Geographic segmentation is a marketing strategy, whereby, prospective buyers are divided on the basis of geographic units, like cities, states, and countries.
“Today, segmentation is no longer a simple, or static, marketing technique; it is core to the way successful companies run their business.”
– IBM Institute for Business Value
The ultimate aim of any business is to make profits. In order to achieve this goal, a perfect marketing strategy is necessary. Marketing is a wide concept, which involves various activities, like studying the buyers’ needs and preferences, designing products according to customers’ needs, and promoting and selling products using various techniques. However, the needs and preferences of customers may not always be the same. They may vary depending on factors, like climatic changes, regional differences, different age groups, cultural differences, etc. It will be a folly on the part of the seller, to treat the customers alike.
You cannot develop and sell a product on assumptions only. While bad-quality products may not lure the customers, good ones may also fail in a low demand market. Hence, a study of the market is indispensable, especially for global brands. One such marketing strategy is target marketing, which recognizes the diversity of customers, and identifies the needs of separate segments. In other words, the market is divided into different segments, that are treated differently, according to their needs and preferences.
Market Segmentation Strategy
In target marketing, the market is divided into distinct segments. Dividing the market into groups of individuals, who share similar needs and preferences, in relation to goods and products, is called market segmentation. Market segmentation is done on the basis of factors, like culture, economic status, geographic differences, and behavior.
A market segmentation strategy is aimed at dividing a heterogeneous market into different segments of buyers. Each segment has individuals who have similar interests. The interests of each segment may vary with regard to products. So it would not be wise to offer them with the same marketing mix.
For example, a cosmetic company can increase their customer base, by targeting audience of different age groups with products designed to meet their specific needs. For example, L’Oreal and Garnier are some of the leading cosmetic producers that cater to the needs of male and female customers of different age groups. A cosmetic company must focus on marketing products according to seasonal changes. The demand for sun protection products increases during summer months. So, seasonal changes play a major role in marketing of such products. In short, products should be tailored to fit the needs of each segment. Apart from seasonal changes, age group and gender; there are various other factors that have to be considered, while marketing products. Hence detailed studies are conducted and the results are evaluated in a proper manner; before evolving a market segmentation strategy.
What is Geographic Segmentation?
Marketing segmentation can be based on any factor, like culture, economic status and geographic differences. If the market segmentation is based on geographic units, it is called geographic segmentation.
As per the dictionary of marketing terms, geographic segmentation definition is as follows: Market segmentation is a strategy, whereby the intended audience for a given product is divided according to geographic units, such as nations, states, regions, counties, cities, or neighborhoods.
Marketers will tailor marketing programs to fit the needs of individual geographic areas; localizing the products, advertising, and sales effort, to geographic differences in needs and wants. Marketers will also study the population density or regional climate as factors of geographic segmentation.
Geographic segmentation in marketing is very important, especially for multinational businesses with global brands. They have to formulate marketing programs, which are intended to lure customers of different geographic units, and are designed after careful study and evaluation. It may also happen that, the products and advertising techniques or means of promotion, vary with the different geographic units.
For example, a global business organization which specializes in clothing may divide the market on the basis of climate. Apart from climatic changes, the economic status and cultural preferences of the customers, have to be considered. Hence, variables of geographic segmentation in marketing include the size of the region, regional climate, population density, and economic status.
Geographic Segmentation Examples
Categorizing customers according to the geographic units, and marketing products that are customized to individual group requirements, is the basic concept. This type of marketing strategy can be explained with some examples.
Climate
A company that sells both rain gear and summer wear has to consider weather changes while marketing such products. It has to focus on marketing rain wear in rainy regions and summer wear in places with hot weather. This strategy is mainly applicable for those sellers, who have customers in various locations with different climatic conditions. So, geographic segmentation is very important in international marketing.
Population Density
Certain products are marketed on the basis of population density in different locations. High-density cities, like New York, create a higher demand for products, like ready-to-eat meals. Even fast food restaurants are commonly found in such cities, rather than urban areas.
Cultural Preferences
The fast food giant McDonald’s serves beer in their German outlets. However, beer is not a part of the menu in their U.S. outlets. This reflects the food preferences of different cultures. This fast food giant has incorporated local food in their menu served at different locations. For example, McDonald’s serves McVeggie in India, McArabia in Middle East and banana pie in Brazil.
Advantages and Disadvantages
As compared to other methods, dividing the market on the basis of geographic factors is easier. This concept works well, if the targeted locations are significantly different in climate, culture, and other such aspects. Geographic segmentation is advantageous for international businesses, and not for a small business, which operates in a well-defined area. Even such small businesses can apply this concept, as they have to cater to the needs of customers. In such cases, they can easily identify the needs and preferences of their customers, and refrain from marketing products that are not suited for that location. However, the needs and preferences of all customers of a particular geographic unit may not be the same. So, geographic segmentation works well, if used in conjunction with others. In some cases, it is not wise to rely on geographic segmentation only, ignoring other vital factors, like age group, gender, economic status, religion, etc.
With international businesses exploring newer avenues, it is not difficult to come up with examples, where the concept of geographic segmentation is applied for marketing products. Even online shopping sites, like eBay, are expanding their business using market segmentation strategy. As they operate in several countries, geographic segmentation is of utmost importance.