Market Segmentation - Psychographic Method
By Mary Anne Winslow Market segmentation is definitely one of the most significant parts of the marketing process. In this article I will examine the car industry in the UK. We will mostly concentrate on the psychographic method of the segmentation. The weaknesses and strengths of the method will be discussed here. I will also look at several other market segmentation methods in the car industry. Market segmentation is an essential part of the marketing process. Itallows firms to allocate their market into groups that have the samesimilarities which are relevant for decision making in the marketingstrategy. Then firms can target their market to serveit effectively, they can differentiate the market, define theopportunities and threats and tailor the marketing mix. To be useful, segments selected shouldbe measurable, substantial, accessible, differentiable and actionable.The market can be segmented in different ways; thethree most popular techniques used are: behavioural segmentation whichanalyse benefit sought, purchase occasion, purchase behaviour, usageand perception and beliefs; the second is psychographic segmentationwhich analyse the lifestyle and the personality of consumers and thethird is profile segmentation which base its researches ondemographic, socio-economic and geographic variables. Researches show that there is no exact definition for psychographicsThe basic basis of psychographic research is that themore firms know and understand about their customers the moreeffectively they can communicate to them.Psychographic research can identify similar values, attitude, andlifestyle or personality groups, but the two main variables used inpsychographic segmentation are the lifestyle and the personality ofthe customer: Personality is an individual’s pattern of character thatinfluences behavioural responses such as self-confidence, dominance,sociability. This variable is important to be understood becausepeople tend to see themselves in a way and purchase products tosatisfy their self-concept so people see them in the way they want.Lifestyle is a person’s pattern of living as expressed in this or herinterests, opinions and activities. It is considered to be a richdescriptor of people buying patterns. Often, people buy brands becausethose brands relate to their way of living. For example a successful businessman in his late thirties will buy aBMW because the image the brand shows in its advertisement is power,success and high standard of living. Psychographics are necessary tofirms because they can investigate into specific product category andbrand decisions by consumers and can be used to paint the big pictureof consumer lifestyle. Psychographics has proven to be a very useful tool for organisationsin their marketing research. It identifies target markets that couldnot be isolated using only demographic variables. Psychographics are designed to measure the consumer’spredisposition to buy a product, the influences that stimulate buyingbehaviour, and the relationship between the consumer’s perception ofthe product benefits and his/her lifestyle, interests and opinions.Often researchers have turned to psychographicsbecause of the limitation encountered in demographics. An advantage ofpsychographics is that it describes segments in terms directlyrelevant to advertisement campaign and market planning decisions oforganisations. It has also appealed marketersfor its power to combine the richness of “motivational research” withthe statistical sophistication of computer analyses and, providecorporate strategists with rich descriptive details for developingmarketing strategy; it has the ability to givemarketers a big image of the consumer’s lifestyle. There is also theappealing advantage that psychographic segments which are developedfor markets in one geographic location are generalizable to market inother geographic locations. Psychographics areessential for discovering both the explicit and the hiddenpsycho-social motives that so often spell the difference betweenacceptance or rejection of the brand. But psychographics have limitations. Researchers have foundreliability problems: first there are no standardized methods toevaluate the stability of results of psychographic techniques andincertitude in this area weakens predictive power. Therefore it willthrow doubts in whether the segment and market targeted are reliableor not. The main problem is that psychographics attempt to measureintangible and diffuse concepts, values and attitudes are not easy tomeasure as every single person has a different personality andconsequently have different opinions and interests. It has also beenpoint out by that there is little cross-studyevidence on reliability so findings cannot be compared and improved. The car industry in the United Kingdom is very large but is resumed bytwo monopolies: the first one is a monopoly in favour of Ford whichowns most of the leading brands. The second is another monopoly whichis described as a “complex monopoly situation arising from theselective and exclusive distribution system used by most car suppliersin the United Kingdom.” by the United Kingdom Parliament. The UK has the biggest used car market in Europe: of the 26 millioncars on the British road only 2 million have been bought new in thepast twelve months (United Kingdom Parliament (1998) Jaguar creates cars for customers that are seeking distinctive saloonsand sports cars which deliver “stimulating performance and captivatingstyle”. They have built an image for their cars whichcorresponds to what their potential buyers want to identify themselveswith. The company is seeking to reflect the individuality of itsconsumers. Its image is one of luxury, sport and freedom to inspirepeople. Jaguar uses psychographics since a big part of the customer’spurchase decision process is based on values, self-concept andattitudes. Jaguar need to know its customers, their personality andtheir self-concept to create a car up to their expectation and reflectthe lifestyle they have. Volvo is another brand of car that has a very different target market.Volvo uses psychographics to segment their market. They create carsaiming mainly at “modern families”. They analysewhat are the attitude and values of families towards cars, what arethe lifestyle of today’s families: research showed that families weregoing away for holidays and needed big cars that are able to bereliable and provide comfort for the whole family. It has been foundthat today, families go to the beach but also to the mountain. SoVolvo created cars that allowed families to purchase car to suit theirlifestyle. They also had to analyse the personality and theself-concept of those families. A family that want freedom, that isadventurous. And this is reflected in Volvo’s advertising campaign. Sowhen people watch those advertisements they can rely on it andidentify themselves with the image they are giving out. Other methods of segmentation are used in the UK car industry such asdemographics or geographic. But often those methods, particularly inthe car industry, need to be supplemented with other data, even ifsome researchers such as Ziff affirmed that “as demographic isbased on the ground that demographic groups are relatively homogenous,it does not need psychographics to distinct customer’s behaviour.”Demographics can turn up objective factssuch as tell that the target customer owns a car but it will not beable to tell why the person bought the car; this “why” is told bypsychographics. In order to be successful, the car industry must knowits consumers: their age, their sex, their marital status, theirincome, their purchase behaviour such as if they are brand loyal or ifthey are innovators. Jaguar keep record of every single client andfollow them for up to four years to know everything about theirsatisfaction, their complaint, so they are able to measure the numberof clients that are brand loyal. Both Volvo andJaguar saw a new target market in women and developed design to satisfytheir wants. In order to serve this new and growing market, identifiedthrough demographics, those firms will need to use psychographicsbecause women have different attitudes, values, personalities andlifestyle than men. They will also need to know what theirexpectations are and what issues they think are most important whenthey buy a car. For example, women may be more focused on safety anddesign while men may be more careful about their image and theperformance of the car. Mary Anne Winslow is a member of Essay Writing Servicecounselling department team and a dissertation writing consultant. Contact her to get free counselling on custom essay writing. 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