Local Search importance is increasing day to day. Small businesses are started creating websites for their online visibility and brand promotion. If your business is completely local and targeted to specific location then target your website to that particular location.
Most of the small businesses try to target their website to entire country even their business services limited to specific location. They thought that their brand will get national visibility. If your business has a plan to expand to national wide in near future then this kind of targeting will be helpful. Otherwise it will affect online business conversion rate.
Google is making their search more targeted and trying to give the exact information to visitors. For example two visitors are trying to search hotels in Google from two different locations. Assume one is from Delhi and another from Mumbai. Mumbai visitor should get Mumbai hotels information and Delhi visitor should get Delhi hotels information. This will happen only when business websites will target exact location. If both visitors are getting mixed results in Google search then targeting should be optimized. In such cases Google places will help visitors a lot.
At present Google webmaster tools have an option to target a website to specific country. In future they may provide state wise or city wise target options. Recently Google places are well organized in search results. Have a look at the following updated Google Places section in search results.
Google Local Listings has covered more than half of the page. Recently Google has combined the relevant organic and local listings and displaying combined results in search.