Ever wonder what the difference is between demographics and psychographics?
In a nutshell, demographics allow marketers to describe who buys, but psychographics enables them to understand why people buy. That is the crucial difference.
Demographics are observable measurable segments of a populations characteristics such as age, family size, gender, race, ethnicity, income, and education. These segments have long been used to create consumer profiles out of any given population. A demographic segment however does not take into account the important of one’s culture on one‘s behavior.
Continually evolving, the effects of culture on consumer behavior have long held great depth and breadth. In essence understanding a culture is a lot like putting your finger on the pulse of a society’s personality. It is an important element in diagnosing the overall health of any marketing plan.
Unlike demographics, psychographics uses psychological, sociological and anthropological factors to determine how the market is segmented by the predilection of groups within the market as well as their reasons to make a buying decision, hold a certain point of view or employ a medium in a particular way. It was developed circa 1960’s and 1970’s as part of an effort to address the shortcomings of relying purely on demographics to create consumer profiles. It took the information gleaned by the broader demographic segmentations and further divided it based on cultural related markers such as values, activities, interests, opinions and overall lifestyles.
There are many segmentation systems used through the psychographic research field. Perhaps the most renowned segmentation system was created circa 1980 by Arnold Mitchell. Mitchell’s system placed consumers into one of 9 lifestyle clusters which he referred to as “VALS”. Though his original system has been modified throughout the years, it was originally based on the splicing together of perspectives from two well-known social scientists, Abraham Maslow (psychologist) and David Riesman (sociologist).
Today instead of directly referring to the original VALS system, many marketers segment using generational names such as Baby Boomers, Gen X and Gen Y.
With psychographics, once the larger lifestyle segments are determined, the market researcher must then ascertain which segments are producing the bulk of customers for a particular product. This action follows an old business rule, that of the 20/80 split. For those not familiar with the 20/80 rule, in marketing the rule dictates that 20% of a product or services’ users accounts for 80% of the volume of the product or service sold. To better analyze the life segment data and determine who the products‘ 20% are marketers look at things such as patterns of usage and the attitudes of heavy users towards the product. Not all heavy users will be the same. It is well known that different people have different reasons for doing the same thing. It is the market researchers job to use what they learned from both demographic and psychographic research to better understand those various reasons.
In conclusion, in order to be successful in today’s world marketers need to employ both demographic and psychographic data into their marketing plans. Though both are needed it is good to understand that the critical difference between demographics and psychographics is the type of information gathered. Demographics tells you who your customers are whereas psychographics helps you better understand why your customers buy in the manner that they do.