What are some ways to use geographic data for market segmentation in sourcing?

Using geographic data in sourcing has many benefits. -It shows where products are most in-demand and abundant, or where they could be produced with the best price. -It helps figure out transportation and logistics needs. -It ensures you follow all local laws and regulations. -It lets you understand local cultures or consumer likes more deeply. Geographic data helps make sourcing more cost-effective, reduces risks, and improves market effectiveness. A concept named near shoring is being used frequently nowadays. This concept is related to specific geographic areas where markets are related. After the pandemic and the sea freight price crisis: markets start to review data in order to source from nearest geographic areas.

1.Demand Analysis: Analyze regional variations in demand. Identify unique product preferences in each location. 2.Supply Chain Optimization: Optimize sourcing from cost-effective regions. Evaluate geographic distribution of suppliers. 3.Regulatory Compliance: Tailor sourcing to local regulations. Ensure adherence to industry standards. 4.Cultural Sensitivity: Understand cultural preferences. Source products aligned with local lifestyles. 5.Marketing Strategies: Customize promotions based on regions. Highlight features relevant to each market. 6.Logistics Planning: Optimize distribution based on geography. 7.Market Size Assessment: Analyze size and growth potential. Allocate resources to high-potential regions.

Leveraging geographic data for market segmentation offers numerous benefits to businesses seeking to customize their strategies for specific regions. By segmenting markets geographically, Procurement functions can develop sourcing strategies that resonate with the specific characteristics of each region. This ensures that the efforts are more relevant and effective in connecting with local business users / cost centre owners. So also, geographic segmentation often aligns with demographic variations, such as age, income levels, and education. Analyzing these demographic factors in different regions allows Procurement to design sourcing strategies that cater to the diverse needs of specific user groups.

Companies need to examine the country of origin of each component, as well as the inherent geographical risks associated 1) Environment risk With the rise of global warming, weather-related events including tornados, floods, forest fires, and snowstorms are routinely causing shipping interruptions and delays. 2) Infrastructure risk Access to transportation and other infrastructure is a major geographical consideration. Nationally, regional storms and flooding can damage or close major highways, airports, railways, and ports, as well as impact the stability of telecommunications, electricity, and water. 3) Geopolitical Risk Tariffs are an important consideration for components sourced internationally, as they can add uncertainty.

Leveraging new AI tools is the most efficient way to conduct research for geographic segmentations. I recommend using ChatGPT if you are proficient with prompting or Procuro AI for a procurement specific tool that automatically generates a detailed market report for any category you are sourcing.

The first step in segmentation is getting clear on your sourcing goals. That is the first step to ensure you are segmenting for the right business outcome.

Leveraging geographic data in sourcing decisions can greatly improve the efficiency and effectiveness of procurement strategies. Buyers should utilize geographic data to understand variations in market demand across different regions & tailor sourcing strategies to align with regional consumption patterns, optimizing inventory and meeting specific market demands. Buyers should also be able to assess cultural nuances and preferences in different regions using geographic data. Customizing sourcing approaches to align with local cultural expectations, potentially influence product design, packaging, and marketing strategies. Finally, buyers should analyze geographic data to identify regions with resilient and well-connected supply chains.

Quantifying the influence of geographic data on market segmentation requires evaluating a range of key performance indicators (KPIs) to gauge the efficacy of your segmentation strategy. Calculate the return on investment associated with your geographic data-driven market segmentation efforts. Compare the costs of implementation against the benefits, such as increased revenue or reduced marketing expenses. Businesses should also collect customer feedback through surveys or other means to understand perceptions and preferences related to geographic segmentation. Analyze the survey results to identify areas of success and areas that may need adjustment.