Editor’s note: Jack Miles is senior research director, Northstar Research, London. 

Does your segmentation measure and understand behavioral biases? Understanding bias can assist in targeting and influencing specific behaviors. Doing this increases segmentation’s value vs. traditional segmentation approaches. 

Why? Because traditional segmentations rely on rational measures and rational thinking. This limits their value. Because we – humans – are irrational. 

You can incorporate behavioral biases into your segmentation by:

Marketing activities often aren’t what influences human behavior. Influence is often created by the context these activities occur in. Psychologist Katarzyna Stawarz’s work supports this. Stawarz found that you can only create new behaviors with the right environmental context.

But what is context? Context in the, ahem, context of influencing buying behavior is the surroundings people make buying decisions in – how busy a shop is, the economic climate, the social norms, etc. 

But often segmentation doesn’t measure these surroundings’ influence … even though this is critical in deciding if you should target a segment. For example, a segment may be risk averse. This means they’re unlikely to switch their buying habits, and thus not a practical segment to target for incremental sales. 

Most segmentations measure income and spending potential. Understandable as this infers a segment’s commercial potential. All very rational. 

But we view money differently depending on the era and environment we grew up in. Morgan Housel, author of “The Psychology of Money,” highlights this. Housel states that those born in times of economic booms view the value of £100 differently to those born in recessionary periods. 

What does this mean for segmentation? It means you should measure your segment’s history. Because this affects how they view value today. And the mo...