THE PAST AND PRESENT OF CUSTOMIZED AND PROPRIETARY GIS – GIS For Business and Service Planning

Almost everybody’s doing it!

Today everybody’s doing it – well almost! Although an exaggeration, geodemographics and geographical analysis of markets is no longer the leap in the dark that it was in the early 1980s. Many business organizations are now employing the concepts of geodemographics and using GIS in many varying applications – from new site location analysis to merchandising and direct mail. With the increased range of applications to which geodemographics can lend itself, the market has grown considerably with new GIS software and databases to accompany these developments like the following ones.

  • Mapping systems

One of the most noticeable changes of emphasis from early proprietary systems is the increased prominence of graphical forms of displaying results compared with the more traditional tabular forms of report. Many area-analysis systems now routinely link into mapping and graphical systems which allow display of the salient geographical information. This routine use of graphical display will be very important in future GIS development as analysis becomes driven by maps and graphs.

  • The manufacturer’s response

We all know that some brands sell better in some parts of a country than others. But, where are these areas and what sorts of people are buying which products? The message is that to influence their retailers, manufacturers must know their end-users. By using geodemographics, manufacturers must know their end-users. By using geodemographics, manufacturers too can have more accurate, more understandable, and more actionable customer profiles. They, too, can estimate sales potential with computer models. Promote in the right areas and select the right media. Additionally they can build efficient direct mailing lists which are targeted to people who live in the right places.

  • Maximizing media potential

One of the problems that many marketing are keen to address at the local level is how to place their advertising so that it reaches the maximum number of customers. Which newspapers or magazines have the highest readerships penetration of their sorts of buyer? How can best use be made of the advertising budget?

On a practical level, market analysis and geodemographics can now address such problems as drawing up a media schedule. For example, a Media Potential Analysis can produce a practical solution to these problems. This technique compares a MOSAIC profile of the client’s target market (existing customers, existing branch catchment profile, or profiles of products from a survey such as Target Group Index, the TMS Clothing and Footwear Survey, or the Financial Research Services Survey) with the MOSAIC profiles of the readers of up to 250 newspaper and magazine titles from the National Readership Survey (NRS). Reports from this analysis rank groups of titles, giving for each one the estimated number of potential customers and the percentage that they represent of the title’s total readership.

Consider a company selling skiing holidays. Where do we advertise holidays in the snow? In terms of readership penetration, the result is fairly obvious; the quality end of the market scores highest, with the UK Daily Telegraph and Times broadsheets ranking highly. But ranking the titles by numbers of potential skiers shows a very different picture. In fact, the message, if you are looking for sheer volume potential could be “Head for the (tabloid) Sun if you want snow”!

Recent work at SPA has focused on using GIS techniques for the right media selection for a large up-market clothing company. As readers can be linked to area classifications, it is possible to produce areal models which can link an NRS profile of readers of a particular title to the areas in which they live. This sort of analysis can help with all sorts of media schedule decisions: where should we advertise our new range of in-car CD players – “Car, Fast Lane or What Car?” Are we missing an opportunity in “Vogue” or ignoring the potential of “Yatching World”? What regional newspapers are best for advertising the opening of my new toy shop? What are the best radio stations on which to announce the new range of clothing in my menswear stores? This brings GIS consultants into close contact with direct mail and advertising specialists, blending together a unique range of skills into an integrated solution for the client.

All of these questions are closely linked with the concept of geodemographics at the micro-level. It can now be demonstrated that a different media schedule would reach the same percentage of a target audience at sometimes up to half the original cost. There is nothing particularly magical about all this. What it does mean is that geodemographics now allow clients to reach the target market with much lower advertising spends than they would otherwise have been able to do without such techniques. The 1990s will undoubtedly see a still sharper focusing upon these issues.

Having defined a catchment area, the client may wish to explore its composition, perhaps with a view to some micro-marketing. Is the client advertising a new sportswear shop by distributing leaflets to households within a 15-minute drive time of the store, promoting the new service? What are the postal sectors with the highest potential expenditure on sportswear? Which sectors have the highest average spend on tracksuits, swim-wear or other sportswear? These concepts apply equally as well to clothing or footwear manufacturers and suppliers. Geographical databases can target mailings for the client’s product in those areas, around the stores they supply, which represent the people who will be most likely to be interested in the product. If one is distributing leaflets, software can be used to target a distribution service at the sectors within the catchment area that will be most rewarding: if the target group is, say, expenditure in this target group.

Perhaps some of the information held at individual postal-sector level is too detailed for a first filtering of suitable locations from unsuitables ones. At the initial planning stage of any projevt clients offer the right ingredients for a new store location, a franchising area, an improved branch product mix or, for a manufacturer, deciding who should supply a product to its end-users. Again market-analysis tools can help. Clients can choose their target group – this might be expenditure on women’s underwear, men’s accessories or children’s jeans. They can the report on the towns that offer the highest potential for the particular products or service.

By asking the right kinds of questions, a geographic database in action can be an extremely valuable planning tool, as this case study has shown. The value is increased further when one considers that such databases can be interrogated by marketing managers on a desktop PC, within a matter of minutes.

 

Customized and tailored uses of GIS systems will both have a strong presence in the retailing environment of the 1990s. Improved methodologies, new software techniques and in particular the huge fall in the cost of computer processing power will allow the GIS industry to offer solutions that would have been out of the question even a few years ago. This improved public-information base coupled with increased availability of large, constantly updated client databases also points towards much more customized classification systems in the future which are either industry-specific of indeed specific to the individual client who has his or her own very specialized problems. This obviously has implications for the development of proprietary systems.

Many large organizations now have data on their own customers – products purchased, payment history and so on. By merging this information with census and other data, it is perfectly possible to develop classifications of customers. Customer classification will become more important as a GIS tool in the future as customer databases improve. As the information services market becomes ever more sophisticated and competitive, it is only natural that suppliers will move towards the development of niche products.

Published by

bisgis

GIS FOR BUSINESS

Comment...

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s