Consumers are not the same people they were 20 years ago, and your marketing strategy shouldn’t be the same as it was then either. Audience segmentation has long been a basic practice of marketing professionals everywhere, with demographics emerging as the most popular way to categorize consumers. But as we embark on a new digital age where technology reigns supreme and people are spending more time online than ever before, these surface-level attributes are no longer sufficient in providing brands with the insights they need to execute marketing that is both effective and efficient. The remedy to these marketing ailments? Psychographics.
Demographics vs. Psychographics
Demographic segmentation is the process of organizing consumers based on external or physical factors, such as age, gender, location, or ethnicity. Because this type of information has traditionally been easy to obtain and provides data points that are fairly straightforward, demographics are the most common variable that brands use to identify their consumers.
Unlike demographics, psychographics are people’s less visible, internal characteristics such as one’s motivations, beliefs, and priorities. Psychographic information is more subjective, as the data that this type of segmentation uses are qualitative and less cut-and-dry than demographics.
The major distinction between the two is that demographics can help you infer what people choose, whereas psychographics are used to predict not just what people choose, but also how and why they choose.
While demographics are certainly valuable pieces of information and provide a great starting point when it comes to building customer personas and developing target audience profiles, they are becoming less and less capable of offering a complete and comprehensive illustration of consumer behavior.
Over the last two decades, the digital world has evolved into something that is now nearly irremovable from our daily lives. The far-reaching capacities of today’s technology have facilitated the formation of an Impulse Generation of consumers that are more digitally connected than ever and where every generation has buying power with just the touch of a screen. As a result, demographics like age and location hold little meaning when considered independently. Data from our survey on Mobile Usage Across Generations confirms this assumption, as we found similar results across all four generations.
Location is also a far less significant determinant of consumer behavior than it once was, as e-commerce enables people from all over the world to purchase products from the same place, wherever and whenever they want. Thus, we can no longer base our marketing strategy on what people will buy (because anyone can now buy anything). Instead, we must focus on why they are buying that particular product.
The Psychographic Solution
The value in psychographics comes from the fact that they give us a window into the intangible thought processes that are crucial to the decisions that consumers make. With the ability to cut across demographics, psychographics inherently acknowledge that, despite appearing the same way on paper, people are different, and we are driven by distinct beliefs, values, and attitudes. Furthermore, the characteristics that psychographics address weigh just as heavily on consumer behavior regardless of technological advancements.
This is important because as our world gets increasingly digitally connected, a diverse array of ideas and beliefs will continue to diffuse across the internet and become adopted by people of varying ages, ethnicities, and geographic locations. As that happens, the once intimate relationship between demographics and psychographics will grow progressively distant, and the notion of not judging a book by its cover will ring truer. For marketers, this means that we must start relying more heavily on psychographics than demographics when it comes to audience segmentation.
Giving Consumers What They Want
Effective marketing strategies are ones that focus not on general awareness amongst a generic group, but on reaching a specific target audience that has high conversion potential. Results-driven marketing requires defining that target audience and getting to know them so that you can deliver exactly what they want.
Our survey on How Brands’ Social Media Impacts Consumers found that after irrelevant content, the second most common reason people unfollow a brand is if they do not agree with their values. At a time when highly charged social issues are at the forefront of society and people want brands to take a stand for what they believe in, it is of the utmost importance that you understand the issues that motivate your customers. Psychographics allow you to interpret who your consumers are on a much deeper level so that you can craft messages that resonate with their beliefs and attitudes.
Handling Demographics Moving Forward
This is not to say that demographics are useless. They are, as I mentioned before, a great starting point in developing customer personas. But they do not provide the complete picture that marketers need to truly understand their customers.
Going forward, you don’t need to abandon demographics completely, but you do need to reconsider the extent to which they shape your overall marketing strategy. In a world where people are spending the vast majority of their days online, it’s safe to say that psychographics should have the final word in determining how you will define and appeal to your target audience.