Levi Strauss & Company (LS&Co) is a good example of a product retailer that has begun to use geographical technology to customize “product mix”, or the combination of products available in specific stores (Allen 1993). LS&Co is one of the world’s largest clothing manufacturers, and sells many product lines in addition to Levi’s jeans. Unfortunately, the company’s sales had been lagging significantly primarily as a result of mergers, acquisitions, price wars and significant retailers such as GAP chain creating their own product lines instead of selling LS&Co’s products. Continue reading GIS FOR RETAIL AND PRODUCT MIX – GIS for Business and Service Planning
It is highly likely that the insurance industry will soon face similar regulations to those already faced by the banking industry (Mertz 1993a). The reporting is likely to be at the zipcode (postcode) level. However, since this is in the future, this section on insurance will focus on current applications: risk assessment and avoidance. In the US, natural disaster after natural disaster has occurred over the last four years, bringing the total insurance industry’s bill to $34 billion (Mertz 1993b). Because of this, the industry has begun seriously to consider how it underwrites policies. The Oakland fire, Hurricane Andrew and the floods and other catastrophes of the summer of 1003 each pointed out the need for greater underwriting care. Insurance companies are beginning to realize that they must either refuse to insure properties that are at great risk from natural disasters, or justify larger premiums for doing so, or clearly identify precise areas in which property damage may be partially reimbursed from other sources. For example, the cross-hatched areas in the figure are wind-pools: insurers who write property-damage policies in these areas may be partially reimbursed by a state fund. Continue reading GIS FOR INSURANCE – GIS for Business and Service Planning
Perhaps the most important use of GIS in the banking industry is regulatory compliance (Tavakoli A. 1993). The Community Reinvestment Act (CRA) and the Home Mortage Disclosure Act (HMDA) are both laws which were passed in order to ensure that the banking industry does not practise “red-lining”. Red-lining is the illegal practice of geographically discriminating against groups (primarily minorities) by refusing to meet the credit needs of customers. For example, if a bank has a branch in an area and accepts deposits from customers within that area but refuses to lend money to those customers, that is considered red-lining. Red-lining reporting is done at the census tract level, making it an ideal application for business geographics. Banks use GIS to analyse whether they are guilty of red-lining, and if not, to help prove to regulators that they are not. Theoretically, if they do find that they are guilty of red-lining, they can use GIS to market to specific groups of customers in order to increase their lending activities within an area: I say “theoretically” because I have not heard of a bank that has admitted to using GIS this way since to do so would also be to red-line in a different way, which would also be against the law. Continue reading GIS for BANKING – GIS for Business and Service Planning
GEOGRAPHY AS THE BASIS OF GIS
In the rush to create bigger and better technical solutions, many in the GIS industry tend to forget that the discipline known as “geography” is the basis of GIS. GIS provides nothing more than the opportunity to manipulate and analyse geographical phenomena using automated systems. In fact, Michael Goodchild, director of the US National Center for Geographic Information Analysis (NCGIA) quite “recently” suggested (Goodchild 1992) that the acronym GIS should be understood to stand for “geographic information science”. This new definition would place more emphasis on analysis of “geographic information” and less on “system”.
The automobile industry is a sector that has long recognized the importance of geographical planning and analysis. All the main auto manufacturers distribute their products to the market via a network of franchise dealers. These dealers are independent businesses but are allocated an exclusive geographical territory to which the manufacturer agrees not to assign any other dealer, subject to the existing dealer meeting certain performance criteria. Clearly most manufacturers aim to maximize their market share and profitability in their market. From analysis of the voluminous amounts of registration data it is clear that there is a very strong relationship between market share and dealer location. In other words the more dealers the manufacturer appoints. The greater the likely market share. However, this is traded off against the fact that as market share increases there are diminishing returns and the sales of each dealer reduce, thus affecting individual dealer profitability and, possibly, the scope for retail price discounting. As a consequence, manufacturers are trying to find a balance between maximizing market share whilst at the same time ensuring that each individual dealership is a profitable business in its own right.
Achieving this balance requires a thorough understanding of existing market performance and the ability to examine alternative scenarios through an intelligent GIS approach. Continue reading Case Study – GIS IN THE AUTOMOBILE INDUSTRY – GIS for Business and Service Planning
After “the past and present of customized and proprietary GIS”, the authors continue with the “GIS futures” at the time, specially for retailers – both for site selection and for other tatics, like retail performance modeling and network performance modeling too.
“Given the range of issues that retailers are now addressing and the more complex problems that GIS will need to consider, proprietary system development must proceed by responding very sensitively to the needs of the client. Only in this way will development remain relevant. There will be a greater role for additional support services alongside software systems and a greater need for tailored and customized solutions for particular problems. Continue reading GIS FUTURES – 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.