Geographic Segmentation
Geographic segmentation divides the market into geographical units such as nations, states, regions, counties, cities, or neighborhoods. The company can operate in one or a few areas, or it can operate in all but pay attention to local variations. In that way it can tailor marketing programs to the needs and wants of local customer groups in trading areas, neighborhoods, even individual stores. In a growing trend called grassroots marketing, marketers concentrate on making such activities as personally relevant to individual customers as possible.
More and more, regional marketing means marketing right down to a specific zip code. Some approaches combine geographic data with demographic data to yield even richer descriptions of consumers and neighborhoods.
Example of Nielsen Prizm
Nielsen Claritas has developed a geo-clustering approach called PRIZM (Potential Rating Index by Zip Markets) NE that classifies more than half a million U.S. residential neighborhoods into 14 distinct groups and 66 distinct lifestyle segments called PRIZM Clusters.
The groupings take into consideration 39 factors in five broad categories:
- education and affluence,
- family life cycle,
- urbanization,
- race and ethnicity, and
- mobility.
The clusters have descriptive titles such as Blue Blood Estates, Winner’s Circle, Hometown Retired, and Back Country Folks.
The inhabitants in a cluster tend to lead similar lives, drive similar cars, have similar jobs, and read similar magazines
Extract from Nielsen Prizm (no23-26)
Marketing to microsegments has become possible even for small organizations as database costs decline, software becomes easier to use, and data integration increases. Those who favor such localized marketing see national advertising as wasteful because it is too “arm’s length” and fails to address local needs.
Those opposed argue that it drives up costs by reducing economies of scale and magnifying logistical problems. A brand’s overall image might be diluted if the product and message are too different in different localities.
An example of geographic segmentation may be the luxury car company choosing to target customers who live in warm climates where vehicles don’t need to be equipped for snowy weather. The marketing platform might focus their marketing efforts around urban, city centers where their target customer is likely to work.
Example: Homepage Coca Cola USA vs Japan
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