What is psychometrics?
We’re all aware that individuals are unique and not everyone likes the same things. This uniqueness comes directly into play in the field of marketing. Since no two people are identical, marketing is about grouping and targeting. That is, higher levels of marketing success arise if you know who to target and how to target them instead of targeting everyone with a generic message. This necessity for specificity means targeting is essentially an empirical question that requires some form of measurement. Consumer behavior is ultimately a result of psychological processes and thus is an optimal target for measurement. Many people don’t think of individual or group characteristics as quantifiable entities, but they can be. Indeed, once you develop a method of quantification, objective grouping based on numbers becomes much easier and more reliable than subjective grouping based on descriptions of consumer traits. Clearly not all measurement is good measurement, so then the question becomes: “How should this measurement be done?” This is where psychometrics comes in.
People often think of psychology as observational and descriptive, but there is a mathematical side to psychology as well. Psychometrics is the field of study that attempts to measure and quantify the classic ‘descriptions’ that psychology insights offer us. One example of a psychometric measure is that of IQ, or the intelligence quotient. It’s one thing to say someone is very smart or not that smart, but having a psychometric formula for this characteristic allows us to assign its value an actual number for any given individual.
The goal of psychometrics, and the reason it is so valuable, is it allows us to measure things that usually are not thought of as measurable. Once something is quantifiable it becomes increasingly easier to investigate, analyze and use in further models.
Generally speaking, the psychometric measurement formula goes something like this:
- Determine what you want to measure
- Create test for what you want to measure
- Run test
- Determine reliability and validity of test
- Refine methods of measurement: Lather, rinse, repeat
This process is accomplished using various testing methodologies such as surveys and questionnaires to create the test and then using statistics to analyze the results and refine the process. Three important paradigms for this process are the Classical Test Theory, Item Response Theory and the Rasch model.
The Intersection of Marketing and Psychometrics
Aside from its theoretical value, psychometrics offers a channel for valuable insights when it comes to marketing. Three such applications are described below.
As mentioned above, using psychometric methods to assist in customer segmentation decreases subjectivity and increases reliability of customer segmentation. Being able to describe your customers numerically allows for the generation and refinement of descriptive models that facilitate segmentation and psychometrics are the best way to create this numeric definition of consumer behavior. Most, if not all, traditional methods of segmentation -- for example, demographics -- are at best proxies for psychological variables. Being able to break these segmentations down into the pertinent psychological processes and then quantify them allows for a fuller and more accurate view of consumer behavior.
2. Additive and interactive effects
As your description of an ideal customer becomes more complex, it becomes more difficult to accurately find these customers using subjective techniques. Imagine you have a Product A and know ‘nice’ people really like it, so you then tell five people to go out and find one nice person to sell your product to. Chances are, all of these people have a different definition of what ‘nice’ is and their definitions are different from your definition. Because of these subjective discrepancies, the potential customers your five people chose might not represent the best circle of consumers for your product. Now imagine Product A needs to be sold to consumers who are not only nice, but also smart. An extra dimension of subjectivity is added into your search, making it that much harder for your employees to find the right customers. This difficulty can be assuaged using psychometrics. Using numbers (via psychometric measures) not only makes it easier to know who you’re looking for, but also makes it easier to find those people and to confirm you have the right people.
3. New Insights
Since there is a whole field of study -- mathematics -- dedicated to how numbers behave with other numbers and another -- statistics -- dedicated to how to analyze these interactions, using numerical measures of psychological constructs allows for a lot more flexibility and creativity when it comes to generating insights about consumer behavior that is grounded in psychology. Additionally, segmentation along relevant psychological dimensions, as opposed to just proxies for these dimensions, allows for the development of a strategy in terms of what to do once the customer segmentations are formed and more reliable and valid data. For example, the psychological aspects of segmentation of this sort can give insight into how to approach your newly found people, how to formulate messages directed toward them, how to design packaging, how to develop product features, etc. Through psychometrics, psychological dimensions become a powerful resource for all aspects of marketing and brand management.