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Unlock This CourseImagine you're selling ice cream. Would you market the same way in sunny Brighton as you would in rainy Manchester? Probably not! This is where market segmentation by location comes in. It's all about understanding that where people live affects what they want, need and buy.
Market segmentation by location, also called geographical segmentation, is when businesses divide their market based on where customers are located. This could be by country, region, city, or even neighbourhood. It's one of the most basic but powerful ways to understand your customers better.
Key Definitions:
Location affects everything from the weather people experience to the culture they're part of. A business selling winter coats will focus on colder regions, whilst a surfboard company will target coastal areas. Understanding location helps businesses make smarter decisions about where to sell, how to advertise and what products to offer.
Businesses can segment their markets by location in several different ways. Each approach helps them understand their customers better and create more targeted marketing strategies.
This involves dividing markets by large geographical areas like countries, states, or regions within a country. For example, a UK business might segment by England, Scotland, Wales and Northern Ireland, recognising that each has different cultures, preferences and even languages.
Businesses operating internationally segment by countries. McDonald's, for instance, adapts its menu for different countries - serving rice burgers in Taiwan and vegetarian options in India.
Within countries, businesses might focus on specific regions. A clothing retailer might stock more raincoats in the North West of England compared to the South East.
This focuses on cities, towns, or even specific neighbourhoods. A local bakery might offer different products based on the ethnic makeup of different areas in their city.
Tesco, the UK's largest supermarket chain, uses sophisticated geographical segmentation. In affluent areas like Kensington, they stock premium products and organic foods. In student areas near universities, they focus on ready meals, snacks and budget options. In areas with large ethnic communities, they stock specific foods that cater to those cultural preferences. This location-based approach has helped Tesco become the market leader by truly understanding local needs.
One of the most important ways businesses segment by location is distinguishing between urban (city) and rural (countryside) markets. These two environments create very different customer needs and shopping behaviours.
City dwellers often have different lifestyles compared to rural residents. They might have higher incomes but less storage space, leading to different purchasing patterns.
City customers often want convenience, speed and variety. They might shop more frequently but buy smaller quantities. They're also more likely to use delivery services and shop online. Businesses targeting urban markets often focus on convenience stores, fast delivery and premium products.
Rural customers often have different priorities. They might travel further to shop, so they tend to buy in larger quantities. They may also have different product needs based on their lifestyle and work.
Rural customers often prioritise value for money and durability. They might need products related to farming, gardening, or outdoor activities. They're more likely to shop at large out-of-town stores and may be less influenced by trends. Businesses often focus on practical products and bulk buying options.
Weather and climate play a huge role in what people buy and when they buy it. Smart businesses use this to their advantage by segmenting their markets based on local weather patterns.
Different regions experience different seasonal patterns. While most of the UK has similar seasons, the timing and intensity can vary. Scotland might need winter clothing earlier than Cornwall, for example.
Sunscreen, ice cream, garden furniture and barbecue equipment sell better in sunnier regions and during warmer months.
Heating equipment, warm clothing and comfort foods are more important in colder regions and during winter months.
Umbrellas, raincoats and indoor entertainment options are more popular in regions with higher rainfall like the Lake District.
Ice cream van operators are masters of geographical segmentation. They plan their routes based on weather forecasts, local events and neighbourhood characteristics. On hot days, they'll focus on parks and beaches. During school holidays, they'll target residential areas with families. They even adjust their product mix - selling more ice lollies in working-class areas and premium ice creams in affluent neighbourhoods. This location-based strategy can make the difference between profit and loss.
Modern technology has revolutionised how businesses use geographical segmentation. GPS, mobile apps and data analytics now allow businesses to target customers with incredible precision.
Smartphones and apps have given businesses new ways to reach customers based on their exact location. This has created opportunities for very targeted marketing.
Businesses can now send special offers to customers when they're near a store. For example, a coffee shop might send a discount code to people walking past during their morning commute. This type of location-based marketing can be very effective because it reaches people at the right time and place.
Businesses now use sophisticated mapping software to analyse where their customers live, work and shop. This helps them decide where to open new stores, how to plan delivery routes and which areas to target with advertising.
Like all business strategies, geographical segmentation has both advantages and disadvantages that businesses need to consider.
When done well, geographical segmentation can give businesses a real competitive advantage by helping them understand and serve their customers better.
Businesses can create more relevant products and marketing messages for specific locations, leading to higher sales and customer satisfaction.
By focusing marketing efforts on the right locations, businesses can reduce wasted advertising spend and improve their return on investment.
Location data helps businesses understand patterns in customer behaviour and identify new opportunities for growth.
However, geographical segmentation isn't always straightforward and can present some challenges for businesses.
Businesses might make assumptions about customers based on where they live, which could lead to stereotyping. Also, people's needs don't always match their location - someone living in a rural area might have urban preferences. Additionally, managing different strategies for different locations can be complex and expensive.
Netflix uses geographical segmentation on a massive scale. They create different content for different countries and regions based on local culture, language and preferences. In India, they produce Bollywood-style content, whilst in South Korea, they focus on K-dramas. They also adjust their pricing based on local economic conditions. However, they've learned that location isn't everything - urban viewers in different countries often have more in common with each other than with rural viewers in their own country. This has led Netflix to combine geographical segmentation with other approaches like age and interests.
Geographical segmentation isn't just for big corporations. Small businesses can also use location-based strategies to compete more effectively and serve their customers better.
Small businesses often have the advantage of knowing their local area very well. They can use this knowledge to create targeted strategies that larger competitors might miss.
Local businesses can sponsor community events, partner with local schools, or create products that celebrate local culture. A bakery might create cakes featuring local landmarks, or a clothing store might stock items supporting the local football team. This creates a strong connection with the local community that larger businesses struggle to match.
As technology continues to advance, geographical segmentation is becoming more sophisticated and precise. Businesses are finding new ways to use location data to understand and serve their customers.
New technologies are making it possible for businesses to understand location-based customer behaviour in ways that were impossible just a few years ago.
AI can analyse vast amounts of location data to predict customer behaviour and identify new market opportunities.
AR apps can provide location-specific information and offers when customers point their phone at a store or product.
Businesses can now respond to location-based trends as they happen, adjusting prices and promotions in real-time.
Understanding geographical segmentation is crucial for any business wanting to succeed in today's competitive market. By recognising that location affects customer needs, preferences and behaviour, businesses can create more effective strategies that truly connect with their target audience. Whether you're a global corporation or a local shop, thinking about location can help you serve your customers better and grow your business more effectively.