What is Geographic Segmentation?

Have you ever searched for service on the internet and been instantly provided with three different options all within 10 minutes of your current location? This is due to geographic segmentation. 

The modern era has connected modern businesses to every corner of the world, including markets previous generations may never have considered. It’s like living in a village – a massive one – that should sway our thinking, no matter what services or products we sell. Social media, cutting-edge communication apps like WhatsApp and Zoom plus delivery services like FedEx give us access to customers worldwide. Distance hasn’t stopped our ability to react quickly, turning delays of weeks and months back in the day, to minutes or hours.

While markets have opened up, that privilege is available to everyone, and competitive intensity is ramping up. Guesswork, hit-and-miss tactics, and unverified thinking that you know your customer just doesn’t cut it anymore. 

Prioritizing your efforts and finding customers most likely to respond to your brand is a critical exercise and it begins with geographic segmentation. It’s a subset of a much bigger research field known as geographic segmentation. The latter covers not only geography but also psychographics and demographics like age, religion, ethnicity, and many other constructs. Indeed, all types of geographic segmentation are the “open sesame” for companies everywhere, using online promotions in the best way.

Geographic segmentation divides a target market by location so marketers can better serve customers in a particular area. This type of market segmentation is based on the geographic units themselves (countries, states, cities, etc.), but also on various geographic factors, such as climate, cultural preferences, populations and more.

The following ads are targeted by geographic unit. Searching for “lawn care,” Google displayed two options in our immediate area:

Why Geographic Segmentation is Necessary

In addition to knowing the geographic segmentation definition, it’s even more important to know why it’s a marketing necessity.

Knowing your customers well allows you to offer a more personal value proposition addressing specific topics and needs. This all begins with where they’re located.

Product relevance and advertising effectiveness often depend on different geographic variables. Matching those products and advertising techniques to specific geographic locations means you’re reaching more relevant audiences and not wasting your time or budget.

This is especially true for large, multinational businesses because it helps them understand location-based attributes of a specific target market, enabling them to better address varying wants and needs of customers in these different regions.

Geographic segmentation is also ideal for small businesses with limited budgets serving a wide customer base in a local or regional territory. It allows them to focus marketing efforts on a defined area of interest, effectively avoiding inefficient spending.

Compared to other segmentation types – demographic, psychographic, or behavioural – geographic segmentation is relatively easy to perform. It’s much easier to identify someone’s location than it is to determine the different elements of their psyche or their behavioural tendencies. While geography is objective, personality traits, interests, and behaviors are all much more subjective.

Remember, geographic segmentation is not based solely on units of geography. You also need to consider other variables. Let’s take a look at those now.

Geographic Segmentation Variables

Climate

As its name suggests, climate-based segmentation involves marketing products based on a particular region’s climate.

For example, brands that typically sell winter apparel (such as Burton or North Face) should market their products in areas that are cold all year round, because they’d probably fail to profit by marketing to warmer climates. Swimwear brands, on the other hand, should target warmer climates – areas with beaches, resorts, etc. – because that’s where they’ll generate the most business.

Products can also be considered more seasonal, instead of regional.

For instance, a retailer in the northern United States that sells products for multiple climates and conditions (e.g., Target or Walmart) should advertise their winter gear in the fall and winter months, and their summer gear in the spring and summer months.

Cultural Preferences

Many companies practice cultural-based geographic marketing. Fast food and restaurant businesses are prime examples.

McDonald’s serves beer in their German restaurants, but not in the US. It 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 of the U.S. since there is a constant supply of fresh seafood throughout the year. In Asian countries, eating habits are highly dependent on religious ceremonies. The Chinese eat dumplings during the Spring Festival to honour their relationship with God. So, marketing strategies would correlate to that.

Population Type and Density

People living in urban, suburban, and rural areas often have contrasting wants and needs, so to make advertising more personalized, geographic segmentation makes sense.

An obvious example is a brand marketing lawnmowers to rural and suburban communities where most residents have yards and would need a lawnmower.

Consider a bicycle company as another example. Ideally, here’s how they would market their varying product line:

• Urban areas: Lightweight bikes with skinny tires, for riding in traffic
• Suburban areas: Comfortable, long-range, race bikes
• Rural areas: Durable mountain bikes with thick tires for uneven terrains

Each area has a population with varying biking needs and should be addressed in such a way.

New Territory

Geographic segmentation is commonly used when an organization launches a product or service in a new geographic location.

Instacart delivered the following Facebook ads knowing these grocery stores are in my residential area:

Since grocery delivery services are still a new market, the company is likely looking for customer growth in many different areas.

Time Zone

Time zone marketing is most useful to large businesses, as they are more likely to be operating across multiple time zones. It can also be of interest to smaller businesses if they operate in nations that have more than one time zone, such as the U.S.

Email marketing is an area that can hugely benefit from segmenting by time zone. While big announcements and press releases should generally be shared at a set time, generic email marketing often benefits from being seen at a certain time of day. 

If you are looking to have your customers read your email first thing on a Monday morning, segmenting by time zone allows it to arrive at 8:45 a.m. local time, putting your email right at the top of the pile.

Geographic Segmentation Advantages

Enhanced focus due to targeting: Geographic segmentation is an effective method to improve focus on the target audience. As a division based on geographical characteristics is involved, organizations tend to create more focused marketing strategies to convert local consumers into successful customers. 

Immediate market growth: In situations where an organization has a marketing strategy for a particular location, it becomes additionally convenient for this organization to apply the same strategy to neighboring locations that demonstrate similar geographical characteristics. Expanding marketing operations and developing corresponding strategies for locations with unknown characteristics is much more time and resource-consuming than expanding to locations that indicate traits similar to the existent target market. 

Improved communication: As targeting is based on geography and the traits that change with a change in geographies, marketing and promotional communications for local audiences need to be according to the specialized nature of this geographical segment. Better communication happens when there’s clarity in regard to what the audience expects out of a product/service. 

Increase profits: Geographical segmentation gives an organization an essential early competitive edge in localized markets, increases brand recall value, and also helps in providing better customer service which in turn leads to better customer retention rates. For organizations with limited reach, geographic segmentation is a strategy to focus their resources on accurate target audiences and receive better revenue results.

How to Build a Geographic Customer Profile

When deciding to implement geographic segmentation its important to consider the following: 

1. Knowing you have a viable group living in a reachable location doesn’t guarantee success. It’s only a starting point.
2. Knowing who you want to reach is less than half the story. You have to convince them to refer you.
3. The only way is to dig into their motivations, brand loyalties, habits, and lifestyles. Use this information – connect it compellingly to your marketing program to get attention, interest and buying action.

Building Your Own Geographic Segmentation Strategy

Statistical Research

Before beginning any market research survey, draw on your sense of the marketplace and numerous statistical sources to pinpoint an area as viable. In other words, assuming people living there like your message and proposal, do they have the money to spend on your offer? This aspect of geographic segmentation is a bit of a grind but will save much research expenditure in the long run.

Data Research

Sales Data: There’s so much information in your sales data you don’t know about. It’s there in the ledgers, shipping records, regional distribution performances and branch comparisons. Get a responsible staff member to review everything and present a plan for geographic targeting.

Website Data:  Google analytics, if accessed in the right way, delivers a roadmap to locations crying out for benefits you promote. It’s technical and requires navigation, but IT assistance will reveal invaluable insights.

Mobile Usage Data: Mobile usage tracing via numerous software apps is available today at affordable prices.

For example, Entities marketing to the Hispanic population in Philadelphia found that the latter shop using cell phones 70% of the time. Extend that nugget of information by testing similar groups in other metropolitan cities who might follow identical behavioural characteristics. The more you probe, the more the pieces of the geographic jigsaw puzzle come together to give you direction and marketing purpose.

Social Media Data: Facebook, LinkedIn, Instagram, Twitter, TikTok, YouTube, Snapchat and others, are in the business of collecting market segmentation data (including geographic segmentation info) on a massive scale so they can attract your promotional dollars. Not only that, but they’ve also spotlighted buying trends by region – on a much bigger size than most businesses can undertake. They can accurately give you buying patterns by zip code. Consult with them on the premise of using their platforms. It may save you survey costs and a great deal of time wading through statistics already there and waiting for observation.

Surveying Geographically Segmented Clients

Survey data uncover the prospects’ product, service, and brand preferences. It’s the next step after data evaluation when it comes to achieving accurate geographic segmentation. You can do this by:

• Structuring a random sample that represents the group your business is targeting. 
• Use conjoint analysis to rank customer behavior traits as a methodology that works well to see if your offer stands a fighting chance. It also effectively differentiates behavior between regions. 
• Discuss survey templates or customized geographic segmentation frameworks with consultants like SoGoSurvey – leaders in the field.
• Make sure that the sample size is indeed representative of the broader group you intend to reach. If not, all your subsequent marketing spending will go down the drain.
• If your staff complement is big enough, with many living in the targeted community, you may have your sample ready-made and available for interviews.

Conclusion

Geographic segmentation is a natural route for small and large enterprises to make headway in their selected markets. It sets a foundation for all that follows. Brands developed in homes can reach customers living on other continents if the message resonates. Like anything else, it’s evolved into a science, which means doing it right with the right intelligence and experience. 

For more information on location-based technology, these blogs might interest you: Indoor-Outdoor Navigation: Challenges and Best Solutions for 2024 and Mastering Workforce Optimization: Location Technology and Data Generation for Staff Management.