Geographical Segmentation of Consumers and Examples of Renowned Companies

We live in an era that is technologically advanced and constantly changing. Companies are no longer only the local players or leaders in the market; they are transgressing the geographical borders. Starting their operations at the district level and then moving to the towns, cities, national, and international levels. This geographic expansion by the company as well as the segmentation of its customers is known as geographical segmentation by the company.

In this article, we will be diving into the concept of geographic segmentation and how renowned companies apply it to win over the market.

The Concept of Geographic Segmentation

Geographical segmentation is a way in which the company not only operates at the local level but also understands that customers today prefer local and customized ads to national-level ads and marketing campaigns. Geographical segmentation of customers is a way of doing grassroots marketing. Grassroots marketing is a situation in which the company not only tailors the product as per local needs but also devises different marketing campaigns for different geographic regions. Each geographical region that a company enters will bring with it new opportunities and challenges. A lot of the factors affecting consumers change when companies cross borders. Geographical segmentation is a way to help companies cluster their customers into one area and then market as per the cluster.

Major Variables That Geographic Segmentation Brings to the Consumer Market are

  • The density of the population and geographic segmentation − The various geographic segmentations have different levels of population. Some are extensively populated, and the way that they live is also different. To better understand the example, when the IKEA brand entered the Chinese market, it saw the compact spaces that customers lived in, and hence the IKEA showrooms are also compact ones, giving the customers the live-in feel of the furniture in their compact houses.

  • Weather and climate of the customers and geographic segmentation − As per the geographical location, the weather and climate conditions change. People in hot and humid weather will not prefer long coats or wool and silk winter clothes; hence, companies can segment their customers based on that factor. For example, H&M, Zudio, and others will have light colors and floral prints during the summer and dark colors during the winter season.

  • Family size and geographic segmentation − This is also an important finding during geographic segmentation. When China had a one-nation policy, companies entering China were focused on making toys that could be played by one individual, whereas in India, companies can build games that can be played by multiple players at the same time because of the presence of siblings.

  • Demographic age and geographic segmentation − Though every country will have people of every age, the average age of different segments varies. In India, the majority of the population is between the ages of 18 and 35, whereas Italy has the most elderly people over the age of 43. Companies can easily see if they will have customers in the market or not. In Germany, people do not want to have kids, so there is no need for child product manufacturing companies to enter because of the scarcity and lack of demand.

  • Religion and geographic segmentation − Religion, as well as the spirituality of the customers, change and cross borders. Geographical segmentation helps the companies make clear distinctions between the customer segments; for example, when McDonald’s entered the Indian market, it replaced all its beef burgers with chicken and paneer burgers because the cow is considered a sacred animal and God by the Hindus. When IKEA entered the Muslim-dominated country of Saudi Arabia, it replaced all the women models in catalogs with male models because women are not allowed to enter the media in the country.

  • Lifestyle Differences and geographic segmentation − When the company enters different markets like the urban market, rural market, metropolitan cities, or developed nations, the way it operates changes. For example, when Hindustan Unilever entered the rural markets of India, it realized that customers are not keen as well as financially sound to purchase big bottles of shampoo, oil, lotions, and others. To cater to their needs, the brand came up with small 1- or 2-rupee sachets for the customers.

  • Customer behavior and geographic segmentation − rural customers prefer ads in which the customer is precisely told what to do by the brand. Like purchase now decisions, urban and more sophisticated customers will repel from these ads. They want ads that provide them with subtle clues and information, and they want to do the thinking. We can see huge differences in how customers perceive the ads and the products as soon as the geographical segments change.

Along with this, we also see huge differences among the customers in terms of their attitude, life cycle stage, age, educational level, income status, occupation, ethnicity, nationality, color preferences, gender, family size, and others. With geographic segmentation, companies not only have small clusters that they can manage and look after, but it also provides them with an opportunity to adapt the brand and its products as per the needs of the customers and be more preferred among the competitor's brands. Nike, as a brand, started its marketing operations through grassroots marketing techniques. Nike has done many sponsorships of local school teams, expert-conducted clinics, provisions of shoes or accessories for the players, sponsoring the local talent as they move to the national team, providing equipment to young athletes, and others.

Geographical segmentation is an amazing way to segment customers and understand them. This also helps the company in designing the marketing that will best hit the customers. Though it should not be done in isolation. Companies should use all types of segmentation, like demographic, behavioral, psychological, and geographic segmentation, for the best results. Geographical segmentation is said to increase the cost, labor, and efforts of the company when compared to national ads or marketing campaigns, but one should not forget the impact it creates on customers. Divide to rule and win hearts.

Updated on: 11-May-2023


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