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Customer Segmentation: Explained

Customer Segmentation: Demographics, Psychographics and Technographics Explained

An effective way to target your marketing efforts is to use customer segmentation. Segmentation is the process of dividing your market into groups of customers based on certain factors that allows you to use personalized messaging that speaks directly to their needs. 

There are many types of customer segmentation such as demographic segmentation, firmographic segmentation, technographic segmentation, psychographic segmentation, behavioral segmentation, and more. 

In this blog, we will deep-dive into understanding demographic segmentation, technographic segmentation and psychographic segmentation to see how they can guide your marketing strategy.

This image talks about the different types of market segmentation. It depicts demographic, technographic and psychographic segmentation.

What is Demographic Segmentation?

Demographic segmentation is a type of customer segmentation which involves the collection of traits of existing and potential customers. It focuses on traits such as age, gender, income, occupation, family status, ethnicity, level of income, and more. 

This is a go-to segmentation method for many businesses as it needs fewer data points as compared to psychographic segmentation or behavioral segmentation while offering more selective distinction than geographic segmentation. 

The most commonly used demographic segmentation factors are:

  • Age
  • Gender
  • Ethnicity
  • Income
  • Level of education
  • Religion
  • Occupation
  • Family structure
This image breaks down the different factors that influence demographic segmentation such age, gender, ethnicity etc.

                                         (Source)

Types of Demographic Segmentation

There are multiple variables by which demographic segmentation is done:

#1 Age

Age is one of the most common variables used when employing demographic segmentation. Consumer preferences and needs differ significantly based on the age group they fall under. 

For example: When a company wants to target young adults and teenagers, they ensure that their marketing efforts are designed to appeal to this age group.

#2 Income

Income levels dictate consumer purchasing ability. Consumers with higher income levels may prefer luxury products where consumers with lower income levels appreciate a bargain. 

Companies that create everyday items prioritize affordability where companies creating luxury items target high-income consumers who can afford to buy their products. 

Income levels also influence pricing strategies for companies. They use it to determine how their products should be priced. 

For example: Luxury brands like Chanel, Gucci, Louis Vuitton, Hermes etc., advertise their products in luxury lifestyle magazines such as Vogue, Vanity Fair, Harper’s Bazaar, and more. This is because their demographic (high-net-worth individuals) usually subscribe to these luxury lifestyle magazines. 

#4 Race, Religion and Ethnicity

Marketing campaigns that take into consideration how race and religion affect sentiments of certain demographic appeals to consumers. 

Also, religion has a significant impact on consumer preferences. Therefore, it is crucial to be aware of the different religious implications of your target segmentation.

#5 Gender

Gender identity should be an integral part of marketing campaigns for products that are gender specific or gender neutral. 

This is because buying preferences will differ for products required by individuals who identify themselves on the gender spectrum. 

By understanding how your product or service affects a gender, you can tailor your marketing efforts in a similar fashion to ensure you get the right results.   

For example: Historically, sanitary napkins were always branded as female-specific products since the major demographic that purchased them were women. Most of the marketing campaigns that surround this product are “girly and pink”. 

However, menstruation is not limited to individuals who identify as women. Transgender and non-binary individuals also experience periods. Therefore, taking gender into consideration when designing marketing campaigns is essential. 

What Are the Advantages of Demographic Segmentation

There are various advantages of demographic segmentation. Let us take a look below to see what they are.

#1 Easily Available Data

This is probably the most significant advantage of demographic segmentation. The information required for demographic segmentation is easily available through census data that is collected by governments. 

#2 Higher Customer Retention and Loyalty 

Targeting the right demographic with the right marketing campaigns is an effective marketing technique. With marketing campaigns that tune into your demographic, you can target your customers effectively. 

This allows your brand to establish customer loyalty and thereby improve retention rates. Satisfied customers become repeat customers and in turn bring in more customers by word of mouth. This allows you to increase your customer base, their loyalty, and in turn, your retention rates. 

#3 Develop Effective Marketing Strategies

Demographic segmentation allows you to identify which individuals are most likely to become your customers and thereby help you define your target market.

Once you have identified your target market, you can develop marketing strategies that appeal to this demographic. 

Carefully curated marketing strategies are the first step in letting your demographic know that you and your product or service is right for them. 

Now that you have an understanding of what demographic segmentation is, let us take a look at the next type of customer segmentation: Psychographic Segmentation.

What is Psychographic Segmentation?

Psychographic segmentation is a type of customer segmentation strategy that categorizes individuals based on the psychological factors. These psychological factors influence purchasing and consumption habits of customers. 

In this type of customer segmentation technique, customers are segmented using various characteristics such as lifestyle, attitude, interests, values, personality, social class, and more. Analyzing these characteristics allows marketers to develop and curate marketing campaigns that their target market will respond to. 

What Is the Difference Between Demographic and Psychographic Segmentation?

It’s quite simple, actually. Psychographic segmentation puts a spotlight on characteristics like personality, interests, social status, values, and more, whereas demographic segmentation emphasizes a specific trait of an individual such as age, income, gender and more to segment their target market. 

However, a combination of both these segmentation techniques allows marketers to add further details to their buyer personas which in turn will allow for better brand positioning, messaging and product development. 

Psychographic Segmentation Factors and Examples

There are 5 different factors of psychographic segmentation. Let’s understand each one of them in detail. 

This image talks about the different factors involved in psychographic segmentation such as lifestyle, opinion, interest, etc.

#1 Personality 

A few well known personalities are introverts, extroverts, ambiverts, emotional, opinionated, and more. Segmenting your target market based on similar personalities is highly useful as they can be a great way to determine their purchasing habits.

For example: A food delivery company wants to target the introverted personalities of their customer base since they make a significant amount for the segment. Their marketing strategies can be tailored in such a way that they show individuals eating delicious food alone from the convenience of their homes. 

#2 Activities and Interests

This type of segmentation segregates buyers based on the activities they engage in and interests they exhibit. 

This can include their hobbies such as skiing, horseback riding, painting, dancing, and more, or their media consumption patterns such as are they fans of political movies or do they enjoy watching sports, and more. It encompasses everything an individual might do in their free time.  

For example: Beer companies are often seen creating ads which have a sports element tied into it. Pop culture shows that sporting events are always big crowd pleasers and inevitably are accompanied by drinking beer. Companies can leverage this trait of their target segment to promote their products.

#3 Social Status

In this type of segmentation, customers are often segmented based on their social status (low, middle and upper). High-end luxury products such as Christian Dior, Burberry, Salvatore Ferragamo prefer to target their products towards the upper-class customers. 

This is because they can afford to buy these luxury products. On the other hand, economical brands like H&M and Marks & Spencer target their products towards the middle-class consumer as they are more affordable and pocket-friendly. 

#4 Lifestyle 

Here, customers are segmented based on their lifestyles. The lifestyle of an individual refers to the way in which they lead their life, how they spend their money, time and energy. 

Customers tend to identify themselves with different personas that they encounter in their professions, hobbies, role-models, and more. 

For example: A single consumer can identify themselves as a sports enthusiast, a socialite, or even as a poet. Therefore, marketing teams need to be cautious when using this type of segmentation. Let us consider a company that makes backpacks for kids to take to school. Kids are sometimes careless with their belongings and are even easily distracted. Therefore, this company can tailor their marketing efforts to highlight qualities such as the sturdiness of their product. 

#5 Opinions 

Generally, a customer’s opinions are formed based on years of nurture they receive from the environment they grew up in, the values they were taught, and their culture. In this type of segmentation, customers are segmented based on their opinions about a subject, their attitudes and their motivators. 

For example: A very famous example of this is the Facebook–Cambridge Analytica use of artificial intelligence and big data to analyze voter profiles. They analyzed people’s political and religious beliefs, their interests and more to target them with the right kind of messaging which thereby influencing their voting behavior. 

What Are the Advantages of Psychographic Segmentation?

Psychographic segmentation focuses on factors that elicit an emotional response from a specific customer from a specific demographic and influence their purchase decision. This is highly beneficial for a company. 

Let’s take a look at the other advantages of psychographic segmentation. 

#1 Provides Better Understanding of Customers 

Psychographic segmentation provides marketing teams with a panoramic view of their customers when used in combination with other segmentation techniques. 

#2 Helps Influence Purchase Decisions 

With psychographic segmentation, marketing teams can trigger an emotional response in individuals and motivate their purchasing decisions. 

For example: A company that states that a part of their profits will be donated to a charity spurs customers. This is due to the fact that an emotional response of helping a charity and its cause is triggered here. 

#3 Create Targeted Messaging 

By understanding what psychographic factors motivate your customers, a more targeted and fuller marketing campaign and messaging can be created. This allows companies to target their segment more effectively.

#4 Product Repositioning 

Sometimes, a product used for a single audience can be repurposed to target other audiences simply because of psychographic segmentation. It allows your company to identify new target markets to reposition your product or service. 

While what has been explained here is just the tip of an iceberg, check out this blog to find out how you can use psychographic segmentation to boost conversions

Next type of customer segmentation is: Technographic Segmentation. Let’s take a look at what this type of segmentation is all about. 

What is Technographic Segmentation?

Technographics is the neologism of two words: technology and demographics. It is defined as the data-driven insights that help businesses identify which accounts are most likely to convert based on the knowledge of their current technology stack.

However, without proper context this word can be quite useless. Before we proceed to explain what technographics segmentation is in depth, let’s understand what it is not. 

Technographic data is not related to demographic data or firmographic data that is typically used to talk about how many employees make up a company and what are their product offerings, respectively. 

This image encapsulates what technographic segmentation is all about. It talks about how it is collected, the quality and the use cases.

(Source)

How is Technographic Data Collected?

Technographic data is broadly collected in three different ways:

  1. Surveys: Employees of different companies are expected to fill in a phone or email survey which aims to collect information about what technology stack they use on a daily basis, and how it is deployed to improve B2B efforts.

    While this might be the most direct method of collecting technographic data, it is time-consuming and taxing because most companies will not respond to these cold calling surveys. 
  1. Website Crawling: In this method, specific tools are used to extricate information regarding what technology stacks are being used by different companies. With this method, we can ensure that the quality of data that is extracted is accurate. 

    However, this method has a limitation. It requires technical expertise to execute the tools used for website crawling. 
  1. Third-Party Data Purchasing: This method is one of the most straightforward ways of obtaining technographic data. Credible data providers have access to robust and reliable data sets that can be bought by companies in need of them. 

    As always, there are limitations to this method of data collection. Here, personal data needs to be anonymized to ensure compliance and safety standards. Also, not every third-party data provider has large enough data sets to be useful. It is therefore imperative to ensure that you are buying from the right data provider.

What Are the Advantages of Technographic Data ?

As we know, technographic data provides an insight into what the technology stack of a company looks like. But when it’s integrated with sales and marketing efforts, the results show that it can significantly improve conversion and retention outcomes. 

Some of the advantages of technographic data are: 

#1 Enhanced Segmentation

Accurate technographic data allows companies to identify which of their target customers are in need of their product or service. With this, they can segment their target markets in a much more granular manner.

Companies can identify what the needs of their target customers are and allocate their sales and marketing efforts accordingly.

#2 Improved Specificity

Technographic data allows sales and marketing teams to address specific pain points their target customers face. With this, they can seize opportunities and the interest of their potential customers. 

#3 Competitor Analysis

With technographics data, you can analyze and identify what technologies your competitors are using and selling. Now that you are equipped with this data, you can strategize accordingly when competing with them for the same accounts in your target market.

To get an in-depth understanding make sure to check out our blog which explains what technographics is and its other advantages, pillar page. 

If you are looking for a sales intelligence tool that provides technographic data, then it is time to book a demo with our sales team. Slintel’s Technographics tracks 25,000+ technologies in over 15 million companies to deliver sales and marketing intelligence.

Wrapping Up 

With everything explained on this page, it is quite apparent that demographics, psychographics, and technographics data sets and segmentation techniques are here to stay. 

Nowadays business intelligence tools that allow you to incorporate all these datasets are a must-have in the B2B SaaS space. 

Armed with the synergy created by these data sets, you can ensure that your sales and marketing efforts are not wasted. In fact, you can ensure that they are targeted with the right messaging to capture your target markets efficiently and effectively.

Sushmitha Malali

Sushmitha Malali

Sushmitha has been a wanderer most of her life. Having spent her life in a plethora of countries - India, Kuwait, Oman, and the United States of America, she enjoys learning about different cultures and discovering new languages. She has dabbled in Medical Writing and Education Content Writing. She is an avid reader and when not writing, loves curling up with a book and hot chocolate.

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