One of the most basic forms of market segmentation, Geographic segmentation divides the market based on the units of geography – such as location, languages used and other such basic elements which separate one geography from the other. For example – The UK and the USA are both very different markets, with different values, attitudes and lifestyle. Thus, the segmentation for both these countries need to be different.
Similarly, the differentiation can be done on regional basis, because one region might contain A grade customers (urban areas) whereas another region might contain average customers (rural or town areas). Thus, geographic segmentation devises the marketing mix based on the geography which the company is going to target.
How are geographic segments used?
While using geographic segmentation, the company might launch different products for that particular market or might also use different marketing strategy to attract the said geography. For example – In a diverse and multi lingual country like India, global companies like Vodafone, Nike, Adidas have to come up with different marketing strategy for different regions within the same country. While the south is passionate about Football, the north is more passionate about cricket. Thus, in the south of the country, Nike or Adidas market strongly based on football whereas in the north and west, they advertise more on the basis of Cricket.
FMCG companies also use the advantage of geography for their sales effort. For any FMCG brand, the territories are clearly marked, on the basis of pin code, area, region or even the complete town. Thus, the marketing is done specifically keeping the sales point in mind. On the other hand, managing inventory, as well as liquidation of products also happens based on the preference of that geography. On the basis of geography, a brands high end shampoo might sell much more then its soap brand. Whereas, in another geography, the soap might be selling in higher quantities.
How geographic segmentation affects product features?
Geography can affect the type of product being sold in a particular region. Take water purifiers for example – purifiers with UV technology (light purification) are used for areas which have clean water. But purifiers with RO technology (heavy purification) are used for areas which have unclean water. Thus, products can also be decided on the basis of geography. Similarly, all the different P’s need to be changed based on geography. Besides product, people used in a retail showroom need to be localites only, otherwise it will directly affect the sales figures.
Thus, overall geographic segmentation can help the company in the following manner.
- It becomes a very basic but very useful form of segmentation.
- It helps you penetrate the market better because you become aware of the geographical gaps in the market.
- It helps you manage your distribution channels better
- It makes your marketing strategy more focused based on geographical preferences
- It helps the sales team in keeping clear targets on the basis of geographical potential of the market.
The most common companies which use geographic segmentation are FMCG companies as well as durable products companies. The bottom line is that any company involved in channel marketing, or a company which has limitations to its expansion / penetration, will use geographic segmentation as one of the methods of segmentation in its marketing plan.