Geographic Segmentation

Published by MBA Skool Team, Last Updated: May 15, 2020

What is Geographic Segmentation?

Geographic segmentation is the market segmentation strategy in which the market is divided on the basis of regions or geographies. Geographic segmentation can be classified by parameters like countries, states, cities, villages, urban / rural, climatic conditions, density of population. This type of segmentation helps to reach out to customers living in a similar region or area and have identical needs.

Importance of Geographic Segmentation

People living in the same area or region often have similar needs and requirements. Certain products are made specifically for a purpose best suited to needs of the people living in a certain region. Hence, geographic segmentation helps identify those set of customers who are living in a particular region or area or place and also have similar features like weather, climate etc. 

Geographic segmentation is one of the four types of market segmentation. The other three are demographic segmentation, behavioral segmentation and psychographic segmentation

Geographic Segmentation Parameters

Since this type of segmentation depends upon the region or areas, below are the parameters related to geographic segmentation:

1. Country- Certain companies make products or services which are specific to only a country. This type of geographic segmentation helps target people from a specific country

2. City- Cities offer a huge potential market to companies. Hence companies often select specific cities for their products or services

3. Villages- Some villages can be identified by companies which give the best set of customers to companies to their business with.

4. Urban/ Rural- Certain products or services can be offered only to the urban population and certain products are rural area specific

5. Climate and weather- Companies use this type of geographic segmentation and identify customers of a region with similar climatic conditions. Areas based on climate can be hot, cold, humid etc and based on weather can be snowfall, rainfall, desert etc regions

6. Population density- Depending upon the number of people in an area or region, companies can use density of population as a parameter to effectively segment the market.

Geographic segmentation parameters

The above image shows the various parameters used in geographic segmentation.

Advantages of Geographic Segmentation

The benefits of segmenting the market on the basis of geography, areas and regions are:

1. It helps identify people living in a similar region who mostly have similar needs and wants

2. Geographic segmentation means companies can concentrate their spending in a particular region which can enhance brand visibility significantly

3. Since geographies are well defined through borders, climate, topography etc it becomes easier for companies to identify them and find out potential customers

4. Densely populated areas can lead to huge market potential for a company to offers its products or services

Disadvantages of Geographic Segmentation

The certain drawbacks of segmenting on the basis of geography are:

1. This does not highlight the buying behavior, needs or wants of a customer. People living in the same region can have different requirements

2. Weather in a region keeps on changing and there have been climatic changes also. Hence simply having geographic segmentation will not be a good solution for a marketing company.

Geographic Segmentation Examples

There can be several way in which this topic can be understood. Certain examples of geographic segmentation are:

1. Country- Sarees are sold in countries like India, flags are sold only in their respective country etc

2. Cities- Replicas of Eiffel Tower will be sold in Paris, products depicting Taj Mahal will do well in Agra etc

3. Villages- Companies doing sugar business can target villages growing sugarcane, tea manufacturing companies can target tea farms etc

4. Urban/ Rural- Hand pumps are required in rural areas, stores of premium watch or car brands can be opened in urban areas etc

5. Climate and weather- Beachwear can be sold in areas close to the sea, sweaters in cold regions, raincoats in areas receiving high rainfall, ice-creams in hot regions etc

Hence all these above examples help to understand the concept of geographic segmentation.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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