Lifestyle segmentation is a method of categorising target audiences based on their way of life, which includes activities such as healthy eating, staying active, and participating in sports and other hobbies, among other things. It is most beneficial for businesses whose purchasing decisions are driven by the lifestyles of their customers, such as shoe purchases for busy moms.
Customised message and improved rapport-building are two advantages that can lead to increased sales. CRM software that includes features to assist companies identify and engage with consumers based on their lifestyle is essential if you’ve spent the time segmenting customers.
Table of Content
Creating lifestyle segments is the process of splitting a market of prospective consumers into separate groups of people who have similar ways of living. For example, the ads for Mountain Dew focus on adventurers lovers and thrill seekers. This is positioned as a way of overcoming fear and the target customer are young adults( 18-30 years of age).
How Lifestyle Segmentation Works?
As opposed to using mass marketing, targeted marketing focuses on attracting a specific group of customers rather than attempting to reach everyone in the market. An alternative is to create submarkets inside the larger market, each with their own set of shared requirements and goals (whether it in the consumer, industrial, or reseller markets). Using this market segmentation, they evaluate each segment’s profitability and select one or more categories to target with a specific marketing strategy. The term “target market” refers to the audience that a business intends to reach once it has narrowed its focus.
There are four basic ways to segment a market, which are based on demographics, behaviour, and psychographics. It is a form of psycho-graphic segmentation that entails gathering information about the habits and preferences of potential customers (through surveys or data from previous sales or loyalty programmes) and then segmenting them based on how they spend their time, the items in their surroundings, and what is most important to them.
The following is a hypothetical scenario: You’re a wine merchant and want to begin offering monthly wine memberships. Companies choose to focus on a smaller segment of the consumer market rather than trying to reach the whole market with their marketing mix. The first step is to gather information about a customers’ wants and needs using a survey.
It’s based on these findings that companies create different buyer categories in the market. “Survivors,” cautious consumers who want to stick with what they know, make up a second sector. The other, larger group is made up of “innovators,” who are engaged consumers who take pride in their refined preferences.
Instead of targeting the “survivor” market with a wine of the month, companies should focus on the “innovator” lifestyle group and create a tailored marketing strategy for them. Prestige pricing and advertising in high-end places are the best ways to attract people who are most likely to buy from you.
Types of Lifestyle Segmentation
Some of the major lifestyle segmentations are as follows:
Innovators
The majority of these consumers are independent thinkers who enjoy variety in their lives, seek upscale or niche products that meet their taste for the finer things in life, and have the financial means to purchase them. For example, all those people who are and will be thronging apple stores to purchase new model of Apple watch or Apple iphone.
Thinkers
These practical, responsible, well-informed, and well-educated consumers are mature and reflective, and they have the financial means to purchase whatever they desire. However, they only make purchasing decisions after gathering all of the necessary information, and they seek out long-lasting products that provide value. For example, those people who invest in financial products for long term profit goals.
Achievers
The lives of these goal-oriented consumers are hectic, with time dedicated to their families, places of worship, and places of employment. They prefer well-established luxury brands that save them time. For example, a person employed as a software engineer in a reputed IT firm.
Experiencers
These ecstatic and even impetuous consumers are motivated by a need to express themselves and find outlets for that expression in sports and social activities. As a result, they are significant consumers of outdoor recreation products, fashion, and entertainment. For example, sports person or social media influencer tasting the food of different restaurants and Dhabas and sharing experience on Instagram or facebook.
Believers
These traditionalists have sincerely held beliefs about the importance of family, religion, and the home country’s products.. Their purchasing habits are predictable, with a preference for well-established (and ideally American) products. For example, there are some people who purchase made-in-India products and boycott Chinese products.
Strivers
They belong to a low-resource group of those who are motivated by achievements. Strivers have values very similar to achievers but have fewer economic, social, and psychological resources. Style is extremely important to them as they strive to emulate people they admire. For example, the customers who purchase chains, cap, loose t-shirts to look like rappers, pop singers etc.
Makers
They belong to the low-resource group and are motivated by self-expression. This type of customer are practical people who value self-sufficiency. They are focused on the familiar family, work, and physical recreation and have little interest in the broader world. As consumers, they appreciate practical and functional products. For example, those people who avoid branded cloths, bags, footwear and prefer local market items as they know their budget and responsibilities.
Survivors
These consumers have limited financial means and are resistant to change, preferring instead to place their emphasis on security and stability. In their capacity as buyers, they are possibly the most cautious, preferring to stick with tried and tested items rather than trendy ones. For example, people above 61 years of age. They do not use Internet, spend time alone, not concerned about the trend.
Benefit of Lifestyle Segmentation
The advantages of lifestyle segmentation are as follows:
Gaining a competitive advantage
Companies can provide benefits to a major client by understanding their lifestyle habits and preferences. They can also satisfy their requirements and wishes in ways that competitors may not be servicing or even aware of, allowing companies to build a footing in the market for their chosen lifestyle segments.
Identifying new market opportunities
Having an understanding of the consumers’ spending and spending habits allows companies to design new goods or enter new verticals that will appeal to them and, as a result, expand their reach and profit margins.
Retaining customers
Both retaining existing clients and acquiring new ones are critical business objectives. Customers’ shifting lifestyles, on the other hand, are frequently to blame when they decide to discontinue using a product or service.
(One example is the move from cable to streaming video providers, which is just one of many.) If companies keep an eye on the customers’ changing lives on a regular basis, you’ll be more likely to retain them as satisfied clients and less likely to lose them to competitors or the next craze in fashion.
Disadvantages of Lifestyle Segmentation
The disadvantages of lifestyle segmentation are as follows:
Can be expensive
Lifestyle segmentation data is not as expensive as psychographic data, but it is still more expensive than data that is more readily available, such as demographic data, in some cases.
Time consuming
While manual data collection can be time-consuming, it can also be more cost-effective than purchasing lifestyle data from a third party.
Inappropriate use of this data can have negative consequences
If sales teams are not properly trained on how to use this information in conversations, it can be a turn-off to clients and prospects.
