Geographic Segmentation: What It Is & Why It Is Important

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Not all customers are the same, which is why marketing segmentation is wildly popular. If you cater a message to a specific type of potential consumer — whether you're using geographic segmentation or not — it's more likely to be well-received, and this is proven. Segmented email campaigns receive just over 100% more clicks than nonsegmented campaigns.

Today, social media has made geographic segmentation easier than ever, though this popular marketing method was around before Facebook ever sold its first targeted ads. So, what is it, and why is it important?

The Types of Market Segmentation

You can’t understand geographic segmentation until you understand market segmentation as a whole. The marketing strategy is deeply rooted in the idea that different demographic groups — whether they’re lumped together by age, behavior, interests, location, gender, income, etc. — have different buying habits.

This method is so effective that using a market segmentation strategy in email marketing campaigns has been found to increase email revenue by 760%. That seems like a lot, but not when you recognize that a small business can better reach a customer base if it is catering directly to the varying tastes and behaviors of a certain type of customer.

Though marketers can split consumers into any sort of group based on any sort of trait, the most popular types of market segmentation are:

  • Demographic segmentation: This separates people by things like age, gender, income level, education level, race and religion. For example, a company would be more likely to sell life insurance to people over the age of 65.

  • Psychographic segmentation: This organizes people by common interests and personal traits. For example, a small business would be more likely to sell dog food to people categorized as dog owners.

  • Behavioral segmentation: This organizes people based on their behavior on an app or website. For example, a company would probably be more likely to sell dryer sheets to customers who have already purchased laundry detergent through its website.

  • Geographic segmentation: This organizes people based on location. For example, a company would probably be able to sell more snow shovels by targeting potential customers who live in snowy areas.

Why Use Geographic Segmentation?

You can tell a lot about people by where they live or at least a lot about what they’re most likely to buy. You probably won’t see a person buying swimsuits in the middle of a frigid Ontario winter unless that person happens to be planning a vacation.

Using geographic segmentation can help a small business concentrate its marketing budget where it matters. For example, that same swimsuit company would get more out of its marketing budget if it focused its marketing efforts on people who live in warm climates near bodies of water, but it goes a lot further than simply the weather.

People in different locations have different belief systems, different tastes, different needs and different languages and dialects. Wordplay or slang used in a marketing campaign in one region may not translate at all to the next. For example, an email marketing headline touting a pants sale would mean something completely different in the United States versus the United Kingdom. Because of the various differences in consumer habits from location to location, geographic segmentation is split into four major categories: location, climate, urbanicity and culture.

Using Location in Geographic Segmentation

Location is one of the simplest ways to organize a target market within geographic segmentation. This sounds like exactly what it is: You’re categorizing customers based on a country, state, region, city or neighborhood. Large companies are more likely to use location-based geographic segmentation to split up global markets, whereas small businesses may use it to focus on specific neighborhoods or regions.

One hugely successful example is the New York-based campaign for the food delivery app Seamless. The service ran a series of ads focusing on New York-centric annoyances, like slow-walking tourists in Times Square and subway closures (such as an ad reading “The L train may shut down. We won’t.”). These types of ads were effective because New Yorkers could relate, but they would not translate well to another city.

It’s also important to consider language when using location-driven geographic segmentation. For example, it might be worthwhile for an American small business to advertise in both Spanish and English if its target market resides in a neighborhood with a heavy Latinx or Hispanic population.

Using Climate in Geographic Segmentation

Different locations have wildly different weather, so it makes sense to target different regions by their climates. This is especially important for any small business selling clothing, vacations and outdoor tools and homewares. For example, a car company will probably do better marketing snow tires and vehicles with four-wheel drive to an area that has snowy, icy winters. Similarly, a small business won’t sell a lot of umbrellas and rain boots in a desert.

Using Urbanicity in Geographic Segmentation

Urbanicity segments a market by whether people live in urban, suburban, exurban or rural areas. These types of consumers have wildly different lives. Just think about trying to sell tractor or farming equipment to a person who lives in the center of Manhattan — it’s not going to work. Beyond location, urbanicity also factors in population size and density.

Zipcar is a prime example of a company that succeeded by segmenting its target market using urbanicity. Zipcar, a sharing-focused service that allows users to pay daily or hourly rates for a car rental, wouldn’t have had much success in a rural area where potential consumers already need to have their own cars to get around every day. Instead, the company targeted millennials (demographic segmentation) in highly populated urban areas where it’s not necessary (or even annoying once you factor in street sweeping and parking) to own a car.

Using Culture in Geographic Segmentation

Different regions have different cultural values and beliefs that change the way certain marketing campaigns will be received, so it's important to keep culture in mind when you're advertising across various geographic segments. For example, in the United States, Carl’s Jr. was known for its racy burger ads until they decided to retire the marketing campaigns in 2017. This is a different story in New Zealand, where a raunchy ad featuring Paris Hilton and swimsuit model Hannah Ferguson was banned from television in 2014.

Even though Carl’s Jr. missed the cultural mark with one particular commercial, fast-food companies are generally some of the most successful when it comes to geographic segmentation based on culture. For example, McDonald’s offers a menu that’s 50 percent vegetarian in India, where a large portion of the population doesn't eat meat.

How to Implement Geographic Segmentation

In order to implement an effective marketing plan using geographic segmentation, you’ll need to first conduct some market research. Learn about your customers and their needs so you can better segment them into meaningful sections. You can gather a lot of information through social media, and social media always allows the targeting of ads to specific locations. If you’re expanding outside the region in which you typically operate, it may be helpful to hire an outside marketer who specializes in that area and is already intimately acquainted with the cultural and behavioral differences.

Once you’ve created a segment, you may want to first test the waters using an A/B marketing campaign. See which ad copy or strategy is most effective and develop things from there.