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Geographic Market Segmentation: Definition, Types & Examples

Personalized marketing has become standard practice for companies looking to effectively reach a 21st century customer. Segmentation compliments advertising strategy by dividing customers into unique and marketable groups. 

Adam R.
March 22, 2023

Geographic Market Segmentation: Definition, Types & Examples

Geographic Market Segmentation

Personalized marketing has become standard practice for companies looking to effectively reach a 21st century customer. Segmentation compliments advertising strategy by dividing customers into unique and marketable groups. 

Geographic Market Segmentation: Definition

You might know who your customer is - but do you know where they come from? Geographic segmentation gives marketers the ability to supplement their strategies with valuable location information. Dividing markets along geographic lines can be done in a number of ways, such as splitting by:

  • City
  • County
  • State
  • Geographic Region (ex. Upper Peninsula, Northwestern US)
  • Continent
  • Rural//Urban//Suburban
  • High Population//Low Population

Geographic segmentation is one of four major types of segmentation models that researchers use to create models of their customers. It’s by far the most obvious and easy to digest of the models; but it doesn’t mean that the insights it generates are simple. Or that they can be taken for granted.

Benefits of Geographic Segmentation

Easy to Gather

Geographic segmentation data is by far the easiest of the four main types to research. Most geographic location information is collected automatically - when users agree to give certain apps or programs access to their location data.

Increase Product & Packaging Relevancy

Marketing along geographic lines enables the creation of niche, targeted advertisements. Micro-targeting based on location can include everything from creating city-specific packaging material (based on sports teams or local history) - to utilizing local events (like a fair or festival) to market your product to local crowds.

Improve Messaging Effectiveness

Knowing where your customers live guarantees you will be able to focus more of your time and effort trying to reach your target audience. 

Develop Customer Personas

Geographic data is an essential component of any effective customer profile. Knowing where your customers are located can have several implications about their purchasing behaviors, lifestyle, and values.

The Characteristics of Geographic Segmentation

Geographic segmentation seeks to answer two questions:

  1. Where is the consumer located?
  2. How does their location impact their purchasing behaviors?

These are the critical points marketers try to discern when collecting geographic survey data from their customers. By gathering information about select variables, marketers can develop clear insights into what geographic factors motivate their customer’s behavior.

Geographic Market Segmentation Variables

Geographic marketing data can be used to make several inferences about a customer’s shopping habits. When researchers look at obtaining geographic marketing data, they may choose to gather any combination of the following variables:

  • Location

Location segmentation can be done on a number of levels - ranging from micro-targeting neighborhoods and city districts; to extremely broad targets - like countries or continents. Knowing where your customers live can have significant implications about their identity and lifestyle. These insights can manifest in the form of unique and targeted product offerings - such as a local dish or themed package.

  • Climate

The climate is an exceedingly powerful influence over the way people live their lives; this factors into their purchasing habits as well. Winter coats don’t sell in Florida like they do in Wisconsin; just like the weather at an amusement park in Laughlin, Nevada might not be as comfortable as one in San Diego, California. Temperature and weather should always be considered in the marketing process.

  • Population

Knowing the population density of the places where your customers are located can give you insight into various elements of their lifestyle. Cities with dense populations often charge more for goods and services, due to the highly competitive and saturated nature of city markets; whereas cities that have a more spread out population may introduce logistical issues for companies looking to integrate changes into the local markets.

  • Environment Type (Urban, Suburban, or Rural)

Beyond looking strictly at population, researchers can also divide customers along rural, suburban, and urban lines. Researchers find it useful to make this distinction, as customers who live in similar types of urban or non-urban settings will likely share many of the same purchasing habits and lifestyle choices. Walmart geographic segmentation strategies favor even coverage of locations across all three types of locations; while retailers like Trader Joe’s favor targeting dense, urban, and suburban populations.

  • Language

It is essential for marketers to be aware of language and cultural barriers when it comes to their messaging. It is nearly impossible to run a successful campaign if your core audience is not fluent in your chosen language. Involve professionals who come from your target demographic and are fluent in the language in your marketing process. 

Variables of Geographic Market Segmentation
  • Culture

Multinational companies often spend months, if not years, researching the markets & culture before entering into a new country. Remain cognizant of the sensitivities and taboos present in a society to avoid offending your would-be customers. Knowing what kinds of holidays are celebrated in the prevailing culture, you can take advantage of increased demand for certain products to boost sales.

Advantages of Geographic Market Segmentation

Examples of Geographic Segmentation

To better understand what geographic segmentation looks like in practice, let us examine a multinational automobile company; one that produces cars for markets in both the United States as well as the United Kingdom. 

In the US, laws and cultural norms dictate that drivers stay on the right side of the road when facing straight; in the UK, this is the reverse. Therefore, vehicles in either country are manufactured and sold with the steering wheel & driver seat on opposing sides. Any car manufacturer must take into account this critical distinction - and market their products accordingly.

For an example of geographic segmentation on a smaller scale, let’s take a look at a local brewing company. A company that packages and ships their beer both locally and to the surrounding states might segment their customers based on whether they are in or out of the state.

Packages that are shipped locally can be marketed with flair and livery that matches the brewery’s home town aesthetics; whereas bottles that are packaged for out-of-state shipping can be marketed more ambiguously. This strategy can increase customer engagement with local customers, without alienating customers outside of the brewery’s state of origin.

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