An increasing number of businesses are finding ways to benefit from the use of geodemographic segmentation in their marketing. It enables them to identify specific groups of consumers to whom they can market in a specialized way.

What Is Geodemographic Segmentation

Geodemographic segmentation is a marketing approach based on the principle that people who live in identifiable communities share similar demographic attributes, such as income, lifestyle, shopping behavior, the nature of their housing, and their use of transport. The area might be as wide as an entire coast or wide swathes of the interior. It could define a state or a county. However, in most cases the area is smaller, such as a community in an inner city or in a middle-income suburb.

Recent developments in software have made possible enhancements the use of geodemographic segmentation by delivering precise, detail-rich, and reliable information.

Who Uses Geodemographic Segmentation?

Geodemographic segmentation is largely used by businesses as a guide to help them identify potential customers and to target their marketing directly to a neighborhood, community or region. The marketing messages might be composed differently for each segment, or they could reach across segments that are similar.

Geodemographic segmentation can, however, also be used in other ways, depending on the nature and goals of the business. A business could use geodemographic segmentation to identify an area in which it will establish a new retail outlet or to expand an existing store. They will do so if they believe that the detailed demographics of a neighborhood most closely relate to a demand for their products and services.

Government entities can also make use of geodemographic segmentation, such as those that provide transport and social services, to determine where their services would serve residents in the best way.

How to Implement Geodemographic Segmentation

By identifying the attributes of consumers in small areas a business can come up with a detailed map showing the characteristics of each segment within its broader service area. Drawing on this information, the business can determine how to market their products or services to each area.

A landscaping service, for example, would be most likely to establish an outlet in an area where the majority of the residents live in single family homes, which are surrounded by yards that need maintaining.

But today’s geodemograhic segmentation goes much further than that. New technology has enabled businesses to be more precise in their marketing. They are able to construct large databases filled with details of their customers and potential customers. Using that information, they can tailor their products or services more directly to segments of the population than ever before.

This vast information base enables a business to direct advertising only to certain segments and avoid spreading a wide net that might reach people who will never be interested in buying their products or services.
A business might find out, for example, that consumers leave their immediate area to shop elsewhere for certain items. It might be worthwhile, therefore, to set up shop closer to those consumers’ homes.

Six Ways in Which Geodemographic Segmentation Can Help Your Business

1) It helps you construct your ideal customer

Using geodemographic segmentation enhanced by the latest advances in technology, in addition to your own data, your business can construct a profile of its ideal customer — by age bracket, income and lifestyle. By searching for those people in a variety of segments, you will be able to identify the location of those consumers and market to them more aggressively.

2) It enables you to measure results

You will be able to trace activity in particular segments back to your sales. Furthermore, you can compare such results with the original data provided by geodemographic segmentation. If the two do not match, you will be able to fine tune your marketing approach.

3) It helps you to determine where to place your advertising

By understanding the lifestyle of people in various communities, a business can direct its advertising. This can be via television, radio, print or the Internet. A target group might read the sports pages, for example, but never watch television.

4) It helps you to direct local marketing effectively

Should you wish to distribute flyers or direct mail, geodemographic segmentation will point out the best areas. Sometimes these ares are within broader segments, that will provide the most potential customers for you.

5) It helps you decide how to build brand profiles for your company

Having set the location and demographic of your customers, you can design your company brand to appeal to them. Young people, adults and seniors will often view a name and logo of a company differently.

6) It enables you to choose suitable sites

A precise picture of your potential market will enable you to pinpoint areas that are best for new sites or expansion of existing sites.

illustration businessman targeting consumers

Final Thoughts

Refined by advances in technology, geodemographic segmentation, once thought to have been fading, is growing in popularity among businesses. Companies value its ability to provide extensive data on segments of the population that can prove particularly useful when marketing to potential customers. Furthermore, it enables them to zero in on areas or communities that fit the demographics of their products or services.

The cost-effectiveness of this approach also appeals to businesses that are seeking to trim their advertising budgets by making them more targeted. Businesses are also finding the approach valuable for other reasons. First, in choosing where to locate or expand sites. Second, where to advertise. And third, how to merchandise to those segments that have the greatest concentrations of potential customers. Can your business afford to ignore this increasing trend? You might want to take a closer look at geodemographic segmentation. And keep an eye out for incorporating its methods in your advertising, site selection, or in measuring the effectiveness of your present communications.

If you have any comments or thoughts on this trend, let us know. Also do that if you’ve used geodemographic segmentation in your business. We welcome you sharing your thoughts with us.

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