Limitations of Psychographic Segmentation

There are some limitations of psychographic segmentation. Some people hold the view that lifestyles of people are too heterogeneous to be classified into watertight groups. Even, so, the general feeling among marketing people is that psychographic measures bring out some useful insights into market segmentation on the basis of such factors as attitudes, interests and activities of the respondents. Psychographic segmentation seems to be more useful as compared to the demographic segmentation. The former enables researchers to draw meaningful inferences in the sphere of advertising. For example, such studies may reveal how different segments respond to advertising messages. At the same time, a major limitation of such studies is that analysis of psychographic data is not only complex but also very subjective. A psychographic study generally involves the use of cluster analysis. There are different techniques of cluster analysis. The application of different techniques to the same set of psychographic data may bring out different market segments. Since the researcher himself has to choose a particular technique to be used, the analysis of psychographic data tends to be subjective. This is considered to be the major limitation of psychographic segmentation.

Behaviouristic Segmentation: Markets can also be segmented on the basis of the behaviour of respondents. One behaviouristic basis is to first identify heavy, moderate and non-users of a product and then no ascertain how demographic, psychographic and media usage characteristics vary among the three categories. This approach leads to the usage rate segmentation.

Usage Rate Segmentation: In order to use this method, it is necessary that data on the consumption of a particular product from a large number of consumers are available. Such data can be obtained through a consumer panel. If panel data are not available, then a field survey has to be undertaken to collect the requisite data. While collecting the data, a structured and non-disguised questionnaire is designed, provided demographic characteristics are to be used for segmentation. In the other case, a structured and disguised questionnaire is used. The measures of usage rate can be in the following forms:

• Users and non-users,
• Heavy users and light users, or
• Heavy users, light users and non-users.

The consumers’ groups thus formed are then analysed either on demographic or psychographic measures.

It may be noted that in respect of several products/brands, a relatively small proportion of the total population accounts for a large proportion of total consumption. In view of this, the usage rate approach for market segmentation seems to be justified. This apart, the use of this approach is not only quite easy but also straightforward. These are the major advantages of this approach. As against these advantages, it has been criticized on the grounds that it fails to take into account the brand preferences of different consumers and is unable to provide any reason as to why a particular brand is chosen by a consumer and not the other brand/s. These shortcomings can be overcome if product or brand attributes approach is used instead.

Brand-related Attributes: In view of the limitations of the forgoing approach, there is now an increasing trend in favour of brand attributes approach. It based on the consumer’ perceptions of the characteristics of various brands Here, it is believed that consumers always compare their perceptions of each brand’s characteristics against an “ideal” brand. As these perceptions seem to form the basis for purchase decisions of the consumers, segmentation based on product or brand attributes has a distinct advantage.

Another way of predicting a consumer’s purchase behaviour depends on two things, viz. his believe about the brand’s attributes and the importance assigned to these attributes. Suppose a given brand has three attributes – attractive, smooth and durable. Further, suppose the relative importance of these three attributes is 4, 3 and 3; and total weight being 10. Now, a consumer assigns a score on a scale of 10 to each of these attributes on the basis of his perception. These scores are: attractive 6; smooth 3; and durable 7. Then his total score for that brand will be (6×4) + (3×3) + (7×3) 54 ÷ 10 = 5.4. Similarly, scores for other competitive brands can be obtained. On the basis of the scores for each brand, it is possible to make a prediction of the consumer’s preference ranking. Such an exercise will enable the researcher to know in depth (i) the product characteristics that different consumers want, and (ii) their perception with regard to these characteristics for each brand. If the researcher also knows the consumer’s “ideal” with regard to these characteristics, then he can decide on the positioning of new products/brands. Decision on some related issues such as introduction of new products, repositioning old products and forecasting market-share trends can also be taken.

As regards statistical techniques for clustering of consumers into homogeneous groups, multiple discriminant analysis and cluster analysis are more frequently used. These techniques can also be used in studies on market segmentation based on product or brand attributes.

It may be pointed out that marketing management is favourably inclined to this approach. This is because of its relative advantage over other approaches. Its main strength is that it enables management to know how its brand is perceived by various segments in terms of the attributes which are important to them. On account of the availability of this information along with demographic, psychographic and media usage data pertaining to each segment, managers are in a position to choose target market segments. They can then design effective copy and media strategies for the preferred segments.

Despite this advantage, this approach is regarded as a very difficult exercise in marketing research on account of two reasons. First, it calls for a lot of competence and expertise for handling the large quantities of data involved. Second, the relationships brought out by the analysis tend to be merely descriptive and do not reveal any causes for the same. As a result, the conclusions drawn by marketing researchers tend to be based largely on their assumptions and inferences.

Requirements for Effective Market Segmentation

Before we close this section, it may be worthwhile to know how market segmentation can be effective. There are three conditions which must be fulfilled if market segmentation is to be made effective.

• The bases for segmenting, i.e. the characteristics on the basis of which customers are to be classified into different categories, must be measurable and the data accessible.
• It is necessary that market segments are accessible. A company should cater to the chosen segment or segments on the basis of the existing channels of distribution, the advertising media and the sales force. This should be possible with minimum cost and waste.
• Finally, the market should be segmented in such a manner that each segment is large enough for a company to have adequate sales and profits from that segment.

Target Marketing: The foregoing discussion indicated how the marketing research can identify different segments of the market. Having thus identified market segments, a company may have to adopt target marketing. In this connection, there are three broad strategies available to a company from which it has to choose one.

The company may adopt the strategy of undifferentiated marketing, which implies that it may cater to the largest part of the market with one offer and marketing mix. Alternatively, it may go in for concentrated marketing which means it favours a narrow market segment and will develop the ideal offer and marketing mix for it. Yet another alternative before the company is differentiated marketing which means it has decided to cater to several market segments, developing an effective offer and marketing mix for each chosen segment. Excepting the undifferentiated marketing strategy, the company has to choose its target market segments.

How does one choose target markets? To begin with, the company has to analyse each segment as a distinct opportunity? Such an analysis will indicate the profit potential of each market segment. Once this information is available, the company has to consider several factors that are relevant in choosing the target market segment. These are: resources available with the company, product homogeneity, product stage in the life cycle, market homogeneity and competitive marketing strategies. Once the target market segment has been identified, it will enable the company to concentrate all its promotional and media efforts for a given product or brand on the chosen market segment. It has to make itself fully aware of the target consumers’ characteristics, needs, and expectations. Since there may be some competitive brands in the same target market segment as the company has chosen, it has to decide how best it can ‘position’ its brand vis-à-vis other brands. This brings us to the concept of ‘positioning’

Brand Positioning: Brand positioning is a relatively new concept in marketing. The concept owes its origin to the idea that each brand occupies a particular space in the consumer’s mind, signifying his perception of the brand in question in relation to other brands. While product or brand positioning has been defined by various authors in different ways, the underlying meaning conveyed through these definitions seems to be the same. Instead of giving several definitions, we may give one here. According to Green and Tull,

“Brand positioning and market segmentation appear to be the hallmarks of today’s marketing research. Brand (or service) positioning deals with measuring the perceptions that buyers hold about alternative offerings.”

From this definition it is evident that the term ‘position’ reflects the essence of a brand as perceived by the target consumer in relation to other brands. In view of this, the management’s ability to position its product or brand appropriately in the market can be a major source of company’s profits. This seems to be an important reason for the emergence of product or brand positioning as a major area in marketing research.

Components of Positioning: Positioning comprises four components. The first component is the product class or the structure of the market in which a company’s brand will compete. The second component is consumer segmentation. One cannot think of positioning a brand without considering the segment in which it is to be offered. Positioning and segmentation are inseparable. The third component is the consumer’s perception of the company’s brand in relation to those of the competitors. Perceptual mapping is the device by which the company can know this. Finally, the fourth component of positioning is the benefit offered by the company’s brand. A consumer can allot a position in his mind to a brand only when it is beneficial to him. The benefits may be expressed as attributes or dimensions in a chart where brands are ‘fitted’ to indicate the consumer’s perceptions.

As perceptional maps are used to indicate brand positioning, blank spaces in such maps show that a company can position its brand in one or more of such spaces.

Techniques for Perceptional Mapping There are a number of techniques for measuring product positioning. Some of these which are important are:

• Image profile analysis
• Factor analysis
• Cluster analysis
• Multi-dimensional scaling

We will not go into the detailed mechanism of these techniques. All the same, we will briefly explain the techniques.

Image Profile Analysis: This technique is the oldest and most frequently used for measuring the consumer’s perceptions of competitive brads or services. Normally, a 5 or 7 point numerical scale is used. A number of functional and psychological attributes are selected. The respondent is asked to show his perception of each brand in respect of each attribute on the 5 or 7 point scale.

It will be seen that the figure provides some insight as to which brands are competing with each other and on what attribute(s). This technique has some limitations. First, if the number of brands is large, it may not be possible to plot all the brands in a single figure. Second, there is an implicit assumption in this technique that all attributes are equally important and independent of each other. This is usually not true. However, this limitation can be overcome by using the technique of factor analysis

Factor Analysis: As regards factor analysis, it may be pointed out that its main object is to reduce a large number of variables into a small number of factors or dimensions. The discussion also brings out some major limitations of the method. Cluster analysis is used to classify consumers or objects into a small number of mutually exclusive and exhaustive groups. With the help of cluster analysis, it is possible to separate brands into clusters or groups so that the brand within a cluster is similar to other brands belonging to the same cluster and is very different from brands included in other clusters.

Multi-dimensional Scaling: Multi-dimensional scaling, point out how perceptual maps can be developed on the basis of responses from consumers. In this connection, two illustrations of perceptual maps were given. The first illustration related to selected Business Schools based on hypothetical data. On the basis of two criteria, viz. how prestigious and quantitative an MBA course is, different Business Schools have been shown in the map. It will be seen that the MBA course of Business School ‘C’ is extremely different from that offered by Business School ‘G’. Points which are close to each other indicate similarly of the MBA courses in the student’s perception. The second illustration related to four brands of washing soaps based on a survey data from Calcutta. This is a non-attribute based example where a paired comparison for four high-and-medium-priced detergents-Surf, Sunlight, Gnat and Key was undertaken. As mentioned there, Sunlight and Surf are closet and Surf and Key are farthest. In other words, the first two brands are most similar and the remaining two are most dissimilar.

While explaining different techniques of product positioning, Subroto Sengupta has shown how the concept of positioning can be used to improve the image of the concerned product or brand. He has given a number of examples covering a wide variety of products such as coffee, soft drinks, washing soaps, toilet soaps, shampoos and magazines. As Sengupta points out the perceptual maps of product class also indicate holes or vacant positions in the market. These open spaces can be helpful to the management in suggesting new product opportunities as also possibilities for repositioning of old products. While it is true that the management does get the clues on preferred attributes of the product in question, it is unable to know all the relevant features of the new product such as its form, package and price. This problem can be overcome through the application of the conjoint analysis. In addition, Sengupta has discussed some research studies in respect of advertising positioning.

We now give a detailed version of a study indicating how a brand which was putting up a poor performance in the market was repositioned. As a result, it improved its image and contributed to increased market share and profits.

An Illustration of Repositioning of Brand: A study done by the Indian Market Research Bureau (IMRB) relates to repositioning of the Singer sewing machine. In the early eighties, Singer, which was renamed the Indian Sewing Machine Company Limited, realised that he market for sewing machine hade come to near stagnation This was partly on account of a multitude of new household appliances.

On the basis of a focus-group study, the study team came to know the presence of two segments in the market. One segment described the sewing machine as “a must and a utility that gives convenience”. The other segment was one where there was a growing perception that sewing is drudgery. A quantitative study gave indications of the size of the two segments existing then:

Drudgery Segment                              57 per cent

Drudgery Segment per cent Utility Segment 43 per cent

It may be emphasized that over the years, Singer had come to be seen as a brand that embodied the values: trustworthy, dependable and durable. However, these core values were no longer motivating enough for the drudgery segment. The Sewing Machine Company Limited, therefore, needed to improve its image. It wanted to add new values in the form of “excitement” and creativity” for its product. Accordingly, the company set up a plant to manufacture a sophisticated sewing machine, which was characterized by a large variety of decorative stitches, and advanced technology. In early 1986, Fashionmaker entered he Singer showrooms.

The study team hypothesized that Fashionmaker would have made an impact (a) on the brand image of Singer, as well as (b) on the product category per se. As there was no suitable pre-launch study, the study team made use of data from a study that was done after the launch of Fashionmaker.

For this purpose, a quantitative study was done to collect data on attitude to sewing at home. This was through obtaining the level of agreement/disagreement on a Linker scale for each statement in a battery. In addition, data were obtained on brand image of Singer and Competition. For this purpose, a semantic-differential scale was used to collect ratings of the two brands on a set of pre-chosen image attributes.

Data on attitude to sewing were gathered from a representative sample of housewives. As regards brand image data, interviews of sewing machine owners and potential buyers were conducted.

The study team chose to split the sample into parts: (a) one part contained respondents who were not exposed to Fashionmaker in any way, and (b) another part contained the rest. It was ensured that the profiles of the two parts were fairly well matched on key demographic dimensions so that there might be comparability of data between pre-Fashionmaker situation and post-Fashionmaker situation.

The data on attitude to sewing were used to understand the segments in the market. Use was made of the technique of cluster analysis, and then, of discriminant analysis to enable the study team to describe the clusters.

The analysis showed a dramatic shift in the post-Fashionmaker situation. A new third segment emerged, together with a shrinking “drudgery” segment. The new segment did not see sewing at home as a laborious task. It held the view that the machine was meant for much more than repairing and alternations – perhaps, for more frequent and creative use.

In order to know the changes that have taken place in brand image, the attributes of brand image were reduced to “factors”, and then these were regressed against the “overall” attribute to arrive at the importance attached to the factors.

As would have been expected, with the appearance of the new segment “versatility” in the market, the post-Fashionmaker situation saw emergence of two new dimensions – “exciting” and “creative” as being important.

Table 23.2 shows the relative importance of image dimension in the two situations.

Table 23.2 Relative importance of Image Dimensions

Pre-Fashionnaker Situation	Post-Fashionnaker Situation
Image   Dimension	Relative   Importance (%)	Image   Dimension	Relative   Importance (%)
Trustworthy,		Trustworthy,
Dependable and Durable	53	Dependable and Durable	41
Attractive  looks	24	Exciting and Trouble-free
Leader	23	Creative	16
		Leader	15
		Modern	10

Based on the results of the factor analysis of the image attributes, the study team determined the scores for the two brands – Singer and the Competition, on the key dimensions. It found that Singer had been able to gain an edge over the Competition through reorganizing its set of values.

The study has thus shown how the emergence of new segments followed by suitable advertising has enabled the management to reposition Singer Swing Machine.

In this connection, it will be interesting to know some observations made by Ranu Raj. Writing on the importance of brand image, the author observes that, “new product development could also mean recycling existing brands… The real excitement comes from recreating the brand, from changing its image in consumers’ minds and by adding drama to the product.” The author further goes on to observe that Horlicks, the age-old brand of HMM, regained its dipping volumes by rejecting a fresh lease of life into its fading product image. The brand was given a new formulation feeling by adding calcium into its existing ingredient mix, by changing its advertising, packaging and labeling. In short, adding value to the equity of the band, and making it more contemporary and relevant to new, emerging needs of consumers.

Integration of Market Segmentation And Brand Positioning: At this stage, the need for combining market segmentation study and brand positioning study may be emphasised. As a consumer segment would respond to a brand that occupies the position preferred by it, so also a brand must be positioned to appeal to that target consumer segment. In other words, the two should be integrated. As David W. Cravens has rightly observed. “Target market and positioning strategies are like the two sides of coin. They are inseparable and each depends upon the other.”

Green and Tull provide a good example of integrating target segment and positioning of brand (beer) in their book. The authors conducted a study in a particular region of the United States, taking a sample of males addicted to beer. The data related to 12 different brands of beer. On the basis of this study, the authors showed how the questions of product positioning and market segmentation and propensities of consumer switching from one brand to another could be interrelated in a single study. It is, therefore, advisable to combine market segmentation and brand positioning in a more comprehensive single study. Such a study will be far more useful to the management in formulating suitable marketing strategy of the company than the two studies done at different times, as if they are completely unrelated.