There is rarely a direct correlation between the propensity to purchase and the actual purchase rate. In the highly competitive retail environment a number of factors contribute to the sales & profitability of a particular location.

Having said that, these tools “out of the box” can be used for a variety of purposes -- and can help retailers make more

Geo-demographic segmentation is based on the premise that people of similar backgrounds, interests and means tend to gravitate into communities. Marketers have been able to harness this sociological phenomenon by using models, which take abstract distributions of demographic characteristics, and synthesize them into a very descriptive, compact, easy-to-understand neighborhood lifestyle typology.

Commercially available geo-segmentation systems are highly descriptive marketing tools. The segments describe the neighborhood as a whole by combining demographics with behavioral data. During analysis, an index is calculated. This calculation compares a particular clusters demographics or behaviors against other clusters. An index indicates a degree of propensity (based on previous behavior) for a cluster or segment to behave a particular way compared to other clusters.

While geo-segmentation systems are most definitely descriptive, they are somewhat less effective at being predictive. That is, they can be used to describe which clusters purchased products at higher rates than others however, to estimate potential sales or response rates they should be used in conjunction with other variables to produce a more robust model.

In other words, just because a particular cluster has a high propensity to purchase a product or service doesn’t mean that one can accurately predict future sales using clusters alone. There is rarely a direct correlation between the propensity to purchase and the actual purchase rate. In the highly competitive retail environment a number of factors contribute to the sales & profitability of a particular location.

Having said that, these tools “out of the box” can be used for a variety of purposes -- and can help retailers make more

stand neighborhood lifestyle typology.

Commercially available geo-segmentation systems are highly descriptive marketing tools. The segments describe the neighborhood as a whole by combining demographics with behavioral data. During analysis, an index is calculated. This calculation compares a particular clusters demographics or behaviors against other clusters. An index indicates a degree of propensity (based on previous behavior) for a cluster or segment to behave a particular way compared to other clusters.

While geo-segmentation systems are most definitely descriptive, they are somewhat less effective at being predictive. That is, they can be used to describe which clusters purchased products at higher rates than others however, to estimate potential sales or response rates they should be used in conjunction with other variables to produce a more robust model.

In other words, just because a particular cluster has a high propensity to purchase a product or service doesn’t mean that one can accurately predict future sales using clusters alone. There is rarely a direct correlation between the propensity to purchase and the actual purchase rate. In the highly competitive retail environment a number of factors contribute to the sales & profitability of a particular location.

Having said that, these tools “out of the box” can be used for a variety of purposes -- and can help retailers make more

clusters. An index indicates a degree of propensity (based on previous behavior) for a cluster or segment to behave a particular way compared to other clusters.

While geo-segmentation systems are most definitely descriptive, they are somewhat less effective at being predictive. That is, they can be used to describe which clusters purchased products at higher rates than others however, to estimate potential sales or response rates they should be used in conjunction with other variables to produce a more robust model.

In other words, just because a particular cluster has a high propensity to purchase a product or service doesn’t mean that one can accurately predict future sales using clusters alone. There is rarely a direct correlation between the propensity to purchase and the actual purchase rate. In the highly competitive retail environment a number of factors contribute to the sales & profitability of a particular location.

Having said that, these tools “out of the box” can be used for a variety of purposes -- and can help retailers make more

higher rates than others however, to estimate potential sales or response rates they should be used in conjunction with other variables to produce a more robust model.

In other words, just because a particular cluster has a high propensity to purchase a product or service doesn’t mean that one can accurately predict future sales using clusters alone. There is rarely a direct correlation between the propensity to purchase and the actual purchase rate. In the highly competitive retail environment a number of factors contribute to the sales & profitability of a particular location.

Having said that, these tools “out of the box” can be used for a variety of purposes -- and can help retailers make more

There is rarely a direct correlation between the propensity to purchase and the actual purchase rate. In the highly competitive retail environment a number of factors contribute to the sales & profitability of a particular location.

Having said that, these tools “out of the box” can be used for a variety of purposes -- and can help retailers make more measurable and actionable decisions.

Geodemographics can be used to:

profile existing store locations
compare profiles of several stores
evaluate the resident population in a proposed trade area
describe current customers
identify sales trends over time by clusters
profile customers by distinct segments such as sales, products purchased, etc.
identify areas which have a large concentration of people similar to your best customers

Profile Creation
- Can be done with minimal orientation and training
- Requires geocoding software, Profiler software & knowledge of database software (Access, FoxPro, etc.) for preparation of the database files

Map Creation
-Can be done with minimal orientation and training
-Requires basic knowledge of mapping concepts

Trend Analysis
- Requires the database to be analyzed over time be geocoded on a regularly scheduled basic. There after, database reporting tools can be set to summarize sales/units/customers by cluster. After a period of time it will become clear that some clusters are consistently high/low performers for particular product segments

Evaluation of Target Households/Population
- Site location reports can include summarized counts of best performing clusters. Requires mapping software. Can easily be generated by a novice user but may require some assist