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Segmenting the US Market: Identifying Your Target Region(s)

Updated: Oct 31, 2023

The US is not one homogenous market. There are significant regional variations across states and cities when it comes to consumer behaviors, competitive forces, distribution landscape and growth opportunities. European firms expanding to the US should avoid a broad national approach and instead segment the market to focus their entry strategy.

Segment the market across dimensions like:

Population Size/Density - Target major metropolitan areas like New York, Los Angeles and Chicago which offer scale. Or select regions with specific demographic compositions based on your target buyer profile.

Income Levels - Wealthier areas in the Northeast or West Coast may offer more potential for premium products. Lower income regions can be a fit for budget offerings.

Industry Clusters - Regions like Silicon Valley and Detroit attract certain industries. Identify areas where your customers are concentrated.

Competitive Landscape - Analyze competitor presence, gaps in offerings, and white space opportunities by market. Avoid over-crowded regions.

Distribution Infrastructure - Assess logistics, routes to market, wholesaler presence and retail partnerships by geography.

For example, an Italian fashion brand may want to focus initial US expansion efforts on New York City where disposable incomes are high, related industries thrive, and there is a concentration of fashion-focused media and retailers.

A German manufacturer of industrial cleaning equipment may prefer targeting Midwestern states like Illinois and Ohio where many US manufacturing facilities are located.

Thoroughly analyzing market segments by state, city and other geographies allows European firms to prioritize and gain share in high-potential regions. While nationwide presence is ultimately ideal, a strategic geographic focus helps efficiently deploy limited resources to get off to a strong US start. The most successful European entrants resist the temptation of a broad approach and take the time to identify target regions based on data-driven analysis.

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