Many tools can help you figure out what your target group does, what they need, and what they like. Geographic segmentation is an important tool that helps businesses make goods that consumers and potential customers will like.
Before launching new products or services or improving existing ones, businesses need to do geographic segmentation as part of their market research.
In this blog, we’ll talk about what geographic segmentation is and how you can use a number of factors to divide your market into geographic groups.
Geographic segmentation is an important yet often overlooked aspect of marketing. It involves dividing your target market into different geographical units to better understand customers’ needs adapt marketing efforts and increase sales.
In this comprehensive guide we’ll cover everything you need to know about geographic segmentation in marketing
What is Geographic Segmentation?
Geographic segmentation is the process of dividing your target market into different geographical units based on location. It allows you to analyze and compare the needs, behaviors, and responses of prospects and customers in various areas.
The goal is to tailor your marketing strategy and tactics to resonate better with specific groups based on their geographical differences. This leads to more effective marketing and higher conversion rates.
Why is Geographic Segmentation Important?
There are several reasons why geographic segmentation is a crucial part of any marketing strategy:
Understand Regional Differences
Where your prospects and customers are located impacts their needs and buying behaviors. Geographic segmentation helps you identify these regional differences so you can cater your marketing appropriately.
For example, people in cold climates may be more inclined to purchase warm coats than those in hot climates. Identifying this allows you to emphasize coats more in ads targeting cold areas.
Personalize Marketing
With geographic insights, you can create localized marketing campaigns that feel more personalized to prospects and customers in each region.
This might mean using region-specific imagery, references, dialects, or offers that resonate better with the target audience. Personalization boosts engagement and conversions.
Optimize Budget Allocation
Geo-targeting helps focus your marketing dollars on the highest potential areas and reduce waste on low-potential regions. You can allocate budget based on market size, competition, and expected ROI.
Set Realistic Sales Goals
Understanding the market potential, trends, and seasonality within geographic segments allows you to set realistic sales goals and forecast more accurately.
Gain Competitive Advantage
Localization gives you an edge over competitors using a standardized, one-size-fits-all approach. They may miss opportunities to connect better with prospects in different regions.
How to Conduct Geographic Segmentation
Conducting geographic segmentation analysis involves several key steps:
Identify Geographic Units
First, determine which geographical units make the most sense for segmenting your market. Common options include:
- Countries
- Regions/States
- Cities
- Neighborhoods
- Postal/Zip codes
Choose units that allow meaningful differentiation in customer needs and behaviors. Going too broad (e.g. continent level) or too granular (e.g. street level) limits usefulness.
Gather Market Data
Next, collect relevant data about each geographic unit, such as:
- Population demographics
- Psychographics
- Income levels
- Industry statistics
- Competitor analysis
- Product/service consumption rates
- Marketing campaign performance
This provides quantitative insights into market potential, customer preferences, and more within each unit.
Analyze and Compare Segments
Analyze the data to identify patterns and differences between geographic units. Compare them on metrics like market size, growth potential, customer behaviors, campaign results, and competitive landscape.
Look for meaningful variations that impact marketing strategy, such as differences in audience interests, income levels, dominant competitors, seasonality, and more.
Identify Opportunities
Based on the insights gathered, determine the best opportunities within each geographic segment for your products or services.
For example, some regions may represent untapped growth potential where you can increase market share. Other areas may be saturated so focusing on customer retention is smarter.
Customize Marketing Strategies
Tailor your marketing mix for each region based on the findings. This may involve using different:
- Media channels
- Ad messaging
- Calls-to-action
- Products/services featured
- Promotions and discounts
- Content offers
- Website localization
Refine strategies to achieve the greatest return on marketing investment in each area.
Track and Refine
Continuously track campaign performance by geographic segment. Analyze the data to determine what’s working well in each region and what needs refinement.
Use learnings to refine your geo-targeted strategies and optimize ROI. Geographic segmentation analysis should be an ongoing process.
7 Geographic Segmentation Variables
Here are some of the most common variables used to segment geographically:
1. Country
Dividing target markets by country allows customization based on differences across national borders such as language, regulations, economic conditions, and consumer behavior.
2. Region/State
Segmentation by region/state accounts for variances across different parts within a country, like regional dialects, climate, or cultural nuances.
3. City
City-level segmentation recognizes differences between urban and rural areas and tweaks marketing accordingly.
4. Population Density
Classifying areas based on population density (urban, suburban, rural) reveals useful insights for localization.
5. Climate
Grouping by climate helps identify location-based needs and tailor offers appropriately, like cold weather gear.
6. Language
Segmenting by native language allows you to communicate better with prospects in different areas.
7. Time Zone
Time zone segmentation helps optimize timing for campaigns in different parts of the world.
Real World Examples of Geographic Segmentation
Here are some examples of how leading brands use geographic segmentation:
Coca-Cola
Coca-Cola localized their famous “Share a Coke” campaign for different markets by printing popular local names on bottles matching the region. This resonated better with audiences by making an emotional connection.
Amazon
Amazon customizes its homepage experience for different countries, translating content into local languages and showcasing products tailored to regional needs and interests.
Nike
Nike analyzes data to identify favorite sports by location, then features relevant local athletes in ads to promote products linked to those sports. This geographic personalization makes ads more compelling.
McDonald’s
McDonald’s tweaks menu items to reflect regional tastes. For example, in India, where beef is not eaten, McDonald’s sells chicken and vegetarian burgers catering to local preferences.
Netflix
Netflix optimizes its content library for each geographic market, licensing popular local movies and TV shows by country to better satisfy audience interests.
As you can see, geographic segmentation allows brands to connect better with audiences on a regional level. By taking location-based differences into account, companies can boost relevance, engagement, and conversions.
Tips for Effective Geographic Segmentation
Here are some tips to ensure you implement geographic segmentation for maximum impact:
- Avoid overly broad or narrow geographic units
- Analyze segments on an ongoing basis as conditions evolve
- Identify the most attractive segments to prioritize
- Use multiple data sources for richer insights
- Combine geographic segmentation with other types like demographic, behavioral, etc.
- Test different marketing tactics by location and track performance
- Localize website content and assets for relevance
- Train sales teams on regional differences
- Adapt products, pricing, and promotions to suit each target area
With the right approach, geographic segmentation can unlock significant opportunities through localized marketing optimization and personalization. Take location-based factors into account to gain a competitive edge.
The Bottom Line
Geographic segmentation enables marketers to gain critical insights into regional variances in their target audience. By dividing and analyzing markets geographically, you can identify location-based differences in customer needs and shopping behavior.
These insights allow you to tailor your marketing mix and campaigns to connect better with prospects and customers in each area. Geographic segmentation improves relevance, boosts engagement, and drives higher conversions through localization.
Make geographic segmentation an integral part of your overall marketing strategy. Focus on the segmentation variables that matter most to your business to unlock growth opportunities through targeted regional marketing.
Geographic segmentation variables
Geography isn’t the only thing that affects geographic segmentation. Climate and weather, cultural preferences, and people are also important. Pricing, product availability, and marketing tactics are just some of the things that depend on where an organization is located.
Let’s explore common geographic segmentation variables.
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Location
This is the most popular way to divide people by where they live. Consumers’ decisions and market behavior can be affected in different ways by where they live. For example, users may choose one product over another because it is closer to where they live. Also, some products might not be useful to customers in a certain area. For example, people living in places with no water may not need beachwear at all, and snow shovels are only useful for people who live where it snows.
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Climate
The weather and climate can affect the market’s desire for certain products. Organizations that sell goods and services that depend on the weather must market them based on the weather in a certain area or place. Think about businesses that sell jackets, coats, gloves, and other warm clothes. Most of the time, these businesses would try to sell their goods in cold places, where they have the best chance of making money. In the same way, businesses that sell beachwear are more likely to make more money during the summer and in warmer regions.
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Religion and culture
Market behavior is also set by and affected by cultural values. People in a certain place often have habits that are tied to their culture, faith, or just their way of life. You need to know how regional differences affect your customers to get the most out of the market. For example, it may be very hard to sell pork-based products and alcohol in places where Islam is the main faith. But in the West, pork-based goods are very popular. For example, bacon is an important part of the English breakfast.
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Population
Demography and population density play a big part in dividing places. In some countries, there are more men than women, which affects how businesses market their goods and what kinds of goods they sell. Also, people in rural and urban areas have different needs. As a business, you need to know these differences and make your marketing efforts fit the needs of different areas. For example, people living in the country with lawns may be more interested in a yard mowing service.
Geographic segmentation characteristics
People in different parts of the world display different characteristics. A marketing strategy created by dividing the target market segmentation into segments on the basis of factors such as economics, food habits, clothing habits, languages, traditions, and many other traits is known as geographic segmentation.
A classic geographic segmentation example: A classic example – people living on colder continents, such as Europe, are interested in warm clothing, heating devices, etc., almost throughout the year, whereas people living in hotter continents, such as Australia, are interested in air conditions, beach vacations, breezy outfits, and cold drinks.
Example 2: let’s take another example where a government body wants to segment its geography based on the use of plastic bags in its region. The goal is to conduct a use of plastic bags survey. Based on actionable insights into the geographical spread of plastic bags, the governmental body can reinforce administrative supervision to reduce the use of plastics and add new plastic recycling plants in areas of heightened usage.
Each continent or country is further divided into places with distinction in terms of culture, traditions, languages, etc., and there can further be a geographical segmentation. Geographic location is an integral factor that determines market positioning and product sales.
Irrespective of an organization’s market share or product success rate, it’s extremely important for them to conduct market research before launching new products/ services or introducing better or newer features.
How McDonald’s use Geographic Segmentation | Market Segmentation
What are some examples of Geographic segmentation in marketing?
Geographic segmentation examples in marketing include: What are the 5 main geographic segments? The main geographic variables that should be considered when segmenting an audience are location, climate, population, culture/religion, and time zone. What does geographic segment mean in marketing?
What is market segmentation?
Market Segmentation is a method used by marketers to divide a target market into smaller groups based on common characteristics, in hopes of marketing more effectively to each group.
What is Geographic segmentation?
Location is probably the first thing that comes to mind when you think of geographic segmentation. This involves grouping customers and prospects into segments based on where they live. Location-based segmentation can be as broad as people living on a certain continent and as specific as those with a specific postal code. Country
Why do marketers use Geographic segmentation?
Marketers may opt to use geographic segmentation for a variety of reasons. For starters, it’s relatively easy to implement into a marketing strategy, thanks to personal data like home address and location data being straightforward to collect and analyze.
