Segmenting Residential Customers: Energy and Conservation Behaviors

Panel: Human and Social Dimensions of Energy Use: Trends and their Implications

Author:
Marc Pedersen, BC Hydro

Abstract

Marketing programs and strategies based on conventional demographic and geographic segmentations have limitations in that customers in traditional categories often have very diverse attitudes, values, motivations, beliefs and lifestyles. Psychographic segmentation overcomes these limitations by uncovering groups of people homogeneous in terms of how they think, feel and act - not what they look like, what they possess or where they live. In turn, strategies and campaigns can be developed such that unique segments receive marketing support and messaging that truly resonates and engages them, thus reinforcing the desired objective of, in this case, changing the way they think about and use electricity.

In June 2006, BC Hydro completed a territory-wide end-use survey of 4,191 residential customers that was supplemented with a set of 60 attitudinal and behavioral questions in regards to electricity and conservation. A multi-disciplinary project team determined via k-means statistical analysis that the market - both at the bill payer and household level - could be most effectively represented by six psychographic segments based on the criteria of them being measurable, substantial, accessible, differentiable and actionable.

Subsequent analysis of the six segments by household electricity consumption patterns lends credibility to respondents' attitudes and self-reported behaviors in the survey, and validity to the developed segmentation model.