What is Lifestyle Segmentation?

Lifestyle Segmentation
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Customer lifestyle segmentation, as the name implies, is a business practice which divides or breaks up information concerning customers into subgroups. These subgroups stem from the sum of all customers that are important to the organization. They must be identified to learn what they need, want or wish to get from a brand or company.

Purpose of Lifestyle Segmentation in Marketing

Once lifestyle subgroups are identified and labeled according to their choices, more options for products and services can be obtained for them.

In turn, the subgroups of customers will become more loyal to the brand as they continue to meet their needs through the brand or company. It is a symbiotic relationship which greatly benefits both partners.

Lifestyle segmentation. All things considered:

There is a formula used to identify lifestyle segmentation. It considers the following factors:

Customer loyalty factor- This is also known as "retention rate." It is a practice conducted in nearly every field, aiming to predict how likely current customers are to remain true to the brand. The way to do this is by analyzing the consumption of the goods and services offered.

The questions to ask are:

-What segment of the consumers contributed the highest percentage of sales?
-What particular demographic segment contributed to what specific revenues?
-According to data, which segments keep coming back?
-According to data, which segments respond the most to new sales ads and campaigns?

Expected profit per sale
Using all sales information based on past campaigns, the data is analyzed to show the best selling years, the highest selling units, most sought after services, and how other goods offered do under the scope of sales.

Discount variables
This is the "give or take" component of this formula.

The prediction is made based on how the market is doing. For example, it would be futile to add merchandise for sale during a campaign which is about to be hit with new government policies that will increase taxes or decrease revenue among consumers.

Using data that traces back to decades, businesses can predict liabilities in sales, losses, and other variables.

Different types of Lifestyle Segmentation in Marketing

Lifestyle segmentation is as varied as customer demographics is. However, four key groups are considered when analyzing lifestyle data. Hence, such data can be:

  • Geographic- Where are our focal groups located, buying, and using the products?
  • Behavioral- When are the groups more likely to buy, under what circumstances, and how do they choose to consume or use the product?
  • Demographics- What is the race, gender, age group, or marital status of our customers/consumers?
  • Psychographic- What makes them unique? What are their personal preferences and lifestyle choices?

Additional Information that is Important When It Comes to Lifestyle Segmentation

As entrepreneurs, the most important thing to remember is that lifestyle analysis is an ongoing process. Demographics shift, groups, change, and tastes vary.

New trends and social changes determine what the public will pick to do next. It is of utmost important to keep a keen eye on all changes and continuously make correlations. Lifestyle segmentation is periodic, consistent, and never-ending.