Market segmentation
Location segmentation
Location segmentation means dividing a market by where customers live or work, using geographical features rather than who the customers are. It matters because people in different places often want different things, even when they earn the same and are the same age. A hardware retailer stocks rock salt and insulated pipe lagging in upland areas with icy winters, and sunshades and drought-resistant grass seed in hot, dry regions.
Three ways to split a market by location
| Basis | What it splits the market by | Example |
|---|---|---|
| Climate | The typical weather of an area | A roofing merchant stocks snow guards and heavy-duty gutter fixings in snowy upland areas, and heat-reflective roof paint in hot, sunny areas |
| Region | A part of a country, or of the world | A regional newspaper prints different local news and sport pages for each area it sells in, so readers see stories about their own towns |
| Population density | How many people live in each square kilometre | A repair shop opening where footfall is high, and running a postal repair service for scattered customers |
Population density is the number of people living in a square kilometre of land. Places are often described as urban (busy towns and cities), suburban (housing on the edge of a city) or rural (countryside with few people). Businesses target densely populated areas when customers must visit in person, because high footfall brings passing trade and one branch can reach thousands of people. A bike repair workshop with a drop-in counter needs plenty of cyclists nearby to stay busy. Where customers are spread thinly, a business may skip the shop altogether and offer delivery or a mobile service instead, as a rural branch might never see enough customers to cover its rent.
Regional segmentation focuses on what customers in one area like and buy, especially where those habits are found only there or are more widespread than elsewhere. Local food, hobbies, weather and rivals all shape what sells, so a small change to a product or its advertising can make it feel made for that place.
Practise this
Edexcel GCSE Business · 1.2.3 Market segmentation