In this post, we will discuss geographic segmentation and its examples. We will also discuss the pros and cons of geographic segmentation and how marketers can use geographic data to improve customer experience.
Companies need to develop effective marketing strategies that can help them target the right customer segment, drive higher engagement and help improve customer experience. Targeting the right audiences requires businesses to first understand their target audience which might require grouping them into segments to serve their needs better. Geographic segmentation is one of the widely used marketing strategies across various industry sectors. It will be great for marketers how geographic location of the customer affects their sales, marketing and profitability and having the knowledge of geographic segmentation will help them create more effective campaigns.
What is geographic segmentation?
Geographic segmentation in marketing involves segmenting customers based on their geographic location or categorizing your target audience into specific categories based on their location. Depending on the needs of your business, you can use broad or narrow categories to define your target market segment. For example, several international businesses run their operations on a geographic basis and divide their operations into broad geographic segments like Asia pacific, Europe, Middle East, Africa and the Americas. To segment your customers geographically, you can broadly segment them using country, region, state, or city as a category. Audiences can also be categorized as urban or rural based on their location in a market. However, in several cases, where it might not be sufficient to classify the audience broadly businesses can use postal codes to segment their customers. The main underlying principle is that people living in the same geography have similar needs and wants and their cultures and lifestyles are also similar in several aspects.
However, apart from location-based categories, you can use other measurements for geographically segmenting your customers:
Climate:
It involves segmenting your customers on the basis of climate of their geographic location or temperature. For example, a vast region in Africa has similar climate and temperature levels which can drive the demand for certain products or services higher. Similarly, there are several products whose demand can be expected to be higher in colder countries. For example, some businesses can categorize the US and Canada together since the demand for their product/service can be similar in both the markets.
Culture:
Culture also has some important influence on various areas in business including marketing, and customer experience. Segmenting users based on culture requires businesses to group them together by cultural affiliation. Culture can affect the interpretation or perception of a product/service in each region. For example, the cultures of the Muslim countries are similar and some products/services may not be in high demand in these areas. So, marketing to these audiences might not be necessary or useful in case of such products.
Environment:
Companies also segment their customers based on environment or the type of environment in which they live like urban, suburban or rural. Target audiences can also be grouped based on population size. Sometimes, population size may be an important factor when the company must decide whether to sell in a particular area or not. If the population size in a particular area is small, it might not be worth setting retail stores in that area since the company might not be able to achieve enough sales. Similarly, the demand for certain products and services can be higher in the urban areas and lower in rural areas. So, this type of segmentation can also be helpful for businesses and marketers with regards to key decisions including marketing and customer experience related.
Language:
Companies can also segment users based on the language they prefer to speak. Businesses can segment users based on language into English speaking and non-English. There are several languages spoken around the world and in some markets like China and India, language can be a very important factor in terms of marketing and customer experience. Segmenting customers based on language also helps improve customer experience since businesses can provide support and customer service in the local language which can help drive higher satisfaction and user loyalty.
Examples of geographic segmentation:
Spotify is planning to expand its services to several new markets in the Asia Pacific region. It segments users based on the country from which they are accessing its services. The company starts providing its services with marketing and customer support in local languages. Not just this, the company also sets prices for various plans based on geography and offers diverse plans according to the needs of people in various markets.
A realtor wants to run a marketing campaign for its properties and target potential customers. As a first step, it segments its customers based on environment into urban and suburban customers. It decides the geographical area in which its marketing efforts will remain limited mainly. Then it uses, this information to place advertisements strategically and selects the right channels for reaching the urban and semi urban consumers. It can reach them through its website, social media and print advertisements as well as email.
The above examples show that geographic segmentation can be used in various scenarios to develop more effective marketing campaigns and provide customers a superior experience while also targeting the right customers cost efficiently.
Advantages of geographic segmentation:
Geographic segmentation is used commonly across the industry by businesses due to the several advantages it offers. It is common to use geographic segmentation since geographic location is also related to economy which is key factor when determining whether to do business in a particular area or not. Some of the leading advantages of using geographic segmentation for targeting your customers are as follows:
Simple to implement:
The main advantage of using geographic segmentation is the simplicity in terms of data collection and implementation. Compared to other types of data like demographic, psychographic or behavioral, geographic data is generally easier to obtain for businesses and marketers. Implementing geographic segmentation also becomes easier because it uses fewer data points. If a social media marketer is attempting to target users geographically, just a simple piece of information which is the user’s location at the time it interacted with a particular website or social media page might be enough to serve the marketer’s purpose. It is also a lot easier to offer personalized experiences based on geographical segmentation.
There are many companies that have several versions of their websites designed for different geographical markets making it easier for them to target users geographically and provide an improved customer experience. If you know, a user is from a particular location, you can easily direct him to the right version of your website or ecommerce site. For example, you can direct the traffic from Spain to Spanish version and from India to the Indian version of your website. Segmenting users based on geography and language is easy and does not need a lot of research. It is also a cost effective method of segmenting users since collecting geographical data may not be very costly or difficult to obtain.
Increased customer engagement:
Another important advantage of using geographic segmentation is that it can drive customer engagement higher. Customer engagement and customer experience are very important factors in terms of marketing and higher customer engagement often means higher conversion and superior customer experience. Geographic segmentation can help businesses drive user engagement higher. Segmenting customers based on geographic location and language can help businesses make their marketing communication and promotional material more effective. If you serve the customers in the language that they speak, it will drive customer engagement higher. Suppose you are an international brand selling in multiple Asian markets including India, Japan, Hong Kong, and China. When promoting your brand in diverse markets, you would like to use the local language and the style that is preferred locally. Marketing your services in a local style will make it more appealing for customers in that geographic location. The use of local language for marketing, sales and customer support will also drive higher engagement. A Japanese customer may feel more convenient using a Japanese website compared to a global page in English. So, developing Japanese versions of your website for customers in Japan, especially if it is a significant market, will help you appeal to Japanese customers and engage them. This can lead to superior brand recall, higher loyalty, and more repeat sales in a geographic market. So, geographic data can be used to drive customer engagement and conversion rates higher. In most cases, marketers first look at geographic data to understand how to engage and serve their customers best.
Superior customer experience:
Geographic segmentation can also help you offer a superior customer experience and grow your brand’s popularity and customer base faster. It is applicable in terms of marketing as well as sales and customer support. Having the geographic information related to your users like their location, language, culture and climate can help you develop more personalized and better marketing experiences which will have a higher appeal. It will also help businesses design a better in store or online purchasing experience for their customers. Not just this geographic data can also help businesses select the most relevant products and services for their customers and make recommendations instead of having to browse through a large catalog of products. It will also help improve the user experience which will in turn drive higher sales and conversion rates.
Drawbacks of geographic segmentation:
Geographical segmentation is effective in so many ways and works well in several scenarios but there are also a few limitations or drawbacks of geographical segmentation. In some scenarios, segmenting users based on geography and culture can be confusing. Moreover, geographical differences or limitations might not be as relevant in an era of digital business and marketing. Another important limitation of geographic data in terms of marketing is that relying solely on it may not yield the desired results. Businesses might need to obtain additional behavioral and demographic data to develop effective marketing campaigns. Looking at customers only through a geographical lens might not be very effective in an era of heavy competition. To offer more personalized services, businesses also need to obtain additional behavioral and demographic data. Suppose you segment your customers as rural and urban customers. You do so because you think the demand for digital services is lower in the rural areas. However, a large set of customers in the rural areas also shops for products and customers online. With increased penetration of internet technology, geographic barriers have become less relevant in terms of business and marketing.
A few last words about geographic segmentation:
Segmentation is a critical step in marketing and apart from helping you identify your target audience’s needs and preferences; it helps you find ways to serve them best and improve the customer experience. Geographic segmentation is used commonly across various industry sectors and the main underlying premise of this segmentation is that people living in the same area have similar needs and wants. One of the most common categories in geographic segmentation is country or market. Companies classify the advanced markets as one group and other markets which are not as advanced in terms of technology and economic progress as another. However, based on the needs of the business, marketers can use different types of geographical classifications like state, city, urban, rural, or even classify consumers by postal code. While geographic segmentation is simple to implement, it is also a cost-effective method of segmenting users. Businesses may need to gather more data than just geographic data to understand their customers better but geographic data provides a good starting point. It is especially helpful in case of digital businesses serving various geographies. Geographic segmentation is also relevant in terms of legislation since laws differ from one country to another and many times also from one state to another. Companies might not be able to serve all the geographies in the same manner and geographic segmentation helps get a better idea of the culture and climate of the area as well as the customer’s preferred language. However, despite its many advantages, there are some limitations or drawbacks of geographic segmentation and one might need to combine it with other data including demographic and behavioral to derive the best results.