- Market segmentation is the process of dividing a larger market into smaller groups of consumers who have similar needs or characteristics.
- One of the most common ways to segment a market is by geography.
- This involves dividing the market based on location, such as countries, regions, cities, or even neighbourhoods.
- It is important to note that there is always an overlap between segmenting methods
- We have for example looked at how businesses can segment the market using demographics
- While that sounds like its different and distinct from segmenting using geography
- You must note how different geographical areas also tend to have different demographic, social, and cultural features
- Segmenting by geography makes sense for large businesses because of customers in different regions have different preferences and needs
- Geographic segmentation helps to tailor marketing messages to local tastes
- This approach is particularly useful for businesses that have physical stores in different locations
Common Ways to Segment the Market Using Geography:
- Country or region: This is particularly important for international businesses that need to tailor their products and marketing strategies to local cultures and regulations.
- Climate: Businesses that sell seasonal products, such as clothing or sports equipment, can benefit from segmenting their market by climate.
- Urban/rural: Depending on whether customers live in cities or rural areas, their needs and preferences may differ, creating opportunities for targeted marketing campaigns.
Situations where it is best to use geographic segmentation
- Situations where a company should opt to use geographic segmentation to segment their market:
- When the product or service has location-specific features or uses, such as surfboards or snow shovels.
- When the climate or terrain affects the use or need for the product or service, such as air conditioners in hot climates or snow tires in cold climates.
- When the company’s distribution channels are regionally based, such as a company that only distributes products in a specific region.
- When the company wants to target customers based on regional cultural or social differences, such as language, religion, or customs.
- When the company wants to take advantage of regional marketing opportunities, such as events, festivals, or local promotions.
Advantages/Benefits of Segmenting the Market Using Geography:
- More effective targeting of marketing efforts: By segmenting the market using geography, businesses can tailor their products and marketing campaigns to specific regions and demographics, leading to higher conversion rates and customer loyalty.
- Increased customer satisfaction: By catering to local tastes and preferences, businesses can increase customer satisfaction and build brand loyalty.
- Reduced marketing costs: Targeted marketing efforts can be more cost-effective than broad marketing campaigns that try to reach everyone.
Disadvantages/Drawbacks of Segmenting the Market Using Geography:
- Potential for oversimplification: Segmenting the market by geography may overlook other important factors that influence consumer behaviour, such as age, income, or education.
- Limited scope: This approach may not work for businesses that sell niche products or have a very small target market.
- Difficulty in data collection: Collecting accurate data on consumer preferences and behaviours in different regions can be a challenge, especially for businesses that operate in multiple countries.