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US Lifestyles Segments

Segmentation Systems and US Lifestyles
There are many tools and techniques available today to assist in performing demographic analysis. Some are very simple while others are much more sophisticated. It is important that the correct tool be used for the type of analysis and results you are seeking to accomplish. If you are simply analyzing one variable at a time such as population counts in your area, it is probably not necessary to invest a great deal of time and money in learning and using complicated analysis tools such as statistical computer software. You can answer many questions you might have by simply adding or subtracting two numbers. For example, to determine if the population has grown during some period of time, you can subtract by hand the current population estimate from an earlier figure and arrive at a quick and accurate answer.
On the other hand, there are occasions when it is helpful or necessary to examine more than one variable at a time to determine if and how they are related and might influence one another. Many techniques are available to assist in this examination including regression analysis, correlation analysis and cluster analysis to name a few.
Geo-demographic clustering has become an invaluable tool for managing the huge number of demographic variables collected for the large and diverse American population. The purpose of a national geo-demographic clustering or segmentation system is to analyze the billions of pieces of data available from the U.S. Census and other sources and to create from that data a manageable number of population groups which share commonalities in their demographic configuration and lifestyle behavior. The challenge of building such a system is to create enough groups so as to provide a multi-dimensional cross-section of the American population, but not so many groups that you cannot easily comprehend and use the segmentation system. This requires elements of both art and science.
The use of segmentation in the business world for marketing and other purposes is now commonplace. Increasingly, church leaders have used segmentation to help them understand and reach the many diverse population groups in the United States and in their own communities. The mass marketing approach used by both
secular businesses and the church in the 40s, 50s and 60s is increasingly ineffective in dealing with smaller and more diverse population niches—each with their own special needs, concerns and expectations.
It is important to understand that the purpose of segmentation is not to replace one-on-one ministry in church settings. Using segmentation in ministry planning is clearly an intermediate step to assist in moving the discussion from abstract concepts such as “Americans”, or “everyone in our community” down to a pragmatic level like “have we communicated with the new family living across the street from the church?” Clearly, the first level is too vague and unspecific while the later discussion of a specific family is probably too narrowly focused for long-term strategy development.  Used properly, segmentation provides a bridge for moving from
the “macro” level of planning to the “micro” level of execution of the plan.
How is a Geo-Demographic Segmentation System Created?
Without the enormous processing power of computers, it would be impossible to create a statistically valid clustering system based upon dozens of variables such as age, income, education, occupation, racial/ethnicity, housing and location. It is still extremely difficult to divide the diverse U.S. population into perfectly distinct and separate groups. Regardless of the number of groups, many of them will share commonalities in some areas. However, the groups will also have important differences. Some may contain predominately young families, others will be primarily singles and couples without children and so on. The important thing to understand is that the computer processing is so extensive that the households in each cluster group end up sharing many critical characteristics including ones of great importance to the work of the church.
Because segmentation is based upon many more variables than the human mind can keep track of at any one time, your initial instinct as to what segments you should see in your area may be misleading. Most of us tend to classify people in our minds using only two or three variables, one of which is often income or race.
Therefore, if you have persons in your community who are well off financially, you may wish to see those people classified in a segment which typically has above average income. However, because segmentation factors in over 100 variables at the same time, it is possible that other variables such as occupation, age,
racial/ethnicity, education or financial behavior can cause individual families with higher incomes to be grouped in segments with typically average incomes. Does that mean the segments are wrong? No, only that segmentation systems are multi-dimensional and human beings tend to think in one dimension at a time. The
bottom line is that each household ends up classified in the segment with which it shares the strongest overall relationship.
What is U.S. Lifestyles?
The U.S. Lifestyles system is a geo-demographic segmentation system that classifies every household in the United States into one of 50 different segments. Each segment consists of households that tend to be at similar points in their life cycle and share common interests, needs for services, and financial behavior. The system is created and maintained by Claritas and is referred to as MicroVision. MicroVision is based on the 160 million up-to-date individual consumer records in the Equifax Consumer Marketing Database (ECMD), as well as the nation’s most current census data. The basic building block of the system is ZIP+4 geography which allows targeting as few as 10 households compared to the 200 to 300 households of traditional segmentation systems. In addition, it is currently the only system that not only annually updates population and household counts, but also annually updates the classification of its 22 million ZIP+4s. This provides the system with the unique ability to monitor and adjust to the ever-changing U.S. population.
PERCEPT has licensed the MicroVision system and has undergone an extensive process of renaming the system and all of the segments to be more descriptive and useful to church leaders and human services agencies.
Why are the Segments Given Names?
It is not uncommon for each of us to generalize about people groups in order to facilitate discussion. We often refer to groups with names like: “Americans”, “Easterners”, “Californians”, “Native Americans”, “Hispanics”, “New Yorkers”, “the wealthy”, “the homeless”, “the unchurched”, “baby-boomers”, etc. Generally, there is unspoken agreement among most of us that we recognize these labels are one-dimensional and that the groups represented by these simplistic words are diverse. Just as there are times when it is appropriate to distinguish between Mexicans, Puerto Ricans and Cubans and even further sub-groups within these categories, there are also times when simply saying “Hispanics” is enough to make a point or answer a question without creating confusion.
Given the rich, three-dimensional nature of segmentation and the diverse individuals it represents, it would be nice to avoid general names for the groups. Unfortunately, as human beings, we are simply incapable of holding fifty different multi-dimensional cluster group descriptions in our heads. We could refer to the segments by number, but that could get confusing. We could also refer to the segments by long multiple-sentence descriptions, but that could be cumbersome. Instead we have assigned simple labels to each group. These labels are designed to create memorable impressions. They do not and cannot convey the full richness of the segment.
These short and easy-to-remember segment names work well as long as you understand them for what they are. They provide a mechanism for interpreting reports and maps without necessarily having to constantly turn to a long reference document. The names function as easy handles to hold on to while you are developing strategy. They are only a means to an end, not a comprehensive or literal description of a group of people.
How Should One Interpret U.S. Lifestyles for a Study Area?
Keep in mind that within each segment, there is some diversity. In Segment 1, Traditional Affluent Families, there are some single and divorced persons and even a few families that are struggling financially. The segment name is describing overall tendencies (“propensities”) within the segment. You will not have to search far to find exceptions.
As you interpret segment information for a study area, concentrate on overall likely behavior and its implications for your work. Try not to oversimplify segmentation by focusing on literal descriptions or individual variables.
For example, you are located in an area where you believe most of the families have very high incomes. You expect to see many households in Segment 1, Traditional Affluent Families. However, when you examine your U.S. Lifestyles report, you notice that most of the families are shown in Segment 16, Established Country Families. How can this be? There are many possible explanations. In addition to typically (though not exclusively) having high incomes, segment 1 families also tend to have very high education, executive and managerial occupations and very high debt loads. If the high income families in your area differ significantly on any of these other important variables, the households would not be classified in segment 1. What the segmentation system is telling you is that given all the variables involved, the households in your area are correctly categorized as segment 16. Although segment 16 overall is typically a medium income segment, there are a wide range of incomes represented within segment 16. As with all the segments, there are other variables such as rural locations, education, occupation and number of children that are just as important to the segmentation process as household income.
U.S. Lifestyles Segment Descriptions
Each of the segments is described in detail in Section 4: U.S. Lifestyles Segment Descriptions of the Sourcebook (4.8MB PDF) and in the US Lifestyles Group Index on this web site. We highly recommend that you read the full description of any segment with which you are interested. Do not rely solely on the segment name to capture the fullness of the segment.