Geographic market segmentation
| Geographic market segmentation |
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Geographic market segmentation is a marketing strategy that involves dividing a market into specific geographic regions, such as countries, states, regions, cities, and even neighborhoods. Each area is then targeted with a specific marketing strategy based on the needs of that area. This strategy helps businesses to focus their marketing efforts and resources on the areas that are most likely to yield the highest returns. It also helps to better understand the needs and wants of each region, which can be used to tailor the marketing approach.
Example of geographic market segmentation
- A clothing store in the US might target potential customers throughout the country by creating a geo-targeted ad campaign based on region. For example, the store might focus its marketing efforts on cold weather states by offering winter clothing deals, while targeting warm weather states with summer clothing promotions.
- A fast food chain might use geographic market segmentation to open new locations in areas that have the right demographics. For example, the chain may look for areas with high concentrations of young people and students, as these are likely to be popular areas for their product.
- A car dealership might target potential customers in specific areas by offering special promotions or discounts to residents living in those regions. For example, the dealership may offer a discounted price to anyone who lives in a certain zip code or city.
- A real estate agency might use geographic market segmentation to target potential home buyers in certain areas. For example, the agency may focus on neighborhoods with high-end homes or areas with a growing population.
- A travel company might use geographic market segmentation to target potential customers in regions with certain climates or attractions. For example, the company may focus on promoting tropical destinations to customers in colder climates, or promoting ski resorts to those living in the mountains.
When to use geographic market segmentation
Geographic market segmentation can be used in a variety of scenarios. It can be a valuable tool when:
- Companies want to tailor their marketing strategies to specific regions or localities.
- Companies want to identify and target the areas that will yield the highest returns on their marketing investments.
- Companies need to better understand the needs and wants of their potential customers in each region.
- Companies want to identify the areas that are most likely to respond to certain promotions or campaigns.
- Companies are looking to target untapped markets or to expand their presence in certain regions.
- Companies want to understand the differences in consumer behavior between different regions.
Types of geographic market segmentation
Geographic market segmentation is a marketing strategy that involves dividing a market into specific geographic regions in order to better understand the needs and wants of each region and to tailor the marketing approach accordingly. The following are some of the main types of geographic market segmentation:
- Global Segmentation: This type of segmentation divides the market into global regions, such as North America, Europe, Asia, etc. It is used to tailor marketing strategies for each region.
- Regional Segmentation: This type of segmentation divides the market into smaller regions, such as states, provinces, districts, and cities. It is used to customize marketing strategies to the particular needs and wants of each region.
- Urban Segmentation: This type of segmentation divides the market into city-level regions. It is used to target local markets in a more granular way.
- Suburban Segmentation: This type of segmentation divides the market into suburban regions. It is used to target local markets and to identify customer needs in more specific areas.
- Rural Segmentation: This type of segmentation divides the market into rural areas. It is used to target regional markets and to identify the needs of customers in those areas.
Steps of geographic market segmentation
Geographic market segmentation is an important tool for businesses to focus their marketing efforts and resources on the areas that are most likely to yield the highest returns. The following are the steps to effective geographic market segmentation:
- Identify the geographic area to target: The first step is to identify the geographic area to target with the marketing strategy. This can include countries, states, regions, cities, and neighborhoods.
- Collect market data: Once the geographic area has been identified, businesses will need to collect market data to better understand the needs and wants of the target market. This data can be collected through customer surveys, focus groups, and market research.
- Analyze the data: Once the market data has been collected, businesses will need to analyze it to identify the areas that are most likely to yield the highest returns.
- Develop a marketing strategy: Based on the analysis of the data, businesses will need to develop a tailored marketing strategy for each geographic area. This strategy should be tailored to the needs of each area and should take into consideration the preferences and buying habits of the target market.
- Implement the strategy: Finally, businesses will need to implement the marketing strategy for each geographic area. This includes creating campaigns, distributing materials, and setting up advertising.
Advantages of geographic market segmentation
Geographic market segmentation can be a powerful tool for any business looking to maximize their return on marketing investments and reach their target audience. The main advantages of geographic market segmentation include:
- Targeting specific geographic areas with tailored marketing strategies based on the needs of that region. This helps businesses to focus their efforts and resources in areas that have the highest potential for growth and return on investment.
- Getting a better understanding of the needs and wants of each region. This in turn can be used to tailor the marketing approach to better meet the needs of the consumers in that region.
- Identifying new markets and untapped opportunities. By targeting specific geographic areas, businesses can identify new markets and opportunities that may have previously been overlooked.
- Enhancing customer loyalty. By targeting specific geographic areas, businesses can build relationships with customers and develop brand loyalty.
- Increasing efficiency. By focusing marketing efforts on specific regions, businesses can save time, money, and resources and ensure that their marketing efforts are reaching the right audience.
Limitations of geographic market segmentation
Geographic market segmentation can be an effective way for businesses to target specific areas with tailored marketing strategies. However, there are some limitations to this approach. The following are some of the limitations of geographic market segmentation:
- Limited Reach: Geographic market segmentation limits a business’s ability to reach potential customers outside of the specific geographic region that is being targeted. This can make it difficult to expand the business’s reach and customer base.
- Lack of Flexibility: Geographic market segmentation requires businesses to create marketing strategies that are tailored to specific locations. This can be difficult to do if the needs of a particular location are constantly changing.
- Cost: Geographic market segmentation can be costly since it requires businesses to create and implement different marketing strategies for each region. This can be particularly challenging for small businesses with limited resources.
- Difficulty of Evaluation: It can be difficult to evaluate the effectiveness of geographic market segmentation since it is difficult to track the success of each individual market segment. This can make it difficult to measure the overall success of the strategy.
Geographic market segmentation is a marketing strategy that involves dividing a market into specific geographic regions. Other approaches related to geographic market segmentation include:
- Demographic segmentation – This approach involves dividing the market based on specific demographic characteristics such as age, income, gender, education level, and occupation.
- Psychographic segmentation – This approach involves dividing the market based on attitudes, interests, and lifestyle.
- Behavioral segmentation – This approach involves dividing the market based on behaviors such as purchase history and frequency of purchase.
These approaches to market segmentation allow businesses to target their marketing efforts and resources more effectively, helping them to reach their desired audience and maximize returns. By using multiple segmentation approaches, marketers can gain a comprehensive understanding of their target market and create more effective marketing campaigns.
Suggested literature
- Beane, T. P., & Ennis, D. M. (1987). Market segmentation: a review. European journal of marketing, 21(5), 20-42.
