Why the traditional approach to segmentation of the market is always wrong
AI is transforming digital marketing – changing how search traffic works. As a result, understanding your target user and segmentation of the market is becoming increasingly important.
However, just because you have some demographic data insight into their age and gender does not mean you know who they are.
That is like saying you know the random guy you see on the train each morning because you can describe his appearance. Despite his boring grey suit and receding white hairline, the man may love musicals.
He may even enjoy dancing in the rain and listening to punk rock. Yet, most organisations get this wrong. When analysing and segmenting their target market, they focus on what their audience looks like.
However, it is not about who people are. It is about understanding their “why”.
How your segmentation of the market attracts polar opposite people
Still unconvinced? Let us conduct a thought experiment. (Do not worry; this will not involve anything mind-blowing like illustrating quantum indeterminacy).
Imagine you have a new health intervention that can transform the health of people who have lived a life of excessive partying. Using a traditional approach to market segmentation, you find the demographics of the perfect target audience.
Awesome! You all high-five each other as you decide to launch the campaign on social media. Boom—this will be brilliant and guaranteed to drive an extra 10k Insta followers!!!
Two different men see your campaign. Both were born in the early 1940s, have children and are in long-term relationships. Excellent, you think. They are ready for the intervention as they have settled down.
Moreover, they are leaders in their industry and have received multiple awards. The campaign cannot fail, you conclude. They have the income to buy your new intervention and must have been to a few parties in their life.
They are native English speakers and have been to university (although one went to a university that is amongst the 400 best globally, while the other man went to one in the top 30). The result?
Congratulations. You have identified a new market segmentation. Joe Biden and Mick Jagger have seen your campaign.
AI is increasing online competition, so you must use behavioural analysis to segment the market.
Admittedly, we are unfamiliar with Joe’s partying habits from his youth. However, it feels unlikely that he spent his 20s throwing TVs out of his hotel room. However, anything seems possible since it was Jagger and not Biden who went to a top 30 university.
Using demographics to build user personas and segment the market is an outdated approach. For too long, people have confused audience targeting with segmentation.
New AI search engines are set to emerge in the future of online marketing. As a result, multi-channel strategies can expect to become more important, increasing the complexity of gaining online visibility.
Consequently, understanding how to target your market through behavioural analytics is crucial.
Just because people are the same age, sex, or ethnicity does not mean they are similar. Instead, we should look to science to understand humans.
The new way to perform segmentation of the market: Developing psychographic profiles to get visibility for the AI age
At Antlerzz, we conduct our digital ecosystem data analysis partly through the lens of cognitive science. The limbic system is a group of interconnected structures located in the brain. It is responsible for emotions and behaviour.
The part of the brain lights up when people discuss their beliefs, attitudes, perceptions and motivations. Marketers should consider this when targeting audiences and building personas. It should be the focus when creating a new market segmentations.
Demographics target what people are. Behavioural data analysis targets an individual’s raison d’être, the future way of targeting your audience. We call these behavioural profiles psychographic analysis.
Why AI is increasing the importance of psychographic analysis
Over the next decade, as more AI chatbots and AI features like Overviews emerge, niche insights will be key to gaining online visibility.
Today, we can see that this change is already occurring. Developing a niche is critical for Instagram’s algorithms to get more fans, views, and engagement.
Moreover, the same is true for website traffic. Gaining topical authority by developing strong entities is crucial. Going forward, understanding how to increase topical authority is arguably the most essential factor for webmasters to understand.
Therefore, understanding how to leverage psychographics for market segmentation plays a crucial role. It helps you develop a focused content strategy, further accelerating your ability to develop a strong niche and stand out.
Psychographic analysis in action: How it’s used in the real world
Behavioural data analysis to segment your market can sound sci-fi, but it is not. It has received significant attention through the unethical Cambridge Analytica and Brexit scandals. Yet, psychographic analytics has also been used extensively to drive business growth.
Tech behemoth Netflix already embeds some of these principles into its technology. It runs approximately 250 A/B tests annually to see how people respond to slight differences in shows or the platform’s appearance.
Furthermore, they create over 76,000 micro-genres to understand what each person likes to watch. Consequently, the platform can understand people’s behaviour and develop bespoke viewing, enabling them to build niche content.
However, you could question how effective their targeting is. After all, Netflix continually recommends I watch a dating show called “Too Hot to Handle.” Why? It certainly has nothing to do with me secretly watching “Love is Blind!”
How is AI used in market segmentation?
Thankfully, with advancements in AI, segmenting your market through psychographics can be done more efficiently. However, you must have clean and accurate data sets.
By leveraging AI’s ability to process vast amounts of data efficiently, companies can better understand customer personalities, values, interests, and lifestyle choices.
Moreover, AI can continuously refine these insights based on new data. AI systems can quickly adapt marketing strategies as they detect new patterns in customer behaviours or shifting preferences.
For example, AI can personalise campaigns by identifying what resonates most with specific psychographic segments and tailoring messages to align with customers’ motivations or emotional triggers.
AI’s predictive analytics further strengthens market segmentation by forecasting customer preferences and behaviours. By examining data such as browsing history, past interactions, and even social media activity, AI can anticipate what will appeal to different audience segments on a deeper, more emotional level.
How to do market segmentation targeting the correct way: Developing psychographic profiles
To get started, consider the following steps. These can guide you on your journey from demographic to behavioural targeting.
- Identify data sources for customer engagement and behaviour. You could include various sources such as CRM data, social media, websites, and user engagement surveys.
- Look for general behaviour trends. Categorise these under beliefs, attitudes, perceptions and motivations.
- Review your initial categorisation and challenge yourself. What are your audience’s political beliefs, worries, dreams, and social pressures?
- Use your data analysis to build your target personas. Feel free to give them a name. However, you may want to consider something gender, ethnic and age-neutral.
- Keep iterating. It is pointless having user personas last updated in 1982. The world is changing – fast! Keep updating them and learning from your data.
Your article helped me a lot, is there any more related content? Thanks!
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