WMW moderator pageoneresults gives a practical example of some of the basic on site ways in which one can target local search. It's a good post on it's own, but at the time of writing, it's on it's own! - Let's hope some others pick up the thread, it's an interesting subject if you work for clients with limited distribution/sales areas.

One of the very first issues we needed to address were all of those visitors
finding the client using general search terms and not refining their search to
their local area. It's great to have the #1 position for a money term but,
only if it brings an ROI. In some instances, it can have a negative impact as
the company will now receive requests from consumers that they cannot service.
What do you do in a situation like that?