Segmentation: location

The idea

Location segmentation means dividing a market by where customers live or work, such as a city, region, country or neighbourhood. Needs and buying habits often vary by place: commuters may want travel-sized products, rural customers may need delivery, and cold-climate residents may buy different clothing from those in warm regions. A business can use location to decide where to open outlets, how to distribute products and which advertising media to use. Location data is easy to collect from postcodes and sales records, so targeting can be precise. However, people in the same area can still differ, and online selling reduces the importance of physical distance. Location is often combined with age, income or lifestyle to build a clearer customer profile.

What earns the marks

• Defines location segmentation as dividing a market by where customers live or work.
• Explains that customer needs and buying habits can vary between places.
• Gives a relevant example, such as a regional product or a local store.
• Explains a benefit, such as choosing store sites or local advertising.
• Explains a limitation, such as differences within the same area or the effect of online shopping.
• Shows how location can be combined with other segmentation variables.

Common mistakes and how to put them right

• Confusing location segmentation with market mapping.

  Put it right by noting that location groups customers by place, not by price and quality positions.

• Assuming all customers in a region behave the same.

  Put it right by recognising variation within any area.

• Ignoring online customers who are not limited by distance.

  Put it right by considering how e-commerce changes location-based targeting.

Exam tips

• Refer to the specific place named in the case, such as a town or region.
• Explain how location affects one element of the marketing mix, such as place or promotion.
• Balance benefits with limitations to reach a supported judgement.