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Segmenting B2B technology markets via psychographics: An

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Segmenting B2B technology markets via

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Art Weinstein
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Marketing Department, Nova Southeastern University, Fort
Lauderdale, FL, USA
Published online: 06 Feb 2014.

To cite this article: Art Weinstein (2014) Segmenting B2B technology markets via
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 Journal of Strategic Marketing, 2014
Vol. 22, No. 3, 257–267, http://dx.doi.org/10.1080/0965254X.2013.876072

Segmenting B2B technology markets via psychographics: an

exploratory study
Art Weinstein*

Marketing Department, Nova Southeastern University, Fort Lauderdale, FL, USA

(Received 17 July 2013; accepted 27 August 2013)

This article examines how marketing executives employ psychographics as part of their
target marketing strategy in business technology markets. In spite of the increased
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attention in the recent business-to-business segmentation literature, psychographics is

not used as a major segmentation dimension (only one in five companies used this
base). Psychographic thinking without formal analysis, however, was a commonly used
strategy evidenced by 59% of the companies. While there was no difference in target
marketing success found between formal and informal psychographics, both
approaches fared significantly better than firms not bringing a psychographic mindset
to their segmentation strategy. Firmographic and demographic variables did not impact
the use of organizational psychographics. Motivation, relationship and risk variables
were used by marketing managers as psychographic inputs. Implications for
management practice and a research agenda for segmentation scholars are presented.
Keywords: segmentation; psychographics; firmographics; target marketing; business
markets; technology companies

Introduction
According to Kotler and Keller (2010), the formula segmentation, targeting and
positioning (STP) is the starting point for value creation and the essence of strategic
marketing. As an example, four high-tech segments were found in researching the mobile
professional market via a value-added analysis – specialized solutions, customized
solutions, value solutions and packaged solutions (Dunn, Hulak, & White, 1999).
Kotler (2003) adds, ‘all markets consist of segments and niches.’ Success results from
the best prospects for an organization’s goods or services – its target markets. Building on
Darwinian theory, parallels between biological competition and business competition
have been drawn. Just as no two species can coexist if they make their living in the
identical way, firms that offer the same products, in the same territory, under the same
conditions, with the same clientele cannot coexist equally. Eventually, one will dominate
(Darwin, 1859; Henderson, 1989).
Psychographics has captured the imagination of consumer marketers as a segmentation
dimension (Piirto, 1991). In consumer markets, it is often used to differentiate target
markets and provide an overall basis for promotional strategy via personality traits or
lifestyles (also known as AIOs, for activities, interests and opinions). Research on business
psychographics is less clear and limited. Hence, the purpose of this article is to critically
examine the use and success of organizational psychographics as a segmentation
dimension from the perspective of marketing executives in technology companies.

*Email: [email protected]

q 2014 Taylor & Francis

 258 A. Weinstein

Background – defining psychographics

In a seminal work, Wells (1975) defined psychographics as ‘quantitative research intended
to place consumers on psychological – as distinguished from demographic – dimensions’
(p. 197).
Demby (1989) offered a comprehensive definition of psychographics stating it is ‘the
use of psychological, sociological, and anthropological factors, self-concept and lifestyle
to determine how the market is segmented by the propensity of groups within their
market – and their reasons – to make a particular decision about a product, person or
ideology.’ McDonald and Dunbar (2005, p. 158) explain that psychographics is ‘a
customer’s inner feelings and predisposition to behave in certain ways.’ They add that
marketers should view psychographics as a contributor to a successful segmentation project.
From a business marketing perspective, the use of psychographics is largely a
conceptual issue with limited evidence of widespread adoption by organizations (Kenney
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& Weinstein, 2010). Organizational psychographics, however, can provide a strategic

competitive edge. For example, Sportmed sells medical instruments and supplies to
physicians who practice sports medicine – the treatment of sports-related injuries. Two
psychographic segments emerged from a research study (Cleland & Bruno, 1996).
Progressives were early adopters of new technology and willing to ‘pay up’ for the
competitive edge this equipment gave them in their medical practice. Traditionals were
more cautious customers who waited to adopt new technology until it had been broadly
accepted in the market; they were willing to forego possible competitive advantage in their
medical practice and believe in ‘playing it safe.’
Barry and Weinstein (2009, pp. 318– 319) defined business psychographics as
the segmentation of organizational buyers into homogenous clusters of mindsets and
behaviors that are distinguished by motives, risk perceptions and social interaction styles in
order to identify prospects as well as predict the predispositions of the firm’s decision makers
for the sake of adapting products, marketing messages and relational selling behaviors.
The authors build on Bonoma and Shapiro’s (1983) nested segmentation model; in fact,
Plank (1985) calls this the most important multistep approach to segment business markets.
Bonoma and Shapiro’s (1983) five-ring process advocates a shift from observable and
objective descriptions of a buyer’s industry (firmographics), operating variables and
purchasing criteria to situational and psychometric segmentation variables. These latter
two innermost rings have risen in importance given the recent business environment
(B.P. Shapiro, Telephone interview conducted by S.V. Cates, September 19, 2002).
Specifically, Barry and Weinstein (2009) examine the innermost ring of the nested model,
buyers’ personal characteristics, which includes buyer –seller similarity, attitudes toward
risk and loyalty to suppliers (Bonoma & Shapiro, 1983). Barry and Weinstein conclude
that business psychographics consists of three major dimensions (motivation, risk and
relationships) and eight variables, which comprise business-to-business (B2B)
psychographics (see Figure 1). In the context of a case study for Citrix Systems,
Weinstein (2011) identified 17 segmentation variables within a nested framework. Several
of them – i.e., type of buyer, key benefits, perceived need for streaming, risk profile and
innovation – had a strong psychographic component.

Business psychographics – recent research trends

Research on organizational segmentation has gained momentum as firms recognize its
power in forging customer relationships (Weinstein, 2006). With heightened attention
 Journal of Strategic Marketing 259

Buyer needs Relational style Risk perceptions

Entrepreneurial culture National culture Negotiating style

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Innovativeness Personality types

Figure 1. Business psychographics – conceptual model. Source: Adapted from Barry and
Weinstein (2009).

given to personalization and relationship marketing, segmentation is a key marketing

activity to create value-enhanced experiences that connect customers with brands.
Clemons, Nunes, and Reilly (2010) call this ‘finding the sweet spot’ – which, in turn, is a
strategy that leads to superior profitability.
Segmentation research can facilitate effective selling by adaptation to customer
personality types. Recent trends toward segment-of-one marketing, customer loyalty
initiatives, customer relationship management programs and web analytics advocate
customers segmentation by profit potential (Kaushik, 2007; Peppers & Rogers, 2004).
These perspectives are further challenging the efficacy of geodemographic
segmentation as it fails to capture the psychographics (motivations, relationship
behaviors, corporate cultures, personalities, etc.) that differentiate customers into
meaningful target markets. As a result, psychographic dimensions have surfaced in B2B
selling strategies and marketing initiatives. The entertaining Mac versus PC promotional
campaign is a brilliant illustration of a psychographic profile of the Apple customer.
In spite of the acknowledged usefulness of psychological segmentation in
organizational settings, the formalization of marketing and operational plans around
psychographic dimensions is infrequently utilized. While researchers and forward-
thinking marketing executives are intrigued by the depth of personalities stemming from
advanced research techniques, psychographic analysis is viewed as costly, subjective and
difficult to measure. Given these shortcomings, many companies are opting for intuitive
segmentation or ‘informal’ psychographics as a part of their strategic planning activities.
Millier (2000) demonstrates how instinctual knowledge can yield testable segmentation
matrices for a new aluminum alloy aimed at the automotive industry.
Further compounding the adoption of psychographics to organizational settings is the
complexity of the buying center. Industrial market characteristics, for example, differ
sharply from consumer markets (B2C) on several dimensions, which impact segmentation
analysis and other strategic marketing decisions (Kotler & Keller, 2010). Not only are
many individuals involved, but also special justifications, authorizations and approvals
often restrict the influence of personality on buying decisions. The industrial salesperson is
instead confronted with a more formula-driven buyer than is typically found in the
 260 A. Weinstein

consumer sector. To simplify the decision process, DHL classifies buyers by personality
type as factual, analytical or touchy-feely (Barry & Weinstein, 2009).
So, how far has business psychographics progressed from a segmentation theory to a
real-world marketing practice? Robertson and Wind (1980) found that employing
organizational psychographic variables improved the explained variance by more than
25% versus demographics alone. This finding is important because, as Wyner (2009)
explains, the value of segmentation ‘should be based on its likelihood of achieving
improved marketing and business performance.’
Bill Neal, the founder of SDR Consulting (Atlanta, Georgia, USA) and former
president of the American Marketing Association explains, ‘Business managers have
relearned the benefits of target marketing. Most marketers now recognize that simplistic
segmentation schemes based on demographics, geography or SIC codes are suboptimal at
best – and disastrous at worse’ (Neal, 2002, p. 37). Most B2B marketers, however, rely on
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firmographics and use psychographics infrequently (Frichol, 2009).

Few companies use segmentation as an effective strategic planning tool. Bossidy
and Charan (2002) stated that less than 5% of the plans they have seen contained useful
segmentation information. Most voluminous marketing plans devote a majority of their
pages to review product features and promotional material but offer only a limited
discussion of customer profiles, benefits sought and what is valued in business relationships.
According to Yankelovich and Meer (2006), 59% of large companies commissioned a major
segmentation study within the past two years but only 14% of the executives said they gained
real value from them.
Also alarming is the erosion of customer segmentation as a leading business tool
according to top executives. Bain & Company has conducted annual studies of the top 25
management tools for more than 20 years. Segmentation’s popularity as a strategic
resource has fallen from a peak in 2006 when it was viewed as the third most important
management tool to 7th in 2008 and 10th in 2010. In the 2012 study, it fell out of the top 10
ranking (Bain & Company, 2013).

Research questions
A major objective of market segmentation analysis is to find growth opportunities. As the
above research indicates, it is apparent that there is an opportunity to improve in this area.
Building on the brief overview of the literature, this empirical study queries B2B
marketing executives about their perceptions of how well psychographics is used in
technology companies. Technology markets are vital because of a transformation to an
entrepreneurial, global and knowledge-based economy (Weinstein, Jin, & Barrett, 2013).
Below are the three major research questions that guide this investigation:
Research Question 1.: Are companies that formally use B2B psychographics more
effective in target marketing success than companies that
informally use B2B psychographics or companies that do not
use B2B psychographics?
Research Question 2a.: Is there a significant relationship between firmographic
variables (company size and industry sector) and the use of
B2B psychographics?
Research Question 2b.: Is there a significant relationship between demographic
variables (age, gender and years working in a marketing
position) and the use of B2B psychographics?
 Journal of Strategic Marketing 261

Research Question 3.: Does the three-component conceptual model of B2B psycho-
graphics (buyer motivation, risk management behavior and
buyer relationship style) explain how marketing managers use
psychographics to segment markets?

Methodology
An email survey was used to collect data from marketing managers in business technology
markets. The questionnaire was distributed via SurveyMonkeyTM and data analyzed
through SPSS 17.0. Industry sectors included computer hardware, software, electronics,
semiconductors, pharmaceuticals, medical devices, communications, biotech, energy,
manufacturing, media, information and research, and professional services.
While this work was exploratory in nature, validity was demonstrated. The research
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instrument measures what it intends to measure (this is also referred to as accuracy or

truth). Content validity was assessed by having two marketing professors with expertise in
segmentation research (major publications and work experience in this area) evaluate
survey to ensure that it clearly specified the domain. From an external validity or
generalizability perspective, the questionnaire was pretested in person with 14 marketing
executives at five leading Silicon Valley companies – Infoblox, National Semiconductor,
Sun Power, Symantec and Trend Micro. Two respected marketing practitioners, affiliated
with the Business Marketing Association (BMA) of Northern California, assisted the
researcher by facilitating these group in-depth interviews, which lasted from one to two
hours. Based on these inputs, the questionnaire was refined, as needed.

Sampling plan and profile

A snowball sampling technique was employed to collect the data. According to Churchill
(1995), snowball sampling is a judgment approach that is useful for sampling special
populations (e.g., high-tech executives); it does, however, introduce a non-probabilistic
sample bias. Given the exploratory nature of this research, this tradeoff was deemed
acceptable.
Two hundred and fifty B2B technology marketers were contacted through personal
networks, business advisory councils at the sponsoring university and members of
professional organizations (BMA and AMA Marketing Strategy and LinkedIn special
interest groups). Seventy marketing managers responded to the survey resulting in a 28%
response rate.
As the sample profile in Table 1 shows, three major sectors – technology, B2B/
professional services and computer-related – accounted for 83% of the respondents (17%
were in the medical/pharmaceutical business). Almost three in five (57%) of the participants
worked for small companies, and the other 43% was split between medium-sized and large
organizations. More than 80% of the respondents were male. Nearly half of the sample was
30 –49-year-olds with the other half being 50 þ (only 4% of the respondents were under
30). This reflects the experience level of the sample since two-thirds of the marketers worked
10 or more years in a marketing position.

Major findings
Research Question 1 (RQ1) assessed the effectiveness of psychographics as a B2B
segmentation base. Psychographics was found to be a bottom-tier segmentation dimension
 262 A. Weinstein

Table 1. Sample profile.

% n
A. Industry sector
Technology 30 21
B2B/professional services 29 20
Computer-related 24 17
Medical/pharmaceutical 17 12
B. Company size
Number of employees
Small (,100) 57 40
Medium (100– 499) 16 11
Large (500 þ ) 27 19
Annual revenues
, $25 million 60 42
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$25– $500 million 14 10

. $500 million 26 18
C. Gender
Male 83 57
Female 17 12
D. Age
, 30 4 3
30 – 49 49 34
50 þ 46 32
E. Years in a marketing position
3 or less 16 11
4–9 17 12
10 or more 67 47

ranking ninth of the nine B2B segmentation bases tested. Only 22% of marketing executives
reported using this approach – usage rate (28%), buying situation (26%) and purchasing
behavior (24%) fared slightly better. The five most popular B2B segmentation bases were
application/end use (59%) and firmographics, geographics, benefits and value (all reporting
43% use). This represents a shift from Abratt’s (1993) research that found geographics and
firmographics as the top two industrial segmentation variables. The importance of
application/end use segmentation is illustrated by this comment from a respondent:
We have customers that reside in a common vertical market but utilize different applications/
end uses for our products. Thus, we do a lot of segmentation by vertical, overlayed with
application. We could end up with multiple marketing programs to a common vertical.
(Oil and gas transportation, small firm)
Although its use was quite limited, psychographics fared extremely well in target marketing
success (this was defined as being ‘successful’ or ‘very successful’ in target marketing
activities). Using an index ¼ 1.00 (average), psychographics was rated as the most
effective B2B segmentation base (1.24) ahead of purchasing behavior (1.10), value (1.08),
firmographics (1.01) and usage rate (1.00). The challenge of incorporating behavioral
business segmentation dimensions into the analysis is captured by this marketer’s view:
It seems that only a distinct minority of enlightened firms have advanced beyond obvious
segmentation criteria, few yet venturing into meaningful psychographics or the Holy Grail of
value-based segmentation. (Management consulting, small firm)
While less than a quarter of the respondents stated that they use psychographics, 59% of
the sample reported the use of psychographic thinking (without formal analysis) in their
marketing strategy decisions. Typically, this was operationalized as analyzing buyer
 Journal of Strategic Marketing 263

Table 2. ANOVA – target marketing success by use of psychographics.

Source Sum of squares Degrees of freedom Mean squares F-test/p-value

Between groups 10.738 2 5.369 8.108/0.001
Within groups 44.366 67 0.662
Total 55.103 69

Groups Count Mean SD

Formal 15 3.92 0.954

Informal 41 3.73 0.751
Not used 14 2.82 0.835
Total 70 3.59 0.893
Note: Tukey’s HSD test: ‘Formal’ and ‘Informal’ are significantly different from ‘Not used’ at the 0.05 level.
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Measure: How successful is your firm in targeting markets? (1 ¼ unsuccessful to 5 ¼ very successful).
Source: Weinstein (1998).

needs. One simple yet effective approach for incorporating intuitive analysis (informal
psychographics) is explained:
We ask nice clients twice a year (we visit them) and ask why they use us or what do they need.
(Personalized printing, small firm)
As Table 2 shows, based on an ANOVA (F ¼ 8.108, p ¼ 0.001), it was found that the use
of B2B psychographics impacts target marketing success. While there was no significant
difference between formal and informal psychographics (means ¼ 3.92 and 3.73,
respectively), those not using any form of psychographics fared significantly worse
(mean ¼ 2.82) with respect to target marketing success.
RQ2 explored organizational (company size and industry sector) and personal
demographics (age, gender and years in a marketing position) and the use of B2B
psychographics. There were no significant differences evidenced among these variables.
Qualitative analysis, however, revealed that computer-related and other technology
businesses were less likely to use formal psychographic research than healthcare and
professional services firms. Given an emphasis on product orientation rather than market
orientation by many innovative, engineering-led high-tech companies, this is not
unexpected. Consider this insightful comment from one participant in the study.
Market segmentation for B2B is just as important for companies marketing to consumers.
In this day and age ‘one size fits all’ will cost you market share, if not your entire market.
(Government services provider, medium-sized organization)
RQ3 supports the concept of the three-component model of B2B psychographics depicted in
Figure 1 (Barry & Weinstein, 2009). All eight of the psychographic variables proposed were
cited by the respondents and no additional business psychographic variables received more
than a single mention. On average, business marketers employ 3.3 variables in their
psychographic analyses – 1.3 motivation, 1.3 relationship style and 0.7 risk management
variables. An example of how one company implements psychographic segmentation is stated:
We have a matrixed segmentation that looks at personality types on one axis and disease
treatment on another. (Healthcare [diabetes products], large company)

Marketing implications – the value of B2B psychographics

Psychographics has the potential to be a powerful segmentation dimension in business and
technology markets. While this issue has been receiving more attention in the academic
 264 A. Weinstein

marketing literature, few practitioners have embraced the benefits of employing business
psychographics in their segmentation analyses. The intuitive value of (informal)
psychographics is clearly evident, however, as business marketers consider variables such
as buyer needs, entrepreneurial and national culture, innovativeness, negotiation style,
personality, relational style and risk in forming ad hoc customer segments and using this
information to design marketing strategies.
Psychographics (formal and informal) can become an important part of business
marketers’ segmentation toolkits along with firmographics, geographics, application/end
use, benefits, value and/or other dimensions. The relatively high costs of conducting such
primary research have limited its widespread use in B2B markets. In this exploratory
study, it was found that firms using business psychographics were 24% more successful
than average in target marketing success. This is very encouraging and is consistent with
Robertson and Wind’s (1980) findings. With the mandate of accountability in marketing, it
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is imperative that marketing research vendors and corporate market researchers

demonstrate the value of this marketing investment through projects and processes.
It is critical that the segmentation analyst get buy-in from management and the
marketing team to make business psychographics a viable target marketing strategy
(Openview, 2012). As a corporate education initiative, it is recommended that
companies create segmentation champions, participate in industry seminars/webinars
and pilot test small-scale segmentation research studies where the value of organizational
psychographics can be readily demonstrated. Once positive results are attained, it is
likely that the organization will want to strengthen its presence in this behavioral
research arena.
As part of a marketing audit (Kotler, Gregor, & Rodgers, 1989), it is suggested that
organizations objectively evaluate their level of segmentation sophistication and strive for
strategic segmentation (Jenkins & McDonald, 1997) – i.e., a company rates high on both
customer-driven and organizational integration dimensions. Dibb and Simkin’s (2001)
proposed that response to segmentation problems in infrastructure (prior to undertaking
segmentation), procedures (during the segmentation process) and operations (facilitated
segmentation implementation) can be enlightening in this evaluation.
Realize that experienced marketers often act as proxy information sources in lieu of
formal psychographic analyses since they clearly understand the major motivational
drivers of their customers. Companies that lack seasoned marketing managers are most
likely to benefit from B2B psychographic research studies. Another lower cost option is
the purchase of syndicated business psychographic information from such research
vendors as SRI International (VALS), Yankelovich Monitor, University of Michigan’s
List of Values (LOV) and Forrester Research. For example, Forrester’s technographic
typology has been successfully applied in many service and technology markets.
Firms not using psychographic insights from either formal market segmentation
studies or trained marketing executives were least effective in their target marketing
efforts. Their lack of market orientation limits their success in understanding target
markets and finding new niche opportunities. The adoption of behavioral segmentation
perspectives can reward these organizations in increased customer focus and market
performance.
Finally, while some organizations may opt to emphasize one area of business
psychographics (motivation, risk aversion or relationship style), business marketers may
fare best with a balanced approach featuring all three components of organizational
psychographics to better understand their customer base.
 Journal of Strategic Marketing 265

Research agenda
The introduction of psychographics into the B2B segmentation plan can assist marketers
design winning target marketing strategies. This analysis of technology markets represents
a starting point in a proposed multiphase segmentation research study. Clearly, a lot of
work remains to be done.
First, the role of business psychographics can be expanded beyond its traditional use in
sales management (adaptive selling, account prioritization and resource allocation) and
new product adoption. Note that a parallel exists in consumer markets where
psychographics is known as a mainstay in advertising profiling. The realm of possibilities
for B2B psychographics include but are not limited to market research applications (e.g.,
improving response rates or designing behavioral segmentation products for clients), field
and online customer service enhancements, differentiated web sites, cost/value tradeoffs
or price sensitivity studies, and creating and managing online communities/business social
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networks.
Second, the sample size should be increased. Highly targeted industry-specific mailing
lists, panel data or involvement in practitioner-oriented trade conferences can be used to
widen the scope of the study. This exploratory project was limited to US companies.
Expanding the research to other industrialized markets (Canada, European Union or
Japan) is a logical next step. This will likely necessitate the use of research collaborators
from these regions.
Third, measurement and analytical improvements are advisable. As Dibb and Simkin
(2010) note, segmentation effectiveness is challenging to measure because it includes
‘hard’ (statistical) and ‘soft’ (segment quality) measures. Foedermayr and Diamatopoulos
(2008) add that segmentation effectiveness is difficult to capture and is often confused
with marketing performance and success metrics. Based on the current study, measures
should be refined for formal versus informal psychographics, business psychographic
components (buyer motivation, risk management behavior and relationship style) and
variables (see Figure 1) and target marketing success.
New relevant segmentation variables can be built into the research program. Canhoto,
Clark, and Fennemore (2013) believe that social media may be useful in understanding
organizational segmentation practices. Other suggestions include the types of market
definitions employed – undifferentiated, differentiated, single segment concentration or
segment-of-one; criteria for market selection; marketing activities used and success;
technology factors and additional classification (firmographic) data. The proposed
measure can add great insight into how marketing managers use psychographics in B2B
technology markets.

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