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Geographic segmentation how-to guide

Nearly every New York City coffee shop will be sure to serve bagels. But if the coffee shop is in the Midwest, they will offer donuts instead of bagels.

If you walk into a Southeastern US restaurant, you’ll see “Coke” on the menu. But in Minneapolis, it will be called “pop,” and it will be called “soda” on the West Coast. Those regional names all refer to soft drinks, but the US region will dictate what people call it. 

These seemingly minor differences are significant because they help companies cater to the local customer profile. Understanding how a location affects a buyer’s behavior will influence what products a company promotes and what marketing messaging they will use.

Companies use four types of market segmentation strategies to group customers: demographics, behaviors, attitudes, and location. Grouping people based on their location is known as geographic market segmentation. A market’s location provides insights into the local tastes, habits, income, and preferences for a particular area. When marketers perform geographic segmentation, they group people based on their behaviors and their location. This way, they can appeal to the unique tastes and behaviors of their target market.

The geographic segmentation definition includes targeting customers based on where they live, work, or travel. To understand people’s preferred locations, marketers perform market research, often using surveys to uncover regional preferences.

For instance, buyers typically prefer to drive small cars in a large city, big trucks in a rural area, and family-friendly SUVs in a suburb. These local preferences will affect how automobile dealers attract customers in each area. Marketers will frequently use geographic data because it is easy to collect and provides insights into local customers’ buying patterns.

But what is geographic segmentation? The more companies know about peoples’ values, culture, and habits, the better they can design products that meet their needs. Market fit is essential for companies to sell their products. Discovering where a person lives, works, or dreams of traveling tells a lot about them, and marketers want to use that information to sell to their target audience.

Large and small companies use location data to focus their marketing efforts. Using geographic segmentation, marketers identify products and marketing messages that appeal to people in a specific region. 

For instance, marketing snowblowers in Chicago in winter makes sense because of the local weather.  Marketing snowblowers in South Florida in July doesn’t make sense. Regional weather, people’s preferences, and local norms impact what people buy.

For businesses with a local clientele, offering products and services that coincide with important events like festivals, football games, or graduations can increase sales.

Companies use geographic segmentation as an essential part of their customer segmentation strategy. Examples of geographic market segmentation include:

McDonald’s caters to local food tastes on a global scale. In 2020, they made their famous McRib sandwich available across the US for the first time in eight years, previously popping up in select locations for a limited time. But McDonald’s caters to local tastes by offering region-specific items. Singapore Samurai Burger, Germany’s McShrimp, and India's Veggie Maharaja Mac are just a few of McDonald’s country-specific menu items.

Apple customizes their products based on the user’s location. Apple computers, stores, cloud storage, apps, music, and podcasts are offered in different languages to appeal to their global audience.

Haircare varies by region and is associated with cultural norms. From long, sleek hair to shaved heads, beauty care practices vary from country to country. Because of these local differences, there are many products. Haircare products include organic shampoo, homemade conditioner, and thousands of other products in this $211 billion market.

Mattress dimensions vary by country. The US sells king and queen-sized mattresses. But in the UK, they sell Super King, Eastern King, Emperor, and Caesar size beds. Hotel mattresses differ from mattresses made for home use. Manufacturers need to know where a person lives, travels, and sleeps to sell them the best mattress solution.

Dollar Stores are opening 600 new locations as customers choose stores to stretch their paycheck, climbing to nearly 16,000 US stores. Family Dollar, which owns Dollar Stores, targets towns with 3,000 to 4,000 residents with fewer retail options because of their distance from larger cities. This chain uses geometric segmentation to hone in on the residents of small towns who need an affordable place to shop.

Starbucks’ marketing strategy has stores in urban areas, often near offices. While keeping their core menu items throughout the year, they will make seasonal menu adjustments, such as their Pumpkin Spice Latte, available at select locations during the fall.

Netflix uses geographic segmentation to stream content aimed at different geographic regions. With over 200 million members worldwide, stream content to over 190 countries in over 20 languages. Top countries that subscribe to Netflix include the US, and Canada followed by Europe and the Middle East.

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A customer’s country reveals cultural and economic norms that influence their buying behavior. For instance, selling hamburgers in the US is acceptable. Still, in a country with religious values that include vegetarianism, the product could not only be a flop but a cultural insult. To avoid failures, companies invest in geographic segmentation studies to pinpoint their target audience.

Each US state has a different flavor, ranging from their weather, food likes and dislikes, politics, and regional needs. For instance, hurricane insurance is a big seller in Florida but won’t have a North Dakota market. Texas is king when it comes to truck sales, but car dealers may have a more challenging time selling lots of big trucks in Vermont and Delaware. 

Large cities have traditionally been a mecca for food and nightlife, but interest in rural areas is rising. Marketers can now target families and remote workers moving out of large, more expensive cities and into suburban and rural areas. As home sales increase in rural areas, so do food, appliances, and household services. People who live in large cities will still be dependent on Uber and Lyft, which are harder to find in rural areas.

Zip codes add a powerful dimension to a market segmentation strategy. Companies use zip code demographics like income level, age, profession, and household size to personalize local businesses' advertising. Zip code mapping can also find the perfect location for a small business or a new warehouse location for a national manufacturer. For local businesses who want to stretch their advertising dollars, they can use zip code marketing to target customers who are most likely to use their services.

The local climate will influence what we eat, which household goods we buy, the car we drive, and our clothes.  People need to know their local neighborhood's climate variations and even what temperature to expect on their next vacation. Seasonal weather patterns have a significant impact on a target market's needs. Companies must design products and craft messages that address how the local weather will impact their customers.

Marketing for the local climate can include having snowblowers in stock for the next blizzard and extra gloves to keep hands warm in sub-freezing weather. Hot coffee, soup, and prepared meals are also big cold weather sellers.

Island resorts cater to visitors who want to escape cold-weather blues and their everyday routines. But marketers need to position their products differently for family vacations, honeymooners, and adventure travelers. Marketing apparel, restaurant options, and travel excursions will vary based on a customer's reason for a warm climate trip. 

Coastal restaurants offer not only food but a chance to enjoy the scenery. Regional cuisine can be part of a fantastic day trip experience for residents within driving distance of the ocean. Local businesses, regional firms, and large businesses can cater to their customer’s needs for enjoyment.

Geographic regions have unique cultural norms. For instance, worldwide, there are thousands of religions with their customs, beliefs, and observances. Over a billion people have no religious affiliation yet still have their firmly held beliefs. Companies can identify what religious associations people have and which norms customers follow in different locales through market research.

Geographic segmentation research helps companies sift through the confusing myriad of beliefs. The more companies know about a specific location's cultural values, the better they can craft a message that appeals to customers. 

For instance, a person’s religious beliefs will affect their grooming. In some religions, men are forbidden to shave or cut their hair, but other groups shave their heads as part of a ritual. Companies must understand local customers so they can sell the right grooming products to the right customer segment.

Cultural norms have a significant influence on the type of food people eat and when they eat it. For instance, dumplings, fish, and spring rolls are foods that families enjoy during the Chinese New Year. But other cultures may abstain from different types of foods or meats during their holidays, making it essential for companies to know geographic norms to promote their products correctly.

Customers in Boston and Bangalore want different products. Find out what they want, fast, with SurveyMonkey.

Companies perform research that tells them where their customers live and work. On a broader scale, they also need to know how many other people live in the area. The number of people in a given location will influence the type of products and services they need. Using this information, companies can create marketing messages that appeal to people in the area written in the local language or dialect.

Urban. For instance, in an urban area, retail stores tend to be smaller because of expensive real estate. Typically, retail stores in a city have to do more with less space and limit the number of products they carry. They will benefit by being on a street where there is lots of foot traffic, so their store gains visibility with the local neighborhood.

Suburban. Suburban stores can cater to larger households with larger stores and more products. There may also be specialized businesses, like swimming pool suppliers, that have a larger market because of larger homes with pools. Suburbs are a great place for families, so companies with services for busy parents and school-aged children will be more prevalent.

Rural.  Rural consumers often have more land to maintain, making John Deere dealerships and their powerful lawn mowers more plentiful. Tractor Supply Company, aka “TSC,” and similar specialty retailers can meet the needs of people who need gear to maintain their farm, ranch, or backyard chicken coop. With the motto of “for life out here,” TSC sells everything from work clothing, equipment, and pet prescriptions to their rural customers, making it easier to shop far away from the city. 

Not every location will fall into these three categories. But classifying your target market by the size of the city or region they live in will reveal how influenced they are by the people and attitudes around them.

What are the benefits of geographic segmentation? Geographic market research can make life easier for marketers, providing regional insights they may not get in a typical customer survey. The country, state, city, or zip code offers insights on what people will buy, providing insights that may not appear in a typical market research survey. 

The benefits of geographic segmentation include:

Easy to implement. Geographic segmentation requires less data than other forms of customer segmentation like behavioral segmentation. The location provides a broader perspective of what influences the customer to make purchases. Behavioral segmentation takes a deep dive into asking why a person buys products and requires more questions and more in-depth analysis. While both are valuable customer segmentation techniques, location market research can take less time and effort.

Understanding where a person lives, how many people live in a zip code, or the average household income of an urban neighborhood is much easier to research than a behavioral study. Lengthy surveys ask people where, when, and why they buy a product can take longer to administer and interpret. Geographical data is easily accessible online and can take less time to collect.

Precision targeting. Marketers can enhance their marketing messages, making them specific to a geographic area. Geographic segmentation helps marketers tell a story that includes local values, weather, events, food, and cultural preferences that impact a customer’s purchase behavior. When customers identify with messages relevant to their lifestyle and local values, they are more likely to buy a company’s products. 

It is easy to understand why people in cities use smaller cars, often because parking is difficult to find and expensive. Seasonal weather patterns are easier to monitor, helping retail stores stay stocked with emergency supplies their customers will need for an oncoming storm.

Contextual knowledge. Geographic segmentation surveys provide a wealth of information that is not available in other types of research. For instance, in some surveys, customers are asked simple questions about their food preferences. Do you like hamburgers or veggie burgers?  Geographic segmentation provides context about customer choices. Results may include local cultural preferences for a vegetarian diet, which will reveal if there is a larger market for vegetarian items.

What holidays do your customers celebrate? It helps if you know which religions are practiced in your target market so you can cater to their celebration needs. Celebrating Jewish holidays will be one reason for an increase in kosher foods in your target market. 

Improved customer profile. By combining geographic data about local values, weather, and customs with customer’s personal preferences, companies gain a greater understanding of why people prefer certain products. Geographic segmentation data completes the picture of a customer’s life, helping companies to create better products and marketing messages that appeal to their target audience. 

Customers may be unaware of their local area's influence and cannot voice it in a behavioral survey. Geographic research provides additional information to understand why people buy.

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