What is Geographic Segmentation? Definition, Factors, Examples, and Pros/Cons

What is Geographic Segmentation?

Geographic segmentation is a market segmentation strategy that groups customers based on the area they live. This can be done in terms of the customer’s location, cultural preferences, time zone, climate, language, urban or rural area, etc.

Geographical segmentation divides customers based on their specific geographical area and targets a specific segment. It assumes that a particular customer area shares common characteristics that a company can target.

It is obvious that the people of India have different product tastes than other Western countries like America’s people. Due to this fact, your successful product in the Indian market might not be successful in the American market.

By understanding the needs and wants of particular areas’ customers, companies can develop relevant marketing strategies and products that best appeal to such customers.

Objectives of Geographic Segmentation

The following are the main objectives of geographic market segmentation.

• Increase brand awareness.
• Address the issues of specific customer areas.
• Fulfill the needs of different geographically distributed customers.
• Increase customer satisfaction
• Increase the company’s sales and profitability.

Variables of Geographic Segmentation

Geographic segmentation is one of the four types of market segmentation – other includes demographic, psychographic, and behavioral. While segmenting a market with this segmentation companies can use any of the following factors or variables.

Related: Demographic Segmentation

Location

Location is the most common geographic factor. The location can be a country, state, city, or even a continent. You must be aware that one marketing strategy that fits in one city or country does not guarantee it will succeed in another country.

The tastes and preferences of different locations of customers differ. Most national companies target customers within the nation and international companies target international customers.

Climate

It includes the segmentation of the market based on the climate of that area. Your business will not get effective results if it markets products to the wrong area.

For example, if your company makes swimsuits it should market in places near the beach, not in hot areas.

Time Zone

Different geographical locations have different time zones. Following this people go to offices, go shopping, and do other activities. While marketing products to different areas, you should also consider the time zones of different areas.

Cultural Preferences

People of the same areas even have different cultural preferences and people of different locations, it is obvious. When targeting customers from different areas you should also consider their cultural preferences.

For example, in Western countries, brides wear white clothes whereas in Indian culture if a woman wears white clothes, usually, her husband is no more.

Population

The number of people is also an important factor in market segmentation. A large population normally means a good opportunity to enter whereas a small density refers to less opportunity. However, there may be exceptions.

Larger companies usually focus on a larger population whereas small companies may stay in their native areas or country only.

Urban and Rural Areas

It is quite certain that the living types purchasing power and habits of urban and rural people are different. If you try to run a gym center in the village this surely would be a bad idea. However, it will work if you open in the urban areas.

Language

Don’t think that all people love to read in English or Hindi only. Your marketing messages would be quite effective if you designed the promotional messages according to the language preferences of the areas you are targeting.

Read Also: The Marketing Mix

Advantages and Disadvantages of Geographic Segmentation

Businesses can not understand the needs and requirements of all areas of customers nor they can satisfy all of them. What they can do is promote the products and wait for the results. And, the result will be negative.

In order to satisfy customers located in different areas, companies must first, understand their requirements and launch marketing programs. For this, it is necessary to go through geographic segmentation marketing. Let’s understand some of its pros and cons.

Advantages:

• Good Relationships – Geographical segmentation allows companies to understand the particular areas of customers and design messages that best appeal to them. Marketing personnel further personally visit them and are involved in the interaction.
• Customer Satisfaction – Companies make products and design marketing strategies with reference to the customer’s requirements, as such, customers get what they wish to have.
• Increase Profits – When you choose the right customers, everything that you make will be sold quickly.
• Increases Customer Retention – Satisfied customers are most likely to repeat purchases. Often they may recommend your brand to others.

Disadvantages:

• Costly – Geographic segmentation is an expensive method. Under this, in order to identify and choose the right target market you must first search, study, and evaluate the customers.
• Time-Consuming – Searching, studying, and evaluating different areas of customers also costume a lot of time.
• Small Market – If you choose only one geographic segment, your market is usually small and will not generate enough demand.
• Different Target Market, Different Strategy – If you choose more than one geographic segment, you have to design different market strategies for each segment.

Examples of Geographic Segmentation

Let’s look at some examples of geographic segmentation.

McDonald’s

McDonald’s is one of the companies that use a geographical market segmentation strategy to sell products around the globe. Let’s say McDonald’s sells burgers using beef in its local areas or where people eat beef.

But, it sells burgers in India using chicken and other veg materials. It is because there are Hindu-Muslim people who do not eat beef. For this, McDonald’s has opened Chicken Maharaja Mac in India.

Gym Business (Urban or Rural)

Everyone wishes to look fit and fine. One of the reasons people join gym clubs is to look fit. Most companies open gym clubs in urban areas. Urban people are more likely to go to the gym and spend money on fitness materials.

Whereas, rural people are already-fit and do not want to spend their hard-earned money on such things. As such, most gym centers are in urban areas, not in villages.

Read Next: Types of Market Segmentation