Psychological Segmentation Principles

“If you’re not thinking segments, you’re not thinking.” - Theodore Levitt Here’s a brief history of market segmentation: 1950s: Segmentation started with basic demographics—age, location, gender—because that was the easiest data to collect and analyze. 1960s: Marketers began adding psychographics, gathering insights into customer attitudes and traits to create more specific profiles. 1970s: The rise of large transaction databases enabled real-time point-of-purchase data collection, leading to segments based on purchase behavior. 1980s: Needs-based segmentation emerged, driven by powerful computers and advanced clustering techniques. This allowed researchers to group customers based on desired product features and benefits. While needs-based segmentation was a step forward, it often missed the mark because customers aren’t product engineers. They struggle to articulate what specific products or features they need. But here’s the thing: Customers excel at describing the outcomes they want to achieve when using a product to get a "job" done. When discussing their desired outcomes, they can identify 100 to 150 different metrics to describe success at a granular level. Today's most effective market segmentation? It focuses on understanding how customers rate the importance and satisfaction of each outcome. This insight allows marketers to craft targeted messages and develop products that resonate deeply with each segment. Here’s 3 examples of Outcome-Based Segmentation in action: 1. J.R. Simplot Company identified a segment of restauranteurs who needed a French fry that stays appealing longer in holding, leading to a tailored product solution. 2. Dentsply found a segment of dentists who believed that the quality of a tooth restoration depended on consistently achieving solid bonds, allowing them to tailor their products to this need. 3. Bosch discovered a segment of drill–driver users who primarily wanted a tool optimized for driving, rarely using it as a drill. This insight helped Bosch create targeted and effective marketing strategies. Outcome-based segmentation represents a significant leap forward. It focuses on real opportunities... ...and measurable activities that are underserved by the competition. Outcome-based segments provide a clear path to innovation and market success.

Stop wasting time on outdated segmentation methods! Using demographics or psychographics to group your audience? You're setting yourself up for failure. By that logic, Prince Charles and Ozzy Osbourne would be in the same segment. Make sense? No, right? Here's how to do it better: 1. Focus on Jobs to be Done    ↳ Understand what task your customer is trying to accomplish with your product or service.      ↳ Think about the desired outcome, not just their age or where they live. 2. Identify Real Pain Points    ↳ People buy to solve problems. What issue does your product fix for them?      ↳ The bigger the pain, the more urgent their need, and the more valuable your solution becomes. 3. Consider the Alternatives    ↳ What are your customers using right now?      ↳ Understand why they might switch to your product and what barriers exist. 4. Understand Values and Fears    ↳ What does your customer care about? What are their fears?      ↳ This gives you a psychological advantage and helps you position your product more effectively. 5. Move Beyond Generic Segmentation    ↳ Demographics give you surface-level information, but understanding why customers act is what truly matters.      ↳ Don’t just focus on basic traits. Know what motivates their buying decisions. Pick one customer segment, dominate it, and expand from there. Traditional segmentation won’t cut it. It's time to think deeper and smarter. Focus on what matters: the problem you're solving and why your customer needs you. ✌️ -- P.S: Follow me Avi Gupta, for more such insights...

Motivation * Ability * Prompt = Multiplicative Effect on Behavior Segmentation is an incredibly powerful tool used by marketers. The basic idea is to divide the audience into homogeneous groups that respond to different types of prompts/stimuli. So, if you have some caregivers who are extremely responsive to what their child says she wants, you want to prompt them to talk to their child about HPV vaccination. If you have other caregivers who are driven by their concerns about their child’s future, you want to ensure they understand how HPV vaccination is tied to their girl’s long-term well-being. How responsive caregivers are to different prompts can be discovered through behavioral insights surveys. These are the kinds of insights the #BehavioralInsightsLab generated when partnering with #Upswell to implement HPV vaccination campaigns in Bangladesh. The impact evaluation showed that Upswell’s social media campaign led to a 10 percentage point increase in HPV vaccination at a cost per DALY of $40. Segmentation-based interventions, have much greater impact. In public health, we have traditionally segmented based on socio-demographic variables. But these are fairly crude - they don’t tell you much about the psychological drivers of behavior. It’s critical that we use a behavioral model for segmentation. A model that’s easy to implement and not data-heavy is the #FoggBehaviorModel. A recent publication shows that prompts reaching caregivers who have both motivation and ability are significantly more likely to impact behavior than prompts reaching caregivers who have only one of these. The effect is multiplicative—in statistical terms, we call this an interaction. For example, caregivers with high ability may be 10% more likely to get their child vaccinated, and those with high motivation, may be 5% more likely. But a well-designed prompt that reaches caregivers who have both high motivation and high ability doesn’t just raise the likelihood by 15%. It might boost it by 30% or even 40%. That may not sound impressive - but it is. Imagine your intervention having a multiplicative effect on behavior. The image shows the difference between caregivers who have high motivation and high ability and are prompted - and those who lack both and are not prompted. There is a 65 percentage point difference (!!!) in HPV vaccination among Nigerian caregivers who are in these two groups. Vaccination is four times higher when all three conditions are met! So, the next question is: How do you identify those with high motivation and high ability, and what prompts will work for them? That’s exactly what the #BehavioralInsightsLab does best. Reach out if you want to increase the impact of your campaign multiplicatively - not just additively. #BehavioralScience #BehaviorChange #SocialNorms #HPVVaccination #PublicHealth #BehavioralInsights #FoggModel #Segmentation #MotivationAndAbility #HealthCommunication #AfricaBehavioralScienceNetwork

You’ve heard: “Segment your audience” Cool. But by what? Demographics? Not super helpful. Behavior? A little better. Intent? Jackpot. Here’s a segmentation play that converts like crazy: - Segment by what made them click, not what they clicked. For example: You send out an email with two subject lines: A: “Need better sleep?” B: “Fix your morning routine” Both promote the same thing (melatonin drops), but from different angles. Now, track who clicked what: • The first group cares about sleep • The second group wants a better morning In your next message, speak to what they care about. The goal is to meet people where their head’s already at. So instead of sorting people by what they did, sort them by why they did it. That’s where things start to click.