A Guide to Geographic Segmentation in Marketing

Walking down the Times Square in New York is in stark contrast to walking down the street of a town like Taos in New Mexico. You would be hard-pressed to find a restaurant like the Eleven Madison Park while walking down the picturesque streets of Taos. There would be a Ford pickup rumbling down the road, quite different from the Cadillacs and Teslas gliding down Manhattan. It would be odd to catch someone wearing a jacket or muffler down here.

As you can see, not all regions are the same. There are many differences between regions located within the same country. While some marketers may see this as a hindrance, seasoned marketers know that by using geographic segmentation, one can make the most out of these differences. So what exactly is geographic segmentation? Let us take a look.

What Is Geographic Segmentation?

Geographic segmentation is the practice of classifying your target market based on their location. Now, this location may include their place of residence or their place of work. At its core, the rationale behind geographic segmentation is simple. People who live within the boundaries of a particular geographical region are likely to have the same needs, owing to the unique conditions of that area.

In this article, we will explore the different conditions or variables associated with a region and learn how they can be used in segmentation. We will also look at the tools at our disposal that make the whole process much easier. But before that, we must discuss why brands need to employ geographic segmentation in their marketing efforts.

Why Is Geographical Segmentation Important?

Geographic segmentation is employed by companies in marketing to expand their base of potential customers. So the question that naturally arises is, how exactly does it help create effective marketing campaigns?

Simplicity: Geographic segmentation is one of the easiest segmentation procedures to execute. When compared to something like psychographic segmentation, geographic segmentation involves less complicated, often rigid variables, which are subject to fewer fluctuations over time.

Increased relevancy: There’s an adage that goes like this, “You can’t sell ice to an Eskimo”. A smart business owner is someone who knows not only what product or service to sell but also to whom to sell it. A highly personalized product lineup will go a long way in helping firms drive up profits and reduce wastage.

Geographic segmentation enables you to personalize your product lineup to make sure you market your products only to those who truly need them, thereby making sure no confused Eskimos are left holding packets of ice.

Increased savings: Ad spending is estimated to have hit around 1 trillion dollars globally. Thus, brands must keep an eye on the dollars spent on marketing. Geographic segmentation helps to create targeted marketing campaigns to make sure your dollars flow only into the right places where they can be utilized with minimum wastage.

Geographic Segmentation vs Psychographic Segmentation

Geographic segmentation is one of many different segmentation methods out there. There are segmentation procedures, like demographic segmentation, psychographic segmentation, and behavioral segmentation. Here, we will consider psychographic segmentation to see how it is different from the concept of geographic segmentation.

Psychographic segmentation is a marketing strategy wherein you create customer segments based on psychographic traits and variables like social status, personality, lifestyle, attitudes, values, beliefs, interests, hobbies, and opinions. Psychographics employs the use of frameworks and methodologies like the VALS framework or the OCEAN model of personality to aid its segmentation procedure.

While the importance of such a meticulous and detailed segmentation cannot be stressed enough, one cannot help but wonder: what if there was a simpler segmentation procedure that could set the ball rolling on your segmentation process?

This is where geographic segmentation can help. Geographic segmentation allows businesses to use comprehensible geographic factors like location, climate, language, and time zone to classify their target audience. Information regarding these geographic units is readily available through public sources and customer databases. There is no need for any complex, behavioral analysis to extract this data.

Geographic data is also easier to apply to your segmentation process. For instance, customers living in cold climates would require winter clothes to keep warm. If you are a seller of sweaters and jackets, that is where you would set up shop. It is that simple.

Geographic Segmentation Variables

Geographic segmentation is carried out based on geographic parameters. Here, we take a look at those parameters coupled with examples of geographic segmentation to illustrate the point.

Country/State

The fundamental way for classifying consumers is based on their geographic location, that is, the country/city/state that they are located in. This rudimentary categorization will pave the way for all further geographic segmentation. One reason why a region-based segmentation is vital is because of the varying tastes and preferences of people across different countries. People’s culinary preferences, for example, vary according to their country.

This is precisely the reason companies like McDonald's have different menus for each country. You would find an Ebi (shrimp) burger only in Japan. Some German McDonald's outlets serve beer. A maple and bacon poutine is a Canadian favorite, which is found in McDonald's outlets across Canada.

Coca Cola also optimizes their product lineup for each country. Coca Cola Peach, Coca Cola Clear, and Georgie Coffee Coca Cola are drinks available in Japan. Coca Cola Plus was introduced in South Korea. Coca Cola Masala Soda is found only in India, which is inspired by the traditional Indian masala soda with spices.

Starbucks is also known for introducing country-specific culinary delights. Starbucks serves Sakura (cherry blossom) flavored tea in Japan. It introduced a Horchata Frappuccino in Mexico as well as a Bungeoppang Latte in South Korea.

Bringing in such indigenous flavors to the menu will help make brands more relatable to the public while increasing their sales simultaneously.

Culture

The world as we know it is a melting point of different cultures across multiple regions.

Brands must adapt to the heterogeneous nature of the global market if they wish to improve their sales across the globe. Holidays and festivals are good use case scenarios for culture-oriented marketing.

In Western countries, Christmas, Easter, and Thanksgiving are celebrated with much pomp and splendor. During the Christmas season, brands provide discounts and offers on a wide array of products, ranging from clothes to electronic goods. The start of the Christmas shopping season is marked by Black Friday. Black Friday, the first Friday after Thanksgiving, is the busiest shopping day of the year in the US.

Segmentation based on culture brings to the forefront issues related to cultural sensitivity. Take the case of marketing during Ramadan in Middle Eastern countries. Muslims fast during the daylight hours, hence, it is considered disrespectful to advertise food and drinks before sunset. Being cognizant of such issues can only happen when we bring culture-based segmentation into the picture.

Economy

The economies of countries all over the world come in varying sizes. There are developed economies with high standards and high costs of living, and then there are developing economies with lower living standards and lower costs of living.

Consumers in developed economies usually do not have to worry too much about necessities like food, water, and housing. They can afford to focus their attention on luxury goods as well as strive for more quality and innovation in their products. For example, Samsung’s line of budget-friendly smartphones, the M series, is not sold in the USA as prospective buyers for budget phones are not too high over there.

However, developing countries may face issues with equal access to necessities for all their citizens. In such markets, brands should focus more on affordability and accessibility in their product lineup. The sale and marketing of luxury goods must ideally take a back seat in such markets. For example, a family of four living in a remote village in a recession-hit economy would not be thrilled with the prospect of owning a Lamborghini.

Climate

Climatic conditions may not influence the working of all companies, but they certainly do influence the working of a lot of companies, particularly those involved in the fashion, cosmetics, automobile, and electronics industries.

Countries like Russia, Canada, and the US states like Alaska have a primarily cold climate. In such regions, the need of the hour, as far as fashion is concerned, is winter clothing like jackets, sweaters, mufflers, and woollen caps. In places with high snowfall, the cars would require special snow tyres. The homes in these areas would require efficient heating systems to keep the residents warm.

Meanwhile, South American and Middle Eastern countries have a largely tropical climate with high temperatures and humidity. The residents there would require clothes made from light and breathable fabrics like cotton and linen. The homes in these countries would require efficient cooling systems to help people survive the scorching heat. Consumers would require sunscreens to help protect their skin from harmful UV radiation.

Language

There are well over 7000 languages spoken all over the world. While a tailored marketing campaign involving each of these languages might not be feasible, brands typically formulate marketing campaigns by making use of the local language of the place in which they are situated. There are several reasons why they engage in language segmentation.

For starters, communicating with your customers in their native tongue creates a sense of belonging, especially if your company is not based out of that region. This relatability could very well prove to be the decisive factor for companies looking to expand their reach within a particular region. Adopting the local language will also lead to better communication about your products, offers, promotions, and other outreach initiatives.

For example, McDonald's uses Spanish ads in the US to reach out to the Hispanic community. Netflix produces content in multiple languages and Apple provides localized versions of Siri.

Time Zone

The world as we know it is divided into 24 time zones. While a Wall Street banker sips his morning coffee, an Indian on the other side of the globe has already sat down for dinner. Any company looking to establish a global presence must be wary of the way different time zones operate.

Take the case of Netflix, for instance. Netflix original shows and movies are released at midnight Pacific Time globally. Some Netflix titles are ‘original’ in one country but not in others. In this case, in the country where the show is an 'original, ' it is available at midnight Pacific Time. In other countries, where the show is a licensed title, it is available at midnight local time. Products have to be launched at the time when the most number of users are active.

Time zone segmentation is also essential to execute functional advertisement campaigns. Google Ads allows you to set schedules based on the time zone of the ad viewer. This can help you make sure your ads are displayed at appropriate times for all your target locations across different time zones. Time zone segmentation improves engagement by delivering content to the right people at the right time.

How To Perform Effective Geographic Segmentation

Firms have a wide array of tools at their disposal to help them with their geographic segmentation strategy. These include market research and data analytics tools, business intelligence and mapping platforms, digital advertising, and geo-targeting tools. If firms wanted to do it the old-fashioned way, they could use census and other government data sources.

Let us take a look at some of these tools.

Persona by Delve AI

A buyer persona is a semi-fictional representation of your ideal customer. It is based on gender, age, location, job profile, personalities, interests, goals, values, and more. Also known as an audience persona, it is built using qualitative and quantitative data.

Persona by Delve AI is a great tool to segment your target audience into personas. We use quantitative data gathered from various sources – government records, CRM software, website analytics, and social media monitoring platforms – to divide your customers into groups based on various demographic, psychographic, geographic, and behavioral attributes.

We have a DISTRIBUTION tab that shows how your audience in that persona segment is distributed geographically. Under the WHERE module, you can find the urbanicity and territory they belong to, along with the top cities, countries, and regions. Urbanicity is the degree of urban development in a given geographical area. Users are categorized into metro, urban, suburban, or rural segments.

The heatmap shows how consumers in this segment are distributed across different geographic levels and their urbanicity. The darker red shades indicate stronger representation in those categories.

Similarly, the WHEN module shows you the day, time, weather, and season. The heatmap shows when this consumer segment is most active. In the example, weekday evenings and nights are the most active times, indicating that this audience is likely engaged after work hours. Also, you can see that there is less activity during extreme weather events, snow, and thunderstorms.

Market research and data analytics tools

PRIZM Premier by Claritas is a market segmentation tool that classifies US neighborhoods into market segments based on demographics, lifestyles, and purchase behaviors. It helps you know more about your customers’ lifestyles, media consumption, needs, and preferences and be able to engage with them in more meaningful and individualized ways.

Claritas also provides a zip code-based segmentation to help you find the top consumer segments who live in a particular zip code, and uncover the demographic characteristics of each of those segments.

Digital advertising and geo-targeting tools

Digital advertising is a vital part of a firm’s marketing strategy. One of the best ways to advertise your products in the digital realm is through the dedicated ad platforms of tech giants like Google and Meta. However, as a business owner, it is your responsibility to ensure that your advertising strategy is effective by guaranteeing that your company’s ads are only shown to potential buyers.

Google Ads' location targeting allows your ads to appear in the locations that you select. Locations may include countries, states within a country, a radius around a location, or location groups that can include places of interest, commercial hubs, or your business locations. This ensures that you reach potential customers much quicker to get higher sales and returns on investment.

Wrapping Up

Geographic segmentation is an effective type of marketing segmentation that has a vital role to play in the sales and marketing strategies of firms. We have seen how geographic segmentation helps to increase the relevancy of your products and services. You also save a lot of money as you do not unnecessarily waste resources on target groups that produce a low ROI.

Geographic segmentation also tends to be simpler when compared to other forms of segmentation like psychographic segmentation. The multiple variables of geographic segmentation make sure that you leave no stone unturned in the quest for increased profit margins. Tools like buyer personas, data analytics, and geo-targeting tools help you streamline the whole process with fewer glitches. Brands could do well to include geographic segmentation in their sales and marketing strategies and reap the numerous benefits that come along with it.