We're all familiar with marketing demographics—the practice of profiling us by age, gender, income level, and other external characteristics. The idea is that those of us who are similar in those respects will be similar in the products and services that we need and buy. More to the point, the idea is that we'll also be susceptible to the same marketing approach. Marketing based on demographics works, of course, and is still widely used. However, researchers have discovered that beyond our external characteristics, our internal characteristics— based on psychological research—are the most effective way to profile us. We're actually more likely to fall for a given pitch based on our psychographics than our demographics. After all, we make decisions—including buying decisions—from the inside, not the outside.

This comes down to what most of us would call lifestyle marketing. We've all seen it, over and over. A company positions itself and its products (cars, coffee, clothes, condos, you name it) as a gateway to a certain lifestyle. The marketing message to consumers is that when we purchase that company's products, we automatically get the lifestyle that's implied. Research tells the companies about the lives we want to live (party animal, cultured connoisseur, loving caretaker); then they project that lifestyle onto their products. Instead of using a hard sell to push the features and benefits of specific products, they can use the soft sell to get us to buy into a lifestyle. It works because the lifestyles they invite us into are based on our own human longings. Psychographics and lifestyle marketing may seem subtle, but don't be lulled by that subtlety-—this is powerful stuff.

This article is excerpted from 'What Color Is Your Parachute? for Retirement: Planning Now for the Life You Want', written by Richard N. Bolles and John E. Nelson.