Demographic data are used to segment markets because these data are related to behavior and because they are relatively easy to gather. However, demographics are not in themselves the causes of behavior. Consumers don’t buy windsurfing equipment because they are young. They buy it because they enjoy an active, outdoor life-style, and it so happens that such people are also typically younger. Thus, demographics often correlate with behavior, but they do not explain it.
Marketers have gone beyond demographics attributes in an effort to better understand why consumers behave as they do. They now engage in psychological segmentation, which involves examining attributes such as personality and life-styles. When demographics and psychological attributes are combined, richer descriptions of segments are produced. Consider, for example, the segmentation of new-car buyers described in the box on page 138.
Personality Characteristics. An individual’s personality characteristics are usually described in terms of traits that influence behavior. Theoretically, they would seem to be a good basis for segmenting markets. Our experience tells us that compulsive people buy differently from cautious consumers, and quiet introverts do not buy the same things nor in the same way as gregarious, outgoing people. However, personality characteristics pose problems that limit their usefulness in practical market segmentation. First, the presence and strength of these characteristics in the population are virtually impossible to measure. For example, how many people in the U.S. could be classified as aggressive? Another problem is associated with the accessibility condition of segmentation. There is no advertising medium that provides unique access to a particular personality type. That is, television reaches introverts as well as extroverts, aggressive people as well as timid people. So one of the major goals of segmentation, to avoid wasted marketing effort, is not likely to be accomplished using personality.
Nevertheless, many firms tailor their advertising messages to appeal to certain personality traits. Even though the importance of the personality dimension in a particular decision may be unmeasurable, the seller believes that it does play an influential role. Thus we see products and services advertised to consumers who are “on the way up,” or are “men of distinction,” or “want to break away from the crowd.”
Life-style. Life-style relates to activities, interests, and opinions. Your life-style reflects how you spend your time and what your beliefs are on various social, economic, and political issues. It is a broad concept that overlaps what some consider to be personality characteristics.
People’s life-styles undoubtedly affect what products they buy and what brands they prefer. Marketers are aware of this and attempt to segment their markets based on lifestyle characteristics. For example, in the mid-1980s, hotels and resorts foresaw a disturbing trend. Baby boomers, an attractive segment when it consisted of singles or childless couples, had become a group that was married with children. In examining this segment, the hotels determined that baby boomers still enjoyed the adventurous travel they had experienced before having a family, but vacationing with children made that difficult. However, these consumers were not willing to take vacations without their children, because many were parents who both worked outside the home and their time with the family was at a premium. The challenge was to create an offering that would allow a family to vacation together but also permit parents and children to indulge their different interests. To accommodate the life-styles of this segment, Hyatt Hotels created “Camp Hyatts” at more than 100 hotels and resorts. The concept is to provide a wide variety of supervised activities and sports for young children. For example, on Maui the camp includes a movie theater, soda bar, video room, computer room, potters’ wheels and kilns, a kids’ restaurant, a swimming pool, and classes on nutrition, fitness, and art appreciation.21
Although it is a valuable marketing tool, life-style segmentation has some of the same limitations as segmentation based on personality characteristics. It is difficult to accurately measure the size of life-style segments in a quantitative manner. Another problem is that a given life-style segment might not be accessible at a reasonable cost through a firm’s usual distribution system or promotional program.
Psychographics. The term psychographics was coined to describe a wide variety of psychological and behavioral descriptions of a market. The development of psychographics evolved from attempts by marketers to find measures more directly related to purchase and consumption than demographics.
Values are one such descriptor. According to psychologists, values are a reflection of our needs adjusted for the realities of the world in which we live. Research at the Survey Research Center at the University of Michigan has identified nine basic values that relate to purchase behavior.22 The nine, which they call the List of Values (LOV), are:
- Sense of accomplishment
- Fun and enjoyment in life
- Being well respected
- Sense of belonging
- Having warm relationships
While most people would view all of these values as desirable, their relative importance differs among people, and their importance changes over a person’s life. For example, people who value fun and enjoyment especially like skiing, dancing, bicycling, and backpacking, and people who value warm relationships give gifts for no particular reason. Thus, the relative strength of values could be the basis for segmenting a market.
Probably the best-known psychographic segmentation tool is VALS, developed in 1978 by the research firm SRI International. The VALS system was developed from a large study of the U.S. population that divided adults into nine segments based on similarities in their values (beliefs, desires, and prejudices) and their life-styles hence, the VALS acronym. In what has become a classic and successful application of VALS, Merrill Lynch switched its advertising from depicting a herd of bulls charging across the prairie to a single bull, described as a “breed apart.” The reason? The herd is more consistent with the VALS segment known as “belongers.” Belongers are traditionalists who are content to follow others and are unlikely to be heavy investors. But Merrill Lynch wants to appeal to “achievers,” the VALS segment characterized by independent thinkers who see themselves as being above the crowd. The result? After changing the ads from a herd to a single bull, Merrill Lynch’s advertising had a much greater impact on consumers, and its market share went up.23
In 1990 SRI introduced VALS2 to reflect changes in how we live and make decisions. The two primary dimensions used to segment the population in VALS2 are an individual’s resources and self-orientation. Resources are broadly defined to include not only income but other factors such as health, education, and self-confidence. Selforientation reflects a person’s self-image and the behavior used to communicate that image to others. Three self-orientation patterns are included in VALS2: principle- oriented (your choices are directed by your beliefs), status-oriented (your choices are directed by your desire for the approval of others), and action-oriented (your choices are directed by your desire for physical or social activity, variety, or risk taking). Resources range from abundant to minimal. Based on a representative sample of the U.S. population, and using resources and self-orientation, eight consumer segments of approximately equal size have been identified. For example, one segment, called “actualizers,” is characterized as optimistic, involved, outgoing, and growth-oriented. Actualizers have wide intellectual interests, engage in varied leisure activities, are well informed, and are politically active. In contrast, another segment, called “experiences,” are unconventional, active, impetuous, and energetic. They like new and offbeat things, are concerned about image, admire wealth and fame, and are uninterested in political issues.24
Several organizations have used VALS2 to develop or refine their marketing strategies. For example, Transport Canada, the agency that operates major Canadian airports, used VALS2 to study the flying public passing through Vancouver, British Columbia. Though actualizers make up about 12 percent of the general population, the study found that 37 percent of the travelers belonged to this group. Since actualizers are a good market for quality arts and crafts, the results suggested that stores such as Sharper Image or Nature Company could do well at the airport.25