Why Location Still Matters

This post is part of our Big Ideas series, a column highlighting the innovative thinking and thought leadership at IIEX events around the world.

We live in a world where digital services are breaking down barriers and disrupting real-world services. e.g. commuting, food services, financial services, etc. In effect, virtual world services increasingly impact consumption behaviours in the real world. These services are accessible to anyone with internet and a connected device. Products and services can be accessed across the world with the click of a button, regardless of where you live.

For Brands, consumers could be anywhere. Companies need to build a virtual world presence in addition to their real-world existence, to be relevant to today’s consumers. What does this mean from a consumer point of view though? In a borderless virtual world, does real-world location of consumers matter at all?

As much as the virtual world transcends geographical boundaries, we as consumers, are very much defined by where we come from. This extends to our preferences, consumption patterns and behaviours. We often choose our places of livelihood based on carefully calculated trade-offs between different neighbourhoods, defined by our personal circumstances and choices – a trendy downtown hotspot, or a quite family neighbourhood or an artsy upcoming suburb.

Interestingly, who we are in the real world, also defines how we behave in the virtual world. A young parent living in a family neighbourhood, is more likely to spend time on local parents’ groups on Facebook, buying or selling second-hand clothing or exchanging tips on parenting. Students living in shared student housing in the suburbs, are more likely to hunt for bargains on e-Bay or second hand online stores. Busy and single workaholics, living in urban centres, are more likely to order eat-in food from a mobile app on a typical evening, than buy fresh groceries and cook. In short, the adoption and use of digital services, some of which may even replace real-world services, is very much underlined by the physical locations and geographical contexts of where people live.

So for Brands, location of their consumers matter deeply, since adoption of their product or services very much depends on it. How their products and services stand out, will depend on local choices, local cultural behaviours, social behaviours, and by extension Brand appeal. Understanding the traits of consumers in a location with a high level of traction for a Brand’s services can act as a template to identify consumers with the same traits in new locations and thus expose new markets to expand to.

Local knowledge is thus more important today than it was ever before, as the world itself transforms from local to global. In his book Location is (Still) Everything: The Surprising Influence of the Real World on How We Search, Shop, and Sell in the Virtual One, David R. Bell presents his GRAVITY framework to understand the impact of consumers’ physical locations on everything they do online. In effect, he calls the two worlds completely intermingled.

Then, how should Brands treat the relevance of local knowledge of consumers:

• Understand the GEOGRAPHIC context when you research consumers, as that could colour their preferences and behaviours deeply
• Learn once and scale. Recognize markets that have similar customer traits. This would be the fastest way to expand your consumer reach
• Create consumer experiences that are seamless between the physical and virtual worlds. Digital services need to take into account the context of the physical markets they serve

People spend increasingly more time on their smartphones, utilizing location-based services that tell them how to navigate, where to find products & services locally and how to spend their leisure time. Thus for Brands focused on building their digital presence, the consumer location context should keep them grounded on the individuality of consumer audiences defined by where they come from and how they use both digital and real-world services.