Psychographic segmentation has taken value-based pricing practices to a whole new level. Using psychographic segmentation it’s now possible to tweak the method of setting prices typically based on superficial demographic categories like age, gender, ethnicity, and other broader variables. On top of this, psychographic segementation gives you the opportunity to modify how consumers respond to different price points and offers (segmentation demographic psychographic behavioural). Think product benefits, buying patterns, and the volume of purchases.

Pricing teams that refine pricing based on pyschographic segmentation examples such as values and interests are now able to determine optimal price points with a greater degree of accuracy. Identifying and understanding consumers emotional and psychological responses to price and value is fast becoming the focus for profitable revenue growth.


In this article, I will discuss psychographic segmentation examples and its synergies with value-based pricing. As I go through, I will use B2C fuel industry case examples. These will point out ways a pricing and revenue management team can use psychographic segmentation questions to inform and test their assumptions on consumer pricing and buying preferences. From here, we’ll go through some possibilities of how pricing teams can trial more dynamic pricing in industries used to fairly fixed and traditional pricing and offers.


What’s the value of psychographic segmentation examples?

If you want to drive more profitable sales without sacrificing volume or revenue, one sure-fire tactic is to figure out a way to charge different prices to customers with different values and reasons for buying.


The late Sir Colin Marshall, CEO, and chairman at British Airways (BA), touched upon the value capture possible of using advanced pricing and psychological principles (psychographic factors in market segmentation) when he said:


“You’re always going to be faced with the fact that the great majority of people will buy on price. However, even for a seeming commodity such as air travel, an element of the traveling public is willing to pay a slight premium for superior service. In our case, we’re talking about an average of 5%. On our revenues of £5 billion, however, that 5% translates into an extra £250 million, or $400 million, a year.”


Colin Marshall’s statement here, explains the significant dollar contribution of a sophisticated and management price change. Literally, BA got millions of dollars from implementing smarter pricing. However, he did not explain how? (Not surprising, because the CEO is not a pricing or psychology expert and may not know the cause and effect relationship of consumer psychology and psychographic variables market segmentation.

psychographic segmentation examples.)


Psychographic segmentation examples case study


To see the full value of psychographic segmentation questions, let’s look at a case study of the B2C fuels market and what revenue opportunities get missed when we assess the consumer fuels market through demographics alone.

Yes, people with different incomes, cars, postcodes make somewhat different fuel purchases (i.e., demographic variables). Knowing this does, however, not tell us why they are buying different amounts of fuels OR what they value OR what they are willing to pay for or not. What consumers value, their motivations for buying is also essential information to any pricing function looking to set optimal price points by product, customer segment or micro-segment.


We all buy fuel for different reasons…

The price of fuel is just one of the reasons we buy fuel. Some people may choose, for example, to purchase fuel from a particular service station because they value convenience. This means they are prepared to buy more expensive fuel to avoid a detour from their daily commuter route. They are prepared to pay more for the convenience of staying on their preferred route to work.


For this group, the price of fuel may be on their list of considerations when they buy their fuel, but it may not be their top driver for purchasing fuel. They have probably made a conscious decision to trade price for convenience. They want to buy from a service station that is convenient to them at a critical point in their daily routine or journey.


Other people may not value convenience or price but the ease of access

This means they are willing to buy petrol from service stations with large forecourts and clear and visible entrances and exits. They may even go out of their way to find a service station with ease of access. Some go off their main route because they like a particular service station.


Again, price may be a consideration for them as well. However, they are willing to spend more on fuel because the service station is easy to access, navigate and leave.  They value their time and don’t want to cue up for cheap fuel. Especially at a service station with a limited number of pumps. Being late for work, or a meeting is a massive risk driver that they are willing to pay a bit extra to avoid.

Implication for psychographic segmentation examples in marketing

Using psychographic factors in market segmentation allows you to create smarter pricing. For example, you can understand why some segments and customer groups overlap with other segments. You can also start aligning your prices to your customer’s values and preferences rather than just following or reacting to your competitors’ pricing tactics. You can also move beyond differential pricing and accusations of price gouging.

When pricing teams uncover what consumers actually value, they are in a stronger position. This doesn’t mean penalising them for living in an expensive neighbourhood. No. It means they can begin to start trialling dynamic pricing that offers real value back to their customers. What’s more, this can happen without forgoing predictive forecasting accuracy, volumes or hard earned revenues.

A pricing team need to understand the sensitives of psychographic variables market segmentation to employ value based pricing

They can also re-calibrate their demand forecasts based on an accurate understanding of current trends and be less dependant on past volumes and trends with little significant to what customer actually value now. These in turn will override tired demographic categorisation, forecasting and hypothesises about price and consumer preferences. Typically based on analyses of simple cost and demand drivers.

Traditional demographic methods of market segmentation do not usually provide enough information to inform segmentation. Analyses of customer segments by age, sex, geography, and income level are not likely to provide as much direction for pricing strategy as management requires (psychographic segmentation market definition).


9 Advantages of psychographic segmentation advertising

Specifically, psychographic segmentation advertising and market approach analysis helps pricing teams to:

  1. Direct the appropriate amounts of promotional attention and money to the most potentially profitable segments of his market
  2. Work out an appropriate margin for a product line. Identify gross margin percentages that truly parallels the demands of the market. Rather, than cost plus margin pricing that bulks in some areas and ignores other potentially quite profitable segments
  3. Identify the first signs of a major trend in a swiftly changing market. Give the business room to prepare or take advantage of it
  4. Determine the advertising campaign that will be most effective for a particular pricing strategy or campaign. Quantify and monitor the market responsive to each by product, group, and segment
  5. Develop targeted promos and loyalty programs for different segments and customer groups
  6. Determine the proportion of the budget that should be allocated to each campaign

  7. Identify trends to anticipate financial impact, risk, and competitive tension
  8. Correct the timing of advertising and promotional efforts. Ensure that they are massed in the weeks, months, and seasons. Especially when resistance to price increase is low and responsiveness is at maximum
  9. Understand otherwise seemingly meaningless psychographic information about consumers. Develop new scoring and rating systems. Use these system to measure consumer value drivers by group and segment and inform segmentation and strategy


Conclusion on segmentation demographic psychographic behavioural


Believing consumers don’t buy based on their values and interest is a mistake. Consumers in B2C markets act just like customers in B2B markets. They increasingly identify their values and interests over their geographic or demographic profiles when they make a buying decision. Psychographic segmentation makes it easier for teams to improve pricing and trial dynamic pricing on the right sites and segments. Using a cookie cutter approach to customer segmentation is not very effective. Demographic or even geographic variables often ignore the reasons why customers buy from us. As well as when they are willing to pay more or not.


Leading global companies already practise this such as Starbucks psychographic segmentation, Zara psychographic segmentation as well as Nike and Apple.


Demographic segmentation should not be disregarded. Instead that it should be regarded as only one among many possible ways of analysing markets.


It can be easy to lose touch with fundamental principles of pricing and psychology in our daily routines at work.  We highly recommend that pricing teams use psychographic segmentation principles to add more depth and rigour to their traditional segmentation logic and thinking about value and price.

psychographic segmentation questions