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Unlock This CourseGeographic segmentation is one of the most straightforward yet powerful ways businesses divide their markets. It's all about splitting customers into groups based on where they live or work. This might sound simple, but location can tell us a lot about what people might want to buy!
Key Definitions:
Where people live affects what they buy! Think about it - people in cold Scotland might need more warm clothes than those in warmer southern England. City dwellers might want smaller cars for tight parking spaces, while rural customers might prefer 4x4s for muddy country lanes.
Geographic segmentation helps businesses target their marketing more effectively, stock the right products in the right places and understand local competition. It's often the first step in market segmentation because it's relatively easy to implement and can lead to quick wins.
Businesses can use many different geographic factors to segment their markets. Here are the main ones you need to know about:
Different countries have different cultures, laws and customer preferences. Even within countries, regions can vary widely (think Scotland vs. Cornwall).
Weather patterns affect what people buy - from food and drink to clothing and leisure activities. Businesses adapt their offerings based on local climate.
City dwellers have different needs and shopping habits compared to those living in rural areas, influencing everything from product design to distribution.
Densely populated areas might support more stores and different business models than sparsely populated regions.
In the UK, postcodes can reveal a lot about income levels, lifestyle and purchasing power (often used in geodemographic segmentation).
Natural boundaries like rivers or mountains, or administrative boundaries like counties, can create distinct market areas.
Let's look at how businesses actually use geographic segmentation in their marketing strategies:
McDonald's famously adapts its menu for different countries and regions. In India, they offer the McAloo Tikki (potato patty) instead of beef burgers to respect local cultural preferences. In the UK, they've introduced regional items like porridge in Scottish branches.
Advertising often varies by region. A clothing retailer might show models in winter coats for Scottish customers while simultaneously promoting summer clothes to customers in southern Spain. Local references and accents in adverts help brands connect with specific geographic markets.
Tesco, the UK supermarket giant, uses geographic segmentation to stock different products in different stores. Their "Express" stores in city centres focus on ready meals and lunch options for busy office workers, while their larger suburban stores stock more family-sized products and household goods. In areas with large ethnic populations, they increase their range of international foods. They even adjust pricing strategies based on local competition and income levels.
This approach has helped Tesco maintain its position as one of the UK's leading supermarkets by ensuring each store meets the specific needs of its local customer base.
Geographic segmentation offers several benefits for businesses:
However, there are some drawbacks to consider:
Not everyone in the same area has the same needs or preferences. A wealthy person and a student living on the same street might have completely different buying habits despite sharing the same geographic location.
The rise of e-commerce means geographic boundaries are becoming less important for many purchases. Someone in rural Scotland can now easily buy products from London or even international retailers.
For the most effective targeting strategy, businesses often combine geographic segmentation with other approaches:
Combining location with age, gender, income, etc. (e.g., targeting young professionals in London)
Adding lifestyle and values to location (e.g., environmentally-conscious consumers in Brighton)
Including purchasing behaviour with location (e.g., frequent online shoppers in suburban areas)
HSBC's famous slogan "The World's Local Bank" perfectly captured their geographic segmentation strategy. While maintaining a global brand, they adapted their services to local markets. In the UK, they offered products tailored to British financial regulations and customs, while in Hong Kong, they provided services suited to the local business environment.
Their marketing campaigns showed how the same values could be interpreted differently across cultures, highlighting their understanding of geographic differences. This approach helped HSBC build trust in diverse markets while maintaining a consistent global brand identity.
If you were starting a business, here's how you might apply geographic segmentation:
Geographic segmentation divides markets based on location factors like country, region, city size, or climate. It helps businesses tailor their offerings to local needs and preferences, making marketing more relevant and effective. While it's one of the simpler segmentation methods, it works best when combined with other approaches like demographic or psychographic segmentation.
Remember that good geographic segmentation isn't just about knowing where your customers are it's about understanding how location influences what they want and need. In today's global marketplace, thinking locally can give businesses a significant competitive advantage.