Geographic information systems have been described as a set of technologies that help us to see our small blue planet in better ways (Longley et al., 1999). More commonly referred to by the acronym GIS, applications include: local governance; business and service planning; logistics; and environmental management and modelling. In both public and private sector research, GIS are used to manage geographic information, help identify geographical trends and patterns and to model spatial processes.
However, GIS have been described as a “nearly” technology for marketers (McLuhan, 2003). Beyond the hype, the actual use of GIS presently is limited to the larger retailers and suppliers, with little expansion into marketing applications. This, despite widespread agreement that the true value of geographical information is only revealed once that information is analysed geographically! McLuhan (2003) cites a survey by GeoBusiness Solutions revealing that only 28% of company boards fully understand the operation and marketing benefits of GIS, with the perceived (and often, actual) high cost of investing in GI software and data products being one of the barriers to GIS reaching its potential. Continue reading Geodemographics and GIS – Richard Harris, Peter Sleight, Richard Webber
Among fast-food chain restaurants such as McDonald’s and Burger King, the most visible and vocal users of GIS are at Arby’s. Among a variety of applications used at Arby’s is one that uses drive time to establish the likely trade area for an existing or potential store (Freeling 1993). In the fast-food business, customers are likely to be attracted more to the convenience of the product than to its gourmet appeal. It is, therefore, important to look at a trade area from the perspective of drive-time accessibility. Like many retailers, Arby’s personnel know how long someone will drive to access their product. In addition, they are familiar with the demographic characteristics of their typical customers. By analysing the demographics of a trade area established by using drive times, the likely sales performance for a store can be modelled. Arby’s is careful not to “cannibalize” an existing store when developing a new store. Cannibalizing means taking customers from one of their existing stores. Cannibalization should be avoided since a new store should increase overall business, not spread it around. By the same token, they are very eager to take away their competitors’ customers, and so they carefully analyse their competitors’ existing locations in comparison with their own.
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
Over the past few years there has been a remarkable increase in interest is GIS. Many of the earliest users were in universities, government departments and environmental agencies. Activity in these traditional core areas is now being supplemented by vigorous growth in several emerging markets, the most important one being business and service planning. For many of these new users, the GIS focus to date has been basic mapping and asset management. Other, more advanced, users are modelling data held in integrated databases. This modelling activity is frequently referred to as spatial analysis.
WHAT IS SPATIAL ANALYSIS?
“Spatial analysis” is one of those terms that are so widely used in so many different contexts that it is difficult to define succinctly. Good child (1988, p; 68) offers a good general definition of spatial analysis as “that set of analytical methods which require access both to the attributes of the objects under study and to their locational information”. Openshaw (1991b, p. 18) suggests that what geographers refer to as “spatial statistics”. Anselin (1989) and Goodchild et. Al (1992) prefer to use the term “spatial data analysis” although there seems to be no substantial difference. Continue reading Implementing Spatial Analysis and GIS Applications for Business and Service Planning
From a marketing perspective, the principal attraction of spatial analysis is still probably a psychological one. Marketeers seem to feel that geography is important in that they know that there are major geographic variations in the demand for products. Maybe they feel that geographers should be able to help them perform better and that there might be methods that geographers know about that could be beneficial to them. Those in the industry who believe this will probably already be displaying more confidence in the value of geography than do many geographers!
Yet at the same time it is evident that there are mutual benefits to both the marketing industry and to geography from closer collaboration. The geographer might gain access to data not in the public domain, new publishing opportunities may arise and there is at least some prospect for technology transfer and commercialization. The marketing industry might gain access to a largely untapped skill base. The question is, however, which methods, which applications, and which new products might be created through such collaborations? Continue reading Marketing Spatial Analysis: A review of prospects and technologies relevant to marketing – GIS For Business and Service Planning
It is possible to look at a published example which demonstrates the method. The example is drawn from a description of a method used at the Oxford Institute for Retail Management to estimate (ante post) potential revenues at the Meadowhall shopping centre using a combination of geodemographics and spatial analysis based on comparisons to Gateshead’s Metro Centre, a shopping centre of a similar type, which had been opened in the mid-1970s (OXIRM 1990). Continue reading Combining Drive-Time Analysis with Geodemographics – GIS For Business and Service Planning
DATA SOURCES AND THEIR GEOGRAPHICAL INTEGRATION
Geodemographics has come into use as a shorthand label for both the development and the application of area typologies that have proved to be powerful discriminators of consumer behaviour and aids to “market analysis”.
Continue reading Geodemographics – GIS for Business and Service Planning