Marketers target regionally

Local marketing decisions are usually taken within regional boundaries to enable budgets and resources to be distributed systematically. But a new report suggests local marketing activity should be tailored to suit different patterns of demand or consumption, rather than be undertaken within allocated geographic boundaries.

Many surveys and reports highlight substantial variations in consumer behaviour and purchasing patterns within different regions throughout the UK. Yet The Future of Local Marketing, published by the Henley Centre and commissioned by the Newspaper Society, shows there is more to these variations than first meets the eye.

In fact, regional differences in consumer purchasing are often directly related to classic marketing product lifecycle models. For example, the report shows certain products and services enter the market and mature at different times within different regions, and product penetrations vary most dramatically at the earlier and later stages of the cycle.

The home PC market is a good example of a sector in its early stages of development. At present, ownership penetrations vary dramatically from 24 per cent in Scotland, to 39 per cent in the South-east (see chart 1). These regional contrasts are linked to differences in income, skill sets and the nature of local employment. Variations are also closely linked to reasons for purchase. In the South-east, the rationale for purchase is work-oriented, whereas in Scotland the rationale is predominantly children’s education. All this evidence suggests that companies should tailor their marketing activity to accommodate these regional disparities.

The Henley Centre report reveals an increase in the level of localised activity in the marketing and promotion of national brands as they search for competitive advantage and minute points of difference in their product or service.

Looking at the finance sector in more detail, the report also reveals that some major banks are rethinking their centralised banking strategies in an attempt to reinstate an element of local management autonomy and local personality to the high street.

One respondent from the financial sector states: “We are trying to get closer to the customer through the old-style bank manager who knows his customers… it’s increasingly important to manage valuable local customers and local contacts.”

In addition, many packaged-goods retailers are moving from distribution strategies based on location to ones of access (Next and Tesco Metro are good examples). This is clearly in response to spontaneous purchase activity and a need for greater convenience.

The average number of miles travelled to major stores is declining as retailers increase their distribution networks and so reduce the size of their catchment areas. The report explains this trend is on course to continue and what we expect to see in the future is a fall in the number of miles travelled per person, as the number of main shopping trips decline. Not surprisingly, size of catchment area varies dramatically by region (chart 2).

This is confirmed in another report, Consumer’s Choice 111, which shows that consumers in Wales are prepared to travel twice as far for groceries and DIY items as shoppers living in the London area. Clearly, there is a correlation between the number of retail outlets available, convenience and distances shoppers are prepared to travel.

The report goes on to review the strategies adopted by a number of top companies to address regional variations in consumer behaviour. The results show that most companies undertake regional and local marketing initiatives and while the extent of activity varies, there are several common denominators.

Firstly, most companies collect local intelligence using their own data or external geodemographic sources. Secondly, there is a high level of interest in regional test marketing such as the launch of Pepsi Max in Scotland and the Esso Price- watch promotion in the North-east. Finally, many companies are expanding their localised communication within localised areas using regional newspapers and other local media.

Traditionally, national advertising casts a wide net to prospective customers using generic messages. But companies are recognising a need to give national press ad campaigns more weight with regional newspapers to satisfy different consumption patterns and support regional sales campaigns.

Some companies are now tailoring their messages to suit the consumption patterns of each region. Coldseal Windows takes this a step further to address the needs and motivations of consumers in different towns. A spokesman from Coldseal reveals: “In Northampton, consumers focus on finance packages, while in Solihull buyers are more concerned with quality.” Henley describes this as the Russian doll effect – the existence of localised disparities within larger regions.

Turning to the motor industry, this sector has long understood the value of varying messages by region, as one respondent from Volkswagen explains: “We know that we have to change the emphasis of the message by region.”

Clearly one of the most useful benefits of tailored localised advertising is the ability to tell customers where outlets are located. The spokesman for VW goes on to say: “The role of local advertising is locational, it’s about helping potential purchasers find an outlet. In general, local advertising is much more detailed than national advertising.”

In most cases, the importance of local advertising is encouraging car dealers to allocate a high proportion of their marketing budget to local activity, and it’s often up to the dealer how much to allocate.

This trend is not just restric ted to the car market. The Henley Centre believes local initiatives will expand their overall share of marketing budgets across other product and market sectors.

A frequent barrier to local advertising is the prohibitive cost of producing localised copy, and the complexity of managing the process. But according to the report, new technology is already providing solutions to these problems and improvements in technology will make the execution of local marketing strategies even easier in the future.

Localised consumption patterns do exist, and companies with the ability to understand and act upon these local dynamics are more likely to gain competitive advantage. The Henley Centre states that local marketing will grow, and increased localised activity will enhance effectiveness, add value to the proposition and provide invaluable points of difference.

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