The Benefits and Risks of Hyper-Localization for Marketing
By adding intangible value to products, brands can make their products more desirable. This is no secret, and so as competition heats up, new methods of marketing needs to be explored, especially in the retail market. One of these new ways is called hyper-localization.
This method emerged after the great success of the global e-commerce businesses and quickly started to gain traction in local markets. It therefore is a relatively new and still not a common practice for smaller and larger companies alike although it has a massive potential. So what is hyper-localization in marketing? How exactly does it work, and which and why brands should use it?
Let’s dive in.
What is Hyper-localization in Marketing?
What is hyper-localization in marketing? In essence, hyper-localization means targeting a specific region or even a specific city/town with the brand and their offerings. Putting it in different terms, hyper-localization means focusing on a specific customer group in a clearly geographically defined area. The goal is to make the brand appeal to the local community which involves personalizing the products or the brand image to the wants and needs of the target group.
This starts with the online presence.
As about a quarter of retail purchases are made online in the US, it is a recommended first step to individualize the website and implement for example a local landing page. This makes online shoppers feel more welcomed and could be the deciding factor of why an online shopper buys at that specific store. It also may support local businesses through targeted advertising or local suggestions if the website is able to get access to the location of the person searching/visiting the website. A key information generally used is the IP-address of the network the person is searching with. As mentioned, this will be processed in order to make hyper-localization work.
Even for stores who have a physical presence in a city, hyper-localization can be used to increase brand awareness by showing more region specific ads, or making the store more visible for people who are searching for a general category in any maps app. The importance of this will increase even further as more and more people demand local suggestions without using the keywords “near me” anymore. As people who are new to a place cannot draw from past experiences it is important to be recognized easily as an interesting brand or business - hyper-localization is enabling this.
Which Brands should use Hyper-localization?
As mentioned before, smaller local businesses can use hyper-localization to be seen much more clearly by people searching for a general category in maps like “restaurant” or “bar”. Hence, businesses wanting to increase brand awareness in a specific area should use hyper-localization. Looking at large companies like Coca-Cola or McDonalds, even they are able to and are already applying hyper-localization in their branding strategy.
Taking the classic Coke as an example, Coca-Cola offers different versions of it depending on which country you are buying it in. The Mexican Coke is produced with cane sugar while the American coke is produced with high-fructose corn syrup. And just like Mexico there are other countries who are having a different “version” of Coke in their supermarkets. With that, Coca-Cola adapts their products to local tastes - which basically is hyper-localization at the national level.
Just like Coke tastes different in different countries, so does McDonalds. The menu is adapted to the tastes of a country and includes country specific items. Overall, all companies with the infrastructure to do so are able to use hyper-localization - from small businesses to global cooperations.
The Benefits and Risks of Hyper-localization in Marketing
The marketing benefits of hyper-localization are manifold. Especially smaller businesses are able to gain a competitive advantage over global and large competitors. They do this by establishing their brand as a local tailored one with special offerings that large and global cooperations often times cannot replicate.
This enhances their unique value proposition and can increase customer loyalty which is the second reason why this branding technique is so useful. Brand loyalty is easier to achieve for global companies as they are most of the time very well known. But, a small business has to utilize other mechanisms like hyper-localization in order to build a strong and loyal customer base as well as trust in their products.
Another major benefit is that hyper-localization can help to mitigate risks in the future. In the case of new product launches this means being able to avoid big missteps due to non suitable products or culturally inappropriate ones. Global companies can make use of it by employing local people which are responsible for specific cities/states to gain knowledge about local preferences and the culture.
Of course there are some drawbacks to hyper-localization. The first one is that it can get quite expensive when done properly as there is a lot of effort needed and a lot of different branding strategies involved which all require separate monitoring and different marketing campaigns. Together with extensive due diligence there is lots of work needed to get to know the target customers well so that the branding strategy is a localized one. This adds an increased level of complexity to the company as a whole as it has to manage not only one single brand but rather a single brand with locally differing variants.
A further risk of hyper-localization is the dilution of the brand through excessive personalization: If the brand appears dramatically different depending on geography, this runs the risk of damaging the brand’s distinct associations. Hence, striking a balance between localizing the brand while maintaining the overall values of the brand is very important.
Final Thoughts on Hyper-localization in Modern Marketing
Hyper-localization offers a great opportunity for many businesses like restaurants, bars or retail stores to stay competitive and relevant to the customers with increasing pressures from big global players. On the other hand it is also a chance for global cooperations to be even more appealing to the target customer by personalizing the known products or services.
No matter which business actually implements hyper-localization, it will in most cases have a positive impact on the brand performance, reputation, and loyalty.
Photo by Tim Mossholder via UnSplash
About The Author
Linus Horn is a master’s student of international business at Hult International Business School in Boston and studied B.Sc. Economics in Hamburg before. Despite coming from a non-marketing background, courses in his bachelor and master studies brought him closer to the broad topic of marketing. Interested in exploring new topics and trends across industries, he applies his analytical skills to uncover these trends and learn more about them to increase the value of future projects.
References for Hyper-localization in Marketing
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McDonalds (2019, May 8). McDonald’s Around The World Menu Is Now Around The Corner. McDonalds.
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