What is geographic segmentation?
Geographic segmentation is a marketing strategy used to target products or services at people who live in, or shop at, a particular location. It works on the principle that people in that location have similar needs, wants, and cultural considerations. By understanding what people in that area require, brands can target more relevant marketing messages and suitable products to customers who are then aware and more likely to buy.
Why is it important to segment customers based on geographical variables?
- It makes your brand relevant: targeted marketing campaigns attract customers and increase revenue because they appeal to the needs and wants within a geographic location, triggering purchases.
- You save money: your marketing budget is more efficient when it offers appropriate and available products and services, rather than being wasted on promoting things that nobody needs
- It’s easy: Location information is objective, easy to measure and analyze, and cheaper than psychographic, demographic or behavioral segmentation
- Larger companies: can offer different or more relevant products in different geographic areas, and market them more efficiently there
- Smaller companies: can target marketing directly at their specific areas of interest and target audience, rather than taking an inefficient blanket approach
Geographic variables by which to segment
There are several geographical parameters you can use to focus your marketing efforts and target your customer base:
This can be as small as a neighborhood or as large as a continent, with towns, cities, states and countries in between.
You wouldn’t try to sell snow chains to Vietnam. Climate segmentation involves selling products that are appropriate for the climate, weather, and season in a particular area.
You may have to adapt your products to take account of cultural variations and sensitivities. For example, in McDonald’s India, the menu is 50% vegetarian and has no pork or beef on the menu, to respect both Hindu and Muslim faiths.
This can be population density or population type. A brand may choose to market in cities rather than rural areas because there are simply more people to buy, and urban distribution is easier. A Chinese grocery store would do more trade in a city area with South Asian communities, than in a less diverse rural farming village.
Urban, suburban and rural
These different environments require different marketing strategies. Generally, customers in cities and suburbs have more purchasing power than rural areas, so products can be more expensive. Customer needs are different: e.g. a car manufacturer may target their smaller, electric vehicles at city and suburb dwellers, and larger, four-wheel-drive cars at rural dwellers.
Not everyone can, or wants to, read marketing in English, Spanish, or Mandarin. It’s essential to use languages of targeted areas for labeling, online communication, and promotion.
Examples of how organizations use geographic segmentation
- A pool supplies manufacturer targets warmer, sunnier climates
- A liberal political action group has more success fundraising in the Pacific Northwest rather than the Southeast
- A clothing retailer adjusts its inventory according to the weather and styles of its store locations
- Restaurant chains customize their menus according to the local tastes and ingredients available in their areas
- Local businesses open locations in areas where the average income is appropriate for the price of their goods
- Home security companies may have more success focusing on high-crime areas
- Retail businesses are more likely to be successful in high-population areas
- Healthcare organizations may provide Spanish language service options in areas with large Hispanic communities
How to build a geographic customer profile
There are many tools that can help you layout a geographic segmentation strategy:
One of the first tools businesses turn to in order to understand the geographic preferences of their customer base is to conduct survey research. Here are four survey research approaches you may want to consider:
- Take a random sample of your customer base and ask about their product preferences. Filter the results by region to breakout geographic preferences.
- Use conjoint analysis methodology to rank order product traits using trade-off questions and filter results by state or region to understand which regional differences exist.
- Test your messaging and advertising concepts with prospects in different areas to understand where different messages are well or poorly received.
- Survey your employees in different regions to understand how engagement may affect the customer experience they are providing per region.
Check your operational sales data to see where product sales are increased or decreased by region. Consider trends in seasonality to understand how they affect your sales by region. Combine your sales operational data with your customer experience and survey data to pick up trends by region.
Use web traffic tracking patterns by region to see where your traffic is coming from. Conduct analysis on the types of products that ship to various regions to pick up differences in purchase preferences.
Mobile usage data
Mobile devices present unique opportunities to better understand customers by very specific location – sometimes down to the foot. By using app-based location services available with most smartphones, you can send the right message at the right time with pinpoint accuracy.
Social media profiles
Social media data can provide tremendous insights into the location preferences of your customers and prospects. Many social media platforms even allow you to target messaging by area or zip code.
Secondary data sources
Many third-party technologies and agencies specialize in helping you to build and execute a geographic segmentation strategy. Claritas PRIZM, Carto, and ad platforms like Google and Twitter are often able to help you target the right prospects in the right locations.
Think and act like a local company
Overall, geographic segmentation is a strategy that is crucial for any organization that provides services that vary based on regional factors like climate, local styles, distribution differences, channel availability, culture or values. Employing an effective marketing plan based on geography can be a key competitive advantage for organizations that understand how to ‘think local’.