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Published: 27/08/2020
Learn how to effectively use geographic segmentation in your eCommerce marketing strategy. Get inspired by real-world examples from industry-leading brands.
There is no easier route into personalized marketing than market segmentation. By breaking down your customer base into groups, you can target your resources and ensure your audience receives the messaging that is most relevant to them.
There are 4 main types of market segmentation, and each offers a different way to define an audience:
- Demographic segmentation – grouping customers by identifiable non-character traits like age, gender, or income.
- Psychographic segmentation – grouping customers based on their personalities and interests, including beliefs, hobbies, and life goals.
- Geographic segmentation – grouping customers with regards to their physical location.
- Behavioral segmentation – grouping customers based on their past actions, like spending habits, browsing habits, and brand engagements.
The premise is simple enough, but the key to successful market segmentation is understanding exactly how it can best work for you. Today we’re going to do a deep-dive on geographic segmentation, and discover all the different ways your marketing can benefit from it.
What is geographic segmentation?
Geographic segmentation involves segmenting your audience based on the region they live or work in. This can be done in any number of ways: grouping customers by the country they live in, or smaller geographical divisions, from region to city, and right down to postal code.
Geographic segmentation might be the simplest form of market segmentation to get your head around, but there are still plenty of ways it can be used that companies never think about.
The size of the area you target should change depending on your needs as a business. Generally speaking, the larger the business the bigger the areas you’ll be targeting. After all, with a wider potential audience, targeting each postcode individually simply won’t be cost-effective.
In total, there are six factors that pertain to geographic segmentation and can be used to create customer segments:
- Location (country, state, city, ZIP code)
- Timezone
- Climate and season
- Cultural preferences
- Language
- Population type and density (urban, suburban, exurban or rural)
Geographic segmentation benefits
Easy to implement
Geographic segmentation is different from the other types of market segmentation (especially psychographic and behavioral) because it requires fewer data points.
As a result, it offers a quick and effective route into personalized marketing and can offer tangible ways to reach potential customers using only their location as a starting point.
Higher product relevancy
This helps not only to improve sales but also creates a better relationship between customer and business. Presenting relevant items to customers improves user experience, reducing the amount of effort they need to put in to find what they want.
Improved advertising effectiveness
By presenting more targeted ads, you’ll guarantee that more of your marketing budget is spent reaching relevant customers, and less wasted on those who have no need or interest in your product.
This isn’t to say that geographic segmentation is always the best strategy to employ. It has specific uses for specific businesses and industries. Small businesses working in localized areas will benefit immensely from targeting their marketing to just these areas. Big businesses with products that will have consumer hotspots in specific regions will also benefit.
An international manufacturer of big four-wheel drive vehicles will achieve more sales targeting customers in rural areas than those who drive congested city streets.
But businesses that sell products that do not depend on region-specific patterns won’t benefit as much from geographic segmentation. Consumers of Corn Flakes are likely to be as common in one region as the next.
Geographical parameters by which to segment
There are several geographical parameters you can use, these include:
Location
Getting the obvious out of the way. Segmenting by location gives you a lot of options. It could be a city, a town, different countries, or even a continent. This can also be used to identify a new geographic location your business may wish to expand into.
Climate
Do you think they are buying winter tires in Dubai? Segmenting by climate helps you identify areas where the climate is appropriate for your product or service.
Culture
When addressing your target market you need to account for cultural variations and sensitivities. For example, In Western cultures, white symbolizes purity, elegance, peace, and cleanliness. However, in China white represents death, mourning, and bad luck.
Population
This can either focus on density or population type. A brand may choose to focus on a densely populated city area, for example, a fitness chain wouldn’t set up a gym in a rural area. You can also overlay demographic information here to find target audiences.
Urban, suburban and rural
These three different environments all need different and specific marketing strategies as customer needs are different. Those in cities and suburbs tend to have more purchasing power than rural areas, soproducts can be more expensive.
Language
Not every country in the world wants or can be marketed to in English. If you’re running a marketing campaign it will be essential it’s done in the local language. You’ll need to make sure you’re ready to enter a market if all your marketing messages are going to need to be changed.
Geographic Segmentation Examples
An example of geographic segmentation is an ice cream company segmenting a country by how hot different regions are and targeting those specific areas that are hottest and therefore more likely to buy ice cream.
But that’s a very basic example.
There are however a number of different variables that you might consider when setting up your own geographic segmentation. These are the different ways you might choose to target consumers once you’ve decided on the location you want to focus on. Let’s look at how each might best be used.
Example 1: Segmenting based on location
Though all geographic segmentation involves grouping customers by the area they live or work in, here we’re talking about selling purely based on the availability of a product to a certain area. This is a tool that is useful to businesses that only have the infrastructure or facilities to serve customers within certain boundaries.
The food box subscription service Oddbox has, until recently, only had the infrastructure to deliver within the borders of London. However, they have now expanded to deliver to another nearby city, Brighton.
Using geographic segmentation they were able to target potential customers living in the city and deliver relevant marketing via social media ads. See their ads targeting Londoners and Brighton residents back to back above. As a result, users who weren’t previously aware of Oddbox can be shown the service now available to them.
For bigger, global brands segmentation by country becomes even more important. One brand that always hones it’s advertisements to the country it’s targeting is McDonald’s.
To see exactly how they do this watch the video below.
Whilst the above videos can be used to address an entire country, some brands choose to go even more local and focus on specific cities.
One brand that tried this was Nike with their “Nothing Beats A Londoner” video. The video does a great job of addressing football fans in London by including key landmarks, local football stars, and general life in London.
It worked so well that it shot to the top of YouTube’s trending chart within hours. It waseven covered by national newspapers,tweeted by London mayor Sadiq Khan, racking up millions of views in the process.
Example 2: Segmenting based on 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, as the United States.
Email marketing is an area that can hugely benefit from segmenting by time zone. Whilst 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 am local time, putting your email right at the top of the pile.
Example 3: Segmenting based on climate and season
There’s nothing worse than a badly targeted advert – except being caught without a winter coat in the middle of a deep freeze. Marketing based on the climate or season in a specific location allows you to present the most relevant information to your audience.
Seasonal offers tend to run for long periods, like the IKEA promotion above, which was marketed to British customers just as the summer kicked in. They can also be extremely time-sensitive, like a supermarket’s promotion of ice cream during an unexpected heatwave.
If you’re targeting an area that is consistently hot, or perhaps for the duration of summer months you could get a bit more creative. The below example from Coca-Cola does just that.
The below outdoor advertisement is in Dallas, Texas. Summer temperatures here are consistently above 95°F so the ad works really well.
Example 4: Segmenting based on cultural preferences
Different regions will have different values that determine whether or not customers decide to make a purchase. In some cases, these values will be determined by the dominant local religion or long-standing traditions and customs, but in other cases, they can be more esoteric local habits that nonetheless need to be understood and catered for.
One of the most common considerations for food manufacturers is religious dietary restrictions. Companies like Haribo that primarily sell gelatin-based sweets, use slightly adapted recipes to cater to the needs of certain demographics.
The German-based company’s main factory in Bonn and their UK factory in Pontefract create their standard range of sweets. Their base in 99% Muslim-majority Turkey, however, makes and markets only halal gummies, using bovine gelatine instead of the porcine gelatine found elsewhere.
From an advertising point of view it’s also important to consider local culture. A recent example of this is Toyota’s TV adverts for its new car the Camry.
In total eight commercials were made to target different demographics across America.
Toyota even went one step further and ran the commercials in between TV Programmes whose main viewership matched the ads. People would see different commercials based on whether they were watching “Scandal” on ABC, which has a high number of African-American viewers, VS a Spanish-language network show on NBC such as Universo.
Example 5: Segmenting based on population density
Another variable to consider is the density and type of the population in the area you’re targeting. People living in urban areas have very different experiences than those in suburban, exurban, or rural regions.
Being able to segment by population density is especially useful for home and garden retailers. Imagine you’re someone like Home Depot. You probably shouldn’t pitch city-dwellers an electric riding lawn tractor, when you’d have much more luck marketing them a manual push reel lawn mower, which takes up less space and is suitable for small garden maintenance jobs.
Don’t forget about the other types of market segmentation
Overlaying other types of market segmentation on top of these geographic parameters will allow you to drill down to a specific target market you can run targeted advertisements to. This ultimately will help you achieve customer growth and product sales.
- Psychographic segmentation
- Demographic segmentation
- Behavioral segmentation
In conclusion
Market segmentation is such a powerful tool for reaching your customers in ways that feel relevant and useful to them. Geographic segmentation is perhaps the simplest way to get your foot in the game.
Think about exactly how your company can best benefit from it: Are you a big company that can utilize different messaging across different regions, or a small business that stands to get a lot more bang for their marketing buck if they target their local area? Maybe your product will be of particular interest to city-dwellers, or most in-demand during certain seasons.
Whatever the case, there’s an opportunity to use geographic segmentation to your benefit.
Get in touch with Yieldify to discuss using audience segmentation to personalize your customer experiences!
Geographic segmentation FAQs:
What is geographic segmentation in marketing?
Geographic segmentation is a marketing strategy that presents potential customers with targeted messaging based on their geographic location.
What is an example of geographic segmentation?
A great example of geographic segmentation is a clothing retailer that presents online customers with different products based on the weather or season in the region they reside in. A customer in New York will require much different clothing in the winter months than one living in Los Angeles.
What companies use geographic segmentation?
Geographic segmentation is used by companies across many sectors, but it’s most useful to businesses selling goods that might be affected by changes in climate or local customs. Companies with very defined regional interest, like sports teams, or small businesses offering local delivery, also benefit from marketing targeted this way.
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FAQs
What do you mean by geographic segmentation explain with an example? ›
What is geographic segmentation? Geographic segmentation involves segmenting your audience based on the region they live or work in. This can be done in any number of ways: grouping customers by the country they live in, or smaller geographical divisions, from region to city, and right down to postal code.
What is a real life example of market segmentation? ›One example of market segmentation in action is Victoria's Secret and their teenage-targeting brand PINK. Victoria's Secret primarily targets women, while their brand PINK is targeted more toward teenage girls and women.
What are some examples of geographic variables often used in segmentation? ›Apart from physical location, this type of market segmentation also categorizes customers using geographical variables like climate, population, food habits, and clothing, etc.
What are the bases of segmentation explain with the example? ›The three main types of market segmentation are demographic, psychographic, and behavioral. Demographic segmentation divides people based on their age, income, education level, and occupation. Some examples of companies that use demographic segmentation include insurance providers, healthcare companies, and banks.
What are the examples of geographical markets? ›Climate-based segmentation refers to marketing products that adhere to a certain climate of an area. Examples of this kind of geographic market segmentation include swimwear brands that are targeted for hot areas with beaches and similarly, raincoats for areas that experience excessive rainfalls, etc.
How does McDonald's use geographic segmentation? ›Geographic Segmentation Example — McDonald's
The fast-food chain divides its target markets into segments by country, region, and cities, then customizes the menu by local preferences. These different market segments have very different preferences and McDonald's does an excellent job of localizing its products.
This approach allows firms to target various categories of customers that perceive the absolute value of particular products and services variable from one another. Coca-Cola's market segmentation focuses on four various elements, namely geographic, demographic, psychographic, and behavioral.
How does Nike use market segmentation? ›Nike creates sub-segments based on needs, demographics, priorities, shared interests, and behavioral and psychographic criteria. The process of identifying the segments will vary from company to company. For Nike, its market segmentation involves four categories - geographic, demographic, psychographic, and behavioral.
What are the examples of benefit segmentation? ›Benefit segmentation can be used to address the different segments within the market for mobiles by the kind of benefits consumers are looking for. Some consumers want phones with good cameras, some want phones that are a status symbol, and some may simply want phones that satisfy the core functions of a mobile.
What is the meaning of geographic segmentation? ›Geographic segmentation is a component that competently complements a marketing strategy to target products or services on the basis of where their consumers reside. Division in terms of countries, states, regions, cities, colleges or Areas is done to understand the audience and market a product/service accordingly.
What is geographic segmentation and why is it important? ›
Geographic segmentation allows small businesses with limited budgets to be more cost effective. The findings that result from geographic segmentation allow small businesses to focus their marketing efforts specifically on their defined area of interest, therefore avoiding inefficient spending.
How is geographic segmentation used? ›Geographic segmentation is a marketing strategy used to target products or services at people who live in, or shop at, a particular location. It works on the principle that people in that location have similar needs, wants, and cultural considerations.
What is market segmentation in simple words? ›What Is Market Segmentation? Market segmentation is a marketing strategy in which select groups of consumers are identified so that certain products or product lines can be presented to them in a way that appeals to their interests.
What is the importance of segmentation in marketing? ›Segmentation helps marketers to be more efficient in terms of time, money and other resources. Market segmentation allows companies to learn about their customers. They gain a better understanding of customer's needs and wants and therefore can tailor campaigns to customer segments most likely to purchase products.
What are the types of geographic segmentation? ›Geographic segmentation is when a business divides its market on the basis of geography. You can geographically segment a market by area, such as cities, counties, regions, countries, and international regions. You can also break a market down into rural, suburban and urban areas.
What is geographic segmentation in a hotel? ›Geographic segmentation
Geographic segmentation is about grouping guests based on their physical location such as city, state, country, or economic status). The major benefit of this segmentation is it helps properties in targeting the varying preferences of people from different regions.
Marketers use various geographic segmentation variables that include the country, region, state, province, town, climate zone, or zip code. Culture and population density (urban or rural) are also crucial variables to include in their market research.
What is the market segmentation of KFC? ›KFC uses demographic segmentation to serve the target market that has both vegetarian and non-vegetarian customer segments. Its offerings cater to kids, young adults, and almost all age groups. KFC's target audience can be categorized into four groups: Children.
How does Starbucks use psychographic segmentation? ›Starbucks is a big fan of psychographic segmentation, and this largely defines their relatability as a brand. For example, they have the, “Non-coffee drinkers who still want to socialize” (catered too by selling frappuccinos and sandwiches in-stores), and the.
What type of segmentation does McDonald's use? ›...
2.3 Demographic Approach.
| Type of segmentation | Segmentation criteria | McDonald's target segment |
|---|---|---|
| Demographic | Age | All age |
| Gender | Male/Female | |
| Income | Low and Middle |
What is the market segmentation of Nestle? ›
Nestlé's client segmentation is based on age, gender, income, and educational attainment. Nestlé never provides the same product to people of various ages. It provides milo for youngsters and coffee for adults, for example.
Is Coca-Cola a geographic segmentation? ›The Coca-Cola Company's operational structure includes four geographic operating segments: Europe, Middle East & Africa; Latin America; North America; and Asia Pacific. The company reporting structure also includes the non-geographic segments of Global Ventures and Bottling Investments Group (BIG).
What segmentation does Pepsi use? ›| Type of segmentation | Segmentation criteria | PepsiCo target segment |
|---|---|---|
| Behavioral | Personality | Easygoing/determined/ambitious |
| User status | Regular users | |
| Psychographic | Social class | Working class, middle class and upper class |
| Lifestyle[1] | Aspirer, Succeeder, Explorer |
Adidas separates its market into multiple categories depending on different consumers' choices and likings. Market segmentation can be separated into different segments of consumers depending on demographic segmentation, geographic segmentation, psychographic segmentation, or behavioral segmentation criteria.
What is Nike's geographic? ›Nike's new geographical areas are North America, Western Europe, Eastern/Central Europe, Greater China, Japan and Emerging Markets. Formerly the Nike brand used four regions: U.S., Asia Pacific, Americas and an area comprised of Europe, the Middle East and Africa.
What companies use market segmentation? ›- Volkswagen. The Volkswagen group is an excellent example of how market segmentation allows a brand to appeal to very different groups of people. ...
- Coca-Cola. When it comes to understanding a broad customer base, few brands are as effective as Coca-Cola. ...
- Kellogg's.
An important example of behavioral segmentation is customer loyalty. As a brand, you shouldn't overlook the customers who exhibit loyal behavior to your business. A popular method marketers leverage to spread loyalty among customers is establishing a rewards program.
What is demographic segmentation example? ›Example of demographic segmentation based on age:
Companies that sell soft drinks, like Coca-cola, often target young adults between the age of 15 to 25 by depicting young men or women in their marketing campaigns.
Examples: Psychographic segmentation examples include luxury items and articles that appeal to a particular lifestyle such as vegetarians and pescatarians. Examples of behavioral segmentation include choosing one product over another due to variation or functionality.
Where is geographic segmentation most useful? ›Geographic segmentation is also ideal for small businesses with limited budgets that serve a wide customer base in a local or regional territory. It allows them to focus their marketing efforts on a defined area of interest, effectively avoiding inefficient spending.
How would you describe the geographic market? ›
Geographic market definition is the use of economic analysis to identify that set of firms. Which of the competitors that can or do sell the relevant products at issue could or will constrain pricing?
How does geographical location affect a business? ›A good location can boost brand image
Geographical location and brand image go hand in hand. Should you decide to up sticks and move to a location that is synonymous with your industry or the world of business in general, your company will instantly be recognised as one that commands a degree of authority.
It allows you to easier conduct an analysis of your data stored in your database, helping to identify potential opportunities and challenges based within it. Enables you to mass-personalise your marketing communications, reducing costs.
Which variable is used as a basis for geographic segmentation of markets? ›Climate, population type/density, new territory marking, and cultural preference are four main variables. What are some important geographic segmentations? Knowing the audience's climate if you're an apparel business is crucial.
What is market segmentation explain its advantages and disadvantages? ›Market segmentation is a customer oriented philosophy. We first identify the needs of customers within a segment and then satisfy those needs. Benefits offered by segmentation can be summarized as follows. By developing strong position in specialized market segments, medium sized firms can achieve a rapid growth rate.
Who are your possible customers under geographic? ›Geographic segmentation is a common strategy when you serve customers in a particular area, or when your broad target audience has different preferences based on where they are located. It involves grouping potential customers by country, state, region, city or even neighborhood.
How does geography affect marketing? ›According to Houldsworth (2003), geography matters in marketing because it is the key factor in being able to extrapolate known information onto persons, households, or areas that up to that point had little or no information.
What are the 4 main types of segmentation in market research analysis? ›Demographic, psychographic, behavioral and geographic segmentation are considered the four main types of market segmentation, but there are also many other strategies you can use, including numerous variations on the four main types. Here are several more methods you may want to look into.
Which segmentation method is best? ›- Segmenting Customers Based on Firmographics. ...
- Segmenting Customers Based on Tiering. ...
- Segmenting Customers Based on Needs. ...
- 4: Segmenting Customers Based on Customer Sophistication. ...
- 5: Segmenting Customers Based on Behavior.
...
The most commonly used demographic segmentation factors are:
- Age.
- Gender.
- Ethnicity.
- Income.
- Level of education.
- Religion.
- Occupation.
- Family structure.
What is a real life example of market segmentation? ›
One example of market segmentation in action is Victoria's Secret and their teenage-targeting brand PINK. Victoria's Secret primarily targets women, while their brand PINK is targeted more toward teenage girls and women.
Is an approach to business that focuses on satisfying customer needs and wants while making a profit for the company? ›Market orientation is an approach to business that prioritizes identifying the needs and desires of consumers and creating products and services that satisfy them.
What do you mean by marketing environment briefly discuss different components of marketing environment? ›A marketing environment encompasses all the internal and external factors that drive and influence an organization's marketing activities. Marketing managers must stay aware of the marketing environment to maintain success and tackle any threats or opportunities that may affect their work.
How segmentation could make your marketing efforts more effective? ›Market segmentation creates subsets of a market based on demographics, needs, priorities, common interests, and other psychographic or behavioral criteria used to better understand the target audience. By understanding your market segments, you can leverage this targeting in product, sales, and marketing strategies.
Why is market segmentation important in a business success factors? ›Market segmentation provides a business owner with a better understanding of its target consumers that enables them to concentrate their marketing efforts on a particular area. This results in better service to the target customers. Proper marketing segmentation facilitates customer satisfaction.
What is market segmentation with example? ›Common characteristics of a market segment include interests, lifestyle, age, gender, etc. Common examples of market segmentation include geographic, demographic, psychographic, and behavioral.
What is demographic segmentation and what is an example? ›Demographic segmentation is a precise form of audience identification based on data points like age, gender, marital status, family size, income, education, race, occupation, nationality, and/or religion. It's among the four main types of marketing segmentation, and perhaps the most commonly used method.
What is behavioral segmentation give three examples? ›Some of the most common nuances of behavioral segmentation boil down to when users become customers (acquisition), how they use the app (user journey), how frequently they use the product (engagement), and how long they continue to use the product (retention).
What are the types of geographic segmentation? ›Geographic segmentation is when a business divides its market on the basis of geography. You can geographically segment a market by area, such as cities, counties, regions, countries, and international regions. You can also break a market down into rural, suburban and urban areas.
What is the use of geographic segmentation? ›Geographic segmentation allows small businesses with limited budgets to be more cost effective. The findings that result from geographic segmentation allow small businesses to focus their marketing efforts specifically on their defined area of interest, therefore avoiding inefficient spending.
What are some examples of demographic? ›
Demographic information examples include: age, race, ethnicity, gender, marital status, income, education, and employment. You can easily and effectively collect these types of information with survey questions.
What is an example of a product sold using demographic segmentation? ›Example of demographic segmentation based on age:
Companies that sell soft drinks, like Coca-cola, often target young adults between the age of 15 to 25 by depicting young men or women in their marketing campaigns.
Demographics describe who we are as individuals, for example: ethnicity, age/generation, gender, income, marital status, education, and homeownership.
What is an example of psychographic segmentation? ›Examples: Psychographic segmentation examples include luxury items and articles that appeal to a particular lifestyle such as vegetarians and pescatarians. Examples of behavioral segmentation include choosing one product over another due to variation or functionality.
What is benefit segmentation example? ›Companies that produce athletic footwear use benefit segmenting to divide customers into professional runners, trail runners, and recreational runners. They provide properly cushioned, lightweight, flexible, and stable shoes for professional runners.
What is an example of behavioral marketing? ›Behavioral marketing will often consider the occasion or timing of a purchase of engagement. For instance, there are universal occasions like holidays that may apply to the majority of customers, or rare occasions that are more irregular and specific, like a wedding.
What are geographic characteristics in marketing? ›People in different parts of the world, display different characteristics. A marketing strategy created by dividing the target market 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.
How does Nike use geographic segmentation? ›The presence of physical stores in different parts of the world is one of Nike's strategies under its geographic segmentation. This segment acknowledges that each country has varied lifestyle habits and cultures. The company introduced different products for various countries that meet the customers' needs.
How would you describe the geographic market? ›Geographic market definition is the use of economic analysis to identify that set of firms. Which of the competitors that can or do sell the relevant products at issue could or will constrain pricing?
Why is geography important in marketing? ›Geographical information can help marketers worldwide see the bigger picture, align with the culture in various locales, and become more agile and responsive in seizing new market opportunities to stay ahead of the competition.
How does coke use geographic segmentation? ›
The company's geographic segmentation aims to drive the market into different geographical units, including cities, regions, and neighborhoods. While Coca-Cola might be focusing on urban and suburban areas, it also ensures a countrywide product distribution network.
Why is location important in market segmentation? ›By knowing where a customer is located can help a company better understand the needs of their customers and companies can then target customers with location-specific ads. You can divide a segment based on their locations, such as town, county, zip code or country.