Geodemographic Segmentation is a classification system for ranking municipalities or micro-regions based on marketing and demographic characteristics. The business applications are very broad. It can be used to analyze market potential, expansion studies, development of trade marketing actions, risk assessment, among others. Geodemographic Segmentation is essential for companies that want to frequently develop geomarketing analyses and seek autonomy and independence(Y. Kamarulzaman 2010).
Advantages of Geodemographic Segmentation
There are several advantages of geodemographic segmentation:
- Effectiveness- This means that top companies can ensure that their marketing strategy is on point. Once the target group is defined, it is easier to know how to make the product fit into the outline of their needs. Thus, the effectiveness of the company is assured. The primary motive is to make the product sell by making the potential buyers believe that their needs can be fulfilled by the particular item. Consumer profiles are thus easier to understand and interpret.
- Ease of operations- This means that once the target group is known, accordingly steps can be taken to ensure that their attention is caught for the product. For example. In case of an item for kids, the advertisements can be vibrant and free toys may also be provided. On the other hand, if the target is the aged, then accordingly means may be adopted. It is very important to understand the taste of the potential clients. In fact, in order to ensure ease of operations, the marketing teams may also be divided accordingly and they may further appoint and allocate responsibilities. Thus, a hassle-free execution of the assigned task is made possible.
- Optimum utilisation of resources- Geodemographic segmentation ensures that there is no waste of time or resources. Once the target is known, steps of marketing are taken accordingly. There is no waste on the trial and error method where there is no surety of what is going to work and what isn't. Proper planning is done beforehand to save time, energy and efforts. There is a harmonious execution of all plans.
- Lack of pressure- This pertains to those who are working for the company. Proper and timely allocation of work helps to cut down on the workload. This means that everyone knows what their role is and what is expected of them. They can this focus on their own work and not be confused as to how things are to be done.
Disadvantages of Geodemographic Segmentation
There are several disadvantages of geodemographic segmentation:
- The very assumption that all those in a particular group, are bound to have similar needs is a big disadvantage. It is not necessary that this will be the case. No two humans think alike or have the exact same needs. Thus, geodemographic segmentation leaves very little scope to cater to individual differences. In fact, they are totally ignored. This, it is not necessary that the segregation is bound to yield good results for the company. Everyone has a different lifestyle, daily situations to face and problems to solve. Thus, these are overlooked in case a company engages in geodemographic segmentation.
- Various tastes cannot be met through geodemographic segmentation. This is so because what may appeal to one person, may be terrible in the eyes of someone else. At times, even if a product fits the needs of everyone, it fails to meet the tastes of people. This is where a matter of choice steps in. While the first disadvantage pertains to a compulsion, this is one where the masses have the freedom to pick. Thus, there may be times when competing brands and companies come up with something more appealing to the senses. A big factor regarding this could the pricing of a product. At the end of the day, the pocket pinch matters the most to the common man.
- At times, the information collected may be skewed. This means that it may be faulty or the population in one are may consist of too many people of the same age or profession or other likewise element. For example, in a locality of factories, the main population will be labourers and the working class while students will be the main population in a region dominated by universities. Thus, the skewed population can yield skewed data. In such cases, there is an overall misinterpretation of the area. Other factors that lead to such errors may also be a migration of population and sex ratio between the males and females. Problematic geodemographic segmentation can, in turn, lead to reduced accuracy of operations and adoption of incorrect and ineffective marketing methods. This defeats the entire purpose of the task and proves to be a total waste.
Geodemographic segmentation is significant and needs to be done strategically and wisely. Though it has both pros and cons, it can prove to be of great help to maximise the sales and profits incurred by the company(Y. Kimura, R. Saito 2011).
- Kamarulzaman Y. 2010. Geodemographics of Travel E-shoppers: An Empirical Analysis of Uk Consumers, "European Journal of Social Sciences", Volume 16, Number 2, 2010.
- Kimura Y., Saito R. 2011. Geodemographics profiling of influenza A and B virus infections in community neighborhoods in Japan, "BMC Infectious Diseases", February 2011.
- Petersen J. Gibin M. 2010. Geodemographics as a tool for targeting neighbourhoods in public health campaigns, "Springer-Verlag", May 2010.
Author: Maria Drzazga