In a pre-pandemic survey of homebuyers, Bankrate.com discovered two-thirds (63%) of Millennial homeowners ages 23…
Demographics and Psychographics appears in the January/February issue of NAHB’s Sales and Marketing Ideas Magazine.
“You’ll read advice from marketing and research leaders in our industry,” noted Ladley, continuing, “Our customers today are targets of sophisticated and personalized consumer product marketing, and we need to compete on that scale.”
The article provides definitions around demographics versus psychographics and a simple three-step process for using both in strategic planning and marketing. Best of all, best practices on putting the data to work come from Tracy Tannenbaum, Chief Marketing Officer at Meritage Homes, Paul Bessler, Vice President, Strategic Market Research at Taylor Morrison, Derek Margetts, Director of Market Research for Shea Homes in Arizona and Tabitha Peterson, Marketing Director at Trumark Urban.
Demographics and Psychographics, Consumer Research
By Maureen Ladley, Ladley & Associates
Customers today experience increasingly sophisticated and personalized consumer product marketing, tailored to them as individuals, as marketers segment, target and market to them. These experiences have changed customers’ expectations for their purchase experiences. Fortunately, as customers’ expectations have changed, so have opportunities for homebuilders to gather and use data. By working with demographic and psychographic data, homebuilders can create a stronger competitive position in the marketplace and provide compelling messages that resonate with their target customer prospects.
What are demographics and psychographics, and how are they different?
Demographics are the quantifiable attributes your customers have. Demographics include categories such as age, marital status, income and homeownership status. Demographics are easy to group into segments: Your age is your age, you do or do not currently own a home.
Psychographics are the qualitative attributes your customers have. Psychographics include values, interests, lifestyle, activities and opinions. Psychographics help you understand your customers at a deeper level. The nature of these attributes can make psychographics more challenging to apply.
In marketing and marketing research, we have gathered and used demographic data for years. If the goal is to gain competitive advantage, using the same demographic data everyone has may not be sufficient. Demographic data coupled with psychographic data can provide the strategic advantage needed to target marketing, design the customer journey, and merchandise models to tell the right story or design the right sales office experience for today’s homebuyers. With the power of psychographics and the subtleties of values, interests, personalities or lifestyles of your target customer, we have the opportunity to deliver the high-level consumer experiences buyers have been trained by consumer brands to expect.
Using Demographic and Psychographic Data in Strategic Planning and Marketing
Step 1: Set Objectives. Start your consumer research planning by setting clear objectives. Are you planning community design, product design, marketing, merchandising, sales experience or the entire customer journey? Are you planning for a single location, for a region or nationally? Setting out clear objectives for your consumer research is the first step, along with identifying who is important to ask, and what questions you need answered to meet your objectives. The scope of your business and the nature of your communities will impact your objectives and approach.
Step 2: Determine Resources. To begin to build a rigorous customer understanding, you have resource options. Demographic data is found through many sources, including US Census data online or for-purchase data. For-purchase psychographic data is available, including Acxiom’s Personicx, Claritas’ PRIZM or ESRI’s Tapestry products, but the easiest way to start gathering actionable psychographic data is to gather it directly with the objectives in mind using consumer research, via surveys, interviews or focus groups, direct observation and even through information gathered at the sales office. This way, you can begin to build a portrait of your target customers.
Step 3: Use the insights and take action. Data has no value unless it is put to use. By setting clear objectives and building a database of consumer insights, you can answer the questions related to your objectives and use your data to craft strategies and actionable steps to reach and convert these target customer prospects.
How Homebuilding Companies are Putting Data to Work
Homebuilding businesses are putting demographic and psychographic data to work at national and local levels.
“At Meritage Homes, we are using a customer journey map to look at different customer segments at different points in their home buying journey to develop a marketing plan around the best way to reach them,” said Tracy Tannenbaum, Chief Marketing Officer at Meritage Homes. “This helps us better assess and tailor both the marketing channel and the message content. We collect our own data to accomplish this approach.”
Paul Bessler, the Vice President, Strategic Market Research at Taylor Morrison said his company combines surveys of home buyers to understanding their customer segments in-house. “We combine demographics, the what, with psychographics, the why,” he said. “The addition of psychographics gives us actionable results. For example, millennials do not fall into just one segment—they represent multiple segments for us. Designing homes, the sales experience and customer journey are so much more today than simply addressing first time buyers, move-up buyers and beyond. We use the deeper understanding of our customers in planning the entire range of product planning, marketing and sales and customer experience.”
At the market level, the objectives are adjusted to the local nature of communities.
“The biggest challenge when it comes to marketing and market segmentation is that the most effective form of segmentation is derived using psychographics but those are more difficult to measure and quantify when it comes to market size. Demographics, which provide a much less effective segmentation strategy, is employed because the data is much easier to obtain and can be used to easily quantify the potential market size,” said Derek Margetts, Director of Market Research for Shea Homes in Arizona. “Using generations provides an efficient way to illustrate some differentiation based on psychographics, but sometimes something seen as a generational shift has more to do with psychological factors. For example, are millennials really turning away from homeownership, or are they delaying marriage and family formation, delaying transitions from one lifestage to another, impacting lifestyle considerations? Ultimately, we use consumer research data we collect and demographic and psychographic databases.”
Collecting one’s own data works well at the community-level. Tabatha Petersen, Marketing Director, Trumark Urban, said she gets a lot of value from getting involved with their infill communities in San Francisco and Los Angeles. “While we do use ESRI’s Tapestry psychographics product, it’s the immersion into the market and the insight I gain that gives us the edge,” she said. “When creating a marketing plan, it’s all about the ‘who’ and the ‘why.’ These two aspects build on one another and help us target market and qualify traffic critical in designing a winning edge. Selling the lifestyle is a must and immersing myself in every aspect as to why that lifestyle is important to a potential buyer is my approach to marketing strategy. I work out of the nearby coffee shops to keep my finger on the pulse, purchase homeowner gifts from local retailers, host events catered with new and local fare, unveil local artwork at our buildings and constantly walk the surrounding neighborhood to keep the marketing relevant and the outreach ultra-authentic.”
Combining demographics and psychographics into your strategic planning, no matter your company size, will help you create a stronger connection to your customers, help you towards competitive advantage in your marketplace and create a memorable consumer experience for your homebuyers.
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Sales + Marketing Ideas magazine is published by NAHB and is the premier magazine for sales and marketing ideas for the housing industry. Each issue has valuable ideas and insights on sales and marketing trends, market research, advertising, marketing plans, model merchandising, sales management and more. Articles are written by the top experts in new home sales and marketing.)