Breaking Down Geographic Market Segmentation and How to Utilize it

Geographic market segmentation has become a vital component of any successful marketing strategy.

Whether you are a small local business or a large global business, correctly utilizing geographic segmentation will put you head and shoulders above the competition.  

Let’s learn more about it and how you can utilize geographic market segmentation for your own business.

What Does “Segmentation” Actually Mean?

In marketing, segmentation describes dividing and grouping an audience into subgroups based on shared characteristics and commonalities. This helps target the most suitable audience for products or services and provides a more personalized experience that satisfies their specific needs and interests. It also enables you to make suitable pricing decisions based on location.  

Marketing segmentation can give you the upper hand in times of fierce competition and increasingly expansive customer bases.

There are four types of market segmentation commonly used today:

• Demographic segmentation
• Geographic segmentation
• Psychographic segmentation
• Behavioral segmentation

In this article, we will focus on geographic market segmentation and how to utilize it.

Breaking Down Geographic Market Segmentation

Luckily, geographic market segmentation is easy to pick up. In a nutshell, it simply means grouping existing or potential customers by location.

In doing this, marketers can focus on a particular area to better serve potential customers with a more targeted and personalized experience. The size of the area targeted will depend on the scope and needs of your business. After all, a global business will not gain much by only targeting specific zip codes.

You may think, “can location really make that much difference on how or what is marketed to a potential customer?”

Yes, it can.

Geographic segmentation capitalizes on the fact that user location dictates the level of interest in a product or service. By focusing on a specific location you can save hours of wasted time and resources. Many companies are now already using location to their advantage.

To gain from geographic market segmentation, one must understand its six essential key areas. Learning them will show you how to attract customers to your business who are appropriate for your product or services.

Geographic Segmentation Variables

Understanding these variables will help you find your ideal customer base. The following will also contain examples of how they can then inform your marketing strategy.

Location

This can be an area as small as a zip code or as large as a continent, with towns, cities, and states in between. The size and objectives of your business will likely affect your scope of locations.

Understanding the location of your market allows you to focus in on them to save resources and provide a suitable service. For example, a store selling USA soccer jerseys would have the whole country as its location parameter. However, a store selling LA Galaxy jerseys would only want to focus on Los Angeles.

Getting this right can eliminate huge amounts of wasted time and resources and help you create the best advertisements for each location.

Climate

Climate can be a huge factor in a product’s success. Hot weather, cold weather, or anything in between will come with its own considerations.

Consider sunblock as an example. A company has invented a new sunblock that only needs applying once a day. In order to maximize the efficiency of their efforts, the company must immediately identify its target audience.

Geographic segmentation can start to locate potential customers in countries where it is hot or where it is currently summer.

Population

Both the density of a population and the different types of people within a population can affect your marketing.

A more populous city could provide more potential new clients. Populated cities also tend to have better distribution networks. So if your inventory control system is looking jam-packed with stock and orders, this is the place to start!

A densely populated city also offers a diverse array of people and living arrangements for you to capitalize on with tailored marketing and suitable products.

For example, a lawnmower company may want to focus on the suburbs where there are more gardens than in the apartment-dominated city center. Likewise, a company selling monthly passes for inner-city transport links should target those living and commuting within the city.

Taking these factors into consideration allows you to really think about exactly who your potential customers are and what they need.

Time Zones

Time zones are useful to large-scale businesses that operate worldwide across multiple time zones. For example, a company based in America that also operates in Europe may have to adjust their communication hours for the most cohesive working schedule.

A common form of marketing affected by time zones is email marketing. Choosing the time of day your emails go out can maximize their effectiveness. Recent research from Omnisend showed 8 am is the best time to have your emails opened with a 20.32% increase rate, but 5 pm is the best time to send a promotional email.

It’s vital to use this knowledge in context to make sure your business works around different time zones. With this in mind, you can schedule emails so that your target audience never misses them. It would make sense to use business process automation software here so that it’s done automatically.

Culture

In a globalized world, technology has bridged a gap, allowing businesses to cater to a diverse range of people across different cultural backgrounds. Cultural-based geographic segmentation has therefore become an important factor of a successful marketing strategy.

A great example comes from fast-food restaurants. McDonald’s serves different foods across different cultural locations. Therefore, their products and adverts must reflect this diversity.

For example, Japan has the Tsukimi burger which is served during the Tsukimi festival in the fall.

The festival honors the full moon and is represented by the egg on the burger.

On the other hand, customers in the Middle East can find themselves happily chowing down on the McArabia burger.

By tailoring products to the values and emotions of different cultural groups, McDonald’s is able to offer a personalized experience that conjures up feelings of home.

Having awareness of cultural diversity can also inform other key decisions across your business, including what is appropriate for your retail social media marketing.

Language

Although English is the main language of the globalized digital world, not everyone uses it. On top of this, some people are put off marketing not in their native tongue.

For some businesses, if a product or service has been a success in English-speaking areas, it makes sense, then, to translate the language into other markets. To explain this, take this example from Colgate.

In the 1960s, Colgate wanted to branch out into France. With support from the American Dental Association, they released their new product “Cue” in France. Unfortunately, and rather embarrassingly, they later found that Cue, in France, was the name of a pornographic magazine.

How to Implement And Utilize Geographic Market Segmentation

When it comes to process improvement strategies, geographic segmentation is one of the best.

Now we have the variables covered, the following will help you begin to implement and utilize your new segmentation strategy.

Building a Geographic Customer Profile

When implementing geographic market segmentation it’s important to consider the following:

• Knowing where potential customers are located does not guarantee success. It’s a starting point.
• Knowing how to convince them to take interest in your product or service is the next step.
• To convince them, you must delve into their motivations, habits, values, and desires.

Starting Your Geographic Segmentation Strategy

So where should you begin? How about with a touch of statistics and data research.

Statistics and data are a great way to get started with your strategy. Most companies are sitting on piles of data but fail to use it. Perhaps you have a retail CRM system with everything you need to get started already.

Some aspects to consider are:

Sales data: buying habits, retention rates, can all be linked to location.

Web data: tools such as Google Analytics can highlight insights by showing which areas are crying out for certain products and services.

Mobile data: how do customers use their phones? For example, research showed 70% of the Hispanic community in Philadelphia shop on their phone. This can be compared and contrasted with other areas.

Social media data: most social media apps now collect geographic data for you. Great for highlighting buying trends and browsing preferences.

Surveying Geographically Segmented Potential Customers

After analyzing data, conducting surveys can help you find out more about the actual individuals who make up your target audience. By creating a random sample that covers your target market, you can begin to decide whether their habits and values make them good candidates for your product.

Get the Best From Geographic Market Segmentation

As we’ve seen, utilizing geographic segmentation is an effective way to ensure you are focusing on the correct target market and increasing revenue by getting the most out of your marketing. It’s also a great way to take the pressure off your team and boost employee morale.

Geographic market segmentation is a two-way deal. On one end, your potential customer gets full value from marketing that is aimed at them and their specific needs. On the other end, your business is getting full value out of its time and resources by being more focused. Implementing intelligent tools such as automation software will make the process less time-consuming and even enjoyable.

Be careful, though.

Geographic segmentation alone is not enough. It doesn’t take into account the behavior of your market, or the fact that people who live in the same place don’t necessarily want or enjoy the same things. For this you will need to go deeper and use your new insights.

Start your journey into geography segmentation today and enjoy those rewards.

This blog post is written by Xiaoyun TU from Brightpearl. Xiao is the Global Head of Lead Generation at Brightpearl, a leading retail automation platform. She is passionate about setting up innovative strategies to grow sales pipelines using data-driven decisions.