the provided insight, this involves practical application.
  • The difference in the groupings could be clearly seen and there should not be a point where it can be seen that people can be counted in both groups.
  • The model delivered should not be limited to a certain subject rather it can be used more than once with a different set of subjects. It must be reproducible.

Increase in marketing return on investment through psychographic segmentation

If a marketer is able to segment its market basis psychographic characteristics then it is said that he is more targeted. He will be in a position to select appropriate channels, use appropriate messaging techniques and would be able to maximize all the offers to the rightful segments. In turn there will be a wise expenditure being made and the marketer will be able to see an increase in the ad spend efficiency. There is a possibility for a greater return on the investment being made (Gajanova, 2018). The marketer can include motivational messaging in order to attract more consumers. Using the psychographic segmentation, the marketer will be in a position to make improvements in many areas and be ready to reap its benefits.

So in conclusion it can be said that segmentation helps in dividing the market into different group’s basis some particular characteristics. It helps an organization to focus on a specific group and develop a specific advertising program which can cater to the needs of a particular segment or can help in developing some new products. Lately it has been seen that marketing is more specific to a particular target market rather than mass marketing. This type of marketing helps an organization to reach to more customers and analyze their needs through studying them. The data for demographic segmentation is easily available in order to market the products and services. Psychographic segmentation is important in order to place the same product or service in a different manner for different sets of people. It helps in attracting more people without making many changes in the product or service.

Reference List

Biswajit, R. ( 2017). Psychographic segmentation of E-retailing consumers for electronics goods in Kolkata. International Journal of Management, IT and Engineering, 7(4).

Gajanova, L. (2018) Strategy of Online Content Marketing Based the Demographic and Psychographic Segmentation. Marketing Identity, 6(1).

Gogoi, B.J. (2020) Changing consumer behavior: segmenting consumers to understand them better. International Journal of Management, 11(5).

Hati, S. R. H., Gayatri, G., & Indraswari, K. D. (2017). Exploring the Potential Segmentation Bases for The Islamic Banks: A Qualitative Content Analysis. Paper presented at Bristish Islamic Economics Society (BIES) Conference 2017, Durham, United Kingdom.

Pitt, C.S., Bal, A.S. & Plangger, K. (2020), "New approaches to psychographic consumer segmentation: Exploring fine art collectors using artificial intelligence, automated text analysis and correspondence analysis", European Journal of Marketing.

Sartika, F & Abdillah, L. (2020) Identification on Product Segmentation, Demography, Psychography, and The Impacts on Buying Decision. International Journal Administration, Business & Organization, 1(1).


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