Market Segmentation: Geographic Location

by Vlad Ungureanu

Mar 2020

Key takeaways from this article!

What is Geographic Segmentation?

Geographic segmentation refers to dividing the market based on geographic location. There are multiple ways that a market can be geographically segmented. You can divide your market by geographical areas, such as by city, county, state, regions (like the East and West Coast), country, or international regions (like continents). You can also divide the market into rural, suburban, and urban market segments. And, you can segment a market by climate or total population in each area.

Adamant Links - Geographic Location

Advantages of geographic segmentation:

• It's an effective approach for companies with large national or international markets because different consumers in different regions have different needs, wants, and cultural characteristics that can be specifically targeted.
• It can be an effective approach for small businesses with a limited budget. They can focus on directly accessible areas and not spend their marketing bugdets on approaches less efficient for their target geographic segment.
• It works well when segmenting based on areas with different population density. Consumers in an urban area usually have different needs and wants than people in suburban and rural environments. There are even cultural differences between these three areas.
• It's relatively easy to break your market down to geographic segments.

Geographic segmentation also comes with a series of constraints:

• Your services or products are competitive, needed or essential in the targeted regions. For example, marketing oranges in southern Europe might not be a good idea considering that these regions are the biggest producers of oranges in Europe.
• Being able to deliver your goods or services in that region, taking into account costs, storage, transport, specific laws and taxes. For example, ordering products from another continent increases the time of delivery, the costs of delivery and in many cases involves 3rd parties that might not provide the same quality services as you.
• Ability to honour warranty in a time efficient and cost-effective manner. If a client has a problem with a refrigerator they bought from you they might not be willing to wait several days before you can repair it and send it back. Also, the costs of sending products back and forth need to be taken into account.
• Possibility to provide customer support, in the spoken language of the region. You might provide services or products to a region but people might have questions and issues that you need to be able to address. Imagine providing support in French in a non-francophone country.
• Cultural differences might prevent you from selling your product or providing your services. Holidays, festivals, traditions, cultural restrictions (alcohol, certain type of meat, preferred clothing styles and clothing materials and so on) may prevent you from doing business in an efficient way in those regions. Obviously, these factors might also prove great advantages if used properly.

Geographic segmentation provides a better view of the channels and strategies that may be used for marketing. For example, in some regions reading is high and watching TV is low, while the opposite may the true in other regions. In some countries, social media usage is high, while in others is limited. Taking location into account will help you develop marketing strategies that get your message across to the relevant customers in a relevant manner.

Cultural Preferences Segmentation

Many companies practice cultural-based geographic marketing. Fast food and restaurant businesses are a prime example. McDonald’s serves beer in their German restaurants, but not in the US, which reflects the difference in drinking preferences between the two cultures. They’ve also incorporated local foods on their menu in some locations — the “McArabia” in the Middle East, banana pie in Brazil, and the “McVeggie”, salsa bean burger, and other unique items in India. Seafood is heavily marketed along the East and West coasts, in the USA, since there is a constant supply of fresh seafood throughout the year. In Asian countries, eating habits may be highly dependent on religious ceremonies. For example, the Chinese eat dumplings during the Spring festival in honour of their relationship with God.

Living Conditions Segmentation

People living in urban, suburban, and rural areas often have contrasting wants and needs, so to make advertising more personalized, geographic segmentation is needed. An obvious example is marketing lawnmowers to rural and suburban communities where most residents have yards and would need a lawnmower.

People living in their own house and apartments are more likely to invest in their living accommodation in terms of furniture, electronics and aesthetics. Owning the house or apartment also indicates either high income (implicitly high possibility for spending) or good credit scores (implying a stable job, ability to take out loans and paying them on time and so no).

Climate Segmentation

As its name suggests, climate-based segmentation involves marketing products based on a particular region’s climate. In this approach we consider goods and services to be seasonal.

For example, brands that typically sell winter apparel should market their products in areas that are cold all year-round, because they’d probably fail to profit by marketing to warmer climates, here the need for their products does not exist. Swimwear brands, on the other hand, should target warmer climates — areas with beaches and resorts, because that’s where they’ll generate the most business. Retailers that sells products for multiple climates and conditions should advertise their winter gear in the fall and winter months, and their summer gear in the spring and summer months.

In our next article, get a detailed look at the Big Five/OCEAN personality model:
Big Five/OCEAN Personality Model